•In May 2017 the Indonesian military conducted a large-scaleexercise in the Natuna Islands. This was in the wake of threeincidents in 2016 that involved Chinese fishing boats. Jakartaaccused the vessels of “stealing fish” within the IndonesianExclusive Economic Zone (EEZ) but Beijing considered these boatsto be carrying out “regular activities in Chinese traditional fishinggrounds”.

•Both Beijing and Jakarta acknowledge that the Natuna Islandsbelong to Indonesia. But while the Chinese avoid mentioning theissue of the islands having an EEZ, Jakarta openly claims that theislands definitely do have an EEZ.

•The two countries are “strategic partners”, and while Chinaneeds Indonesia to help realize some of its “One Belt One Road”ambitions, Jakarta eyes funding from Beijing to help its “MaritimePower Dream”.

•Indonesia has adhered to its claim of being an Archipelagic Stateand has relied on the United Nations Convention on the Law of theSea (UNCLOS) to support its territorial claims. China has alsoopenly stated that the South China Sea issue would be resolved withreference to UNCLOS.

•However, Indonesians are divided over the issue. There are thosewho wish to bring the problem to an international tribunal, becausethey have no faith in bilateral negotiations as a possible path to asolution. The rise of hardline Muslims in recent months and their critical view of Chinese investments in Indonesia may also affect Jakarta–Beijing relations.

• While the Natunas is likely to remain a perennial issue between Indonesia and China in the short to medium term, it is unlikely to derail the bilateral relationship as economics is likely to continue trumping politics in Sino-Indonesian relations, at least under Indonesian President Jokowi's administration. It is also unlikely to bring about an outright naval confrontation between Indonesia and China.