If Indonesia picks China, where does that leave Australia?

When an Indonesian frigate conducted a passing exercise with Chinese naval vessels off Taiwan's east coast last week, the Indonesian Navy called it routine maritime diplomacy, a standard naval greeting between ships sharing the same waters. That framing is defensible. What is harder to defend is Australia's apparent comfort with the broader pattern it sits inside.

One PASSEX is not a pivot — the pattern around it might be

The exercise itself was modest by any technical measure. A passing exercise, or PASSEX, is exactly what Indonesia described: ships exchanging signals, formations, and goodwill as they share a stretch of ocean. As University of Western Australia's Jennifer Parker noted, it would not normally be approved at the foreign ministry level, and China and Indonesia do have an existing naval relationship. That context matters. You cannot argue for freedom of navigation in the South China Sea and then object every time a navy exercises it.

But context cuts both ways. China's coastguard began patrolling east of Taiwan in June, stopping and questioning commercial vessels well outside any reasonable interpretation of its jurisdiction. Taiwan is mid-way through its annual Han Kuang war games, simulating a Chinese attack. And Beijing chose this moment to announce, unilaterally, that Indonesia's frigate would be joining them. The Indonesian Navy's confirmation came hours later, and was notably thin on prior consultation with Taipei or Washington.

The question is not whether one PASSEX is a strategic masterstroke. The question is what it tells us about where Indonesia is heading.

The Lombok Strait, the Sunda Strait, the Makassar Strait: these are the passages through which navies project power from the Indian Ocean into the Pacific.

Indonesia's strategic autonomy has a breaking point

Indonesia has always played a careful hand. The world's fourth most populous country and the dominant power in Southeast Asia, it has spent decades cultivating strategic autonomy, refusing to align too firmly with either Washington or Beijing. That is not irrational. Indonesia's economic relationship with China is enormous and growing, and its political culture is allergic to the appearance of being anyone's junior partner. Prabowo's government has shown more interest in great-power engagement than its predecessor, courting investment from both sides and keeping its options conspicuously open.

But strategic autonomy has a breaking point. If a serious conflict emerged in the Taiwan Strait, the waters north of Australia would become a critical maritime corridor instantly. The archipelago that is Indonesia does not merely border those waters; it controls them. The Lombok Strait, the Sunda Strait, the Makassar Strait: these are the passages through which navies project power from the Indian Ocean into the Pacific. If Indonesia were to adopt a posture of studied neutrality in a genuine conflict, or worse, provide political cover for Chinese operations, Australia's strategic position would deteriorate faster than most defence planning has reckoned with. China's recent missile test near Nauru and Tuvalu showed that Beijing is not shy about signalling its reach to Australia's north and east simultaneously.

The timing of the PASSEX announcement is worth sitting with. It came the same day US Under Secretary of War for Policy Elbridge Colby was meeting with Indonesia's Defence Minister in Jakarta, which is either a coincidence or a pointed message, depending on how charitable you are feeling toward Beijing's sense of occasion.

Australia's response is not calibrated to this risk

Meanwhile, Indonesia's economy is under serious stress, with the rupiah falling past its 1998 Asian financial crisis lows. Economic vulnerability tends to concentrate minds around whoever is offering investment and infrastructure at scale. China has been making that offer loudly and consistently for a decade. Australia's equivalent engagement, including aid and economic diplomacy, has been far more modest and far less coherent.

Australia spends just under two per cent of GDP on defence, a figure that has been treated as roughly adequate for years. It is not adequate if the strategic environment north of Darwin is moving in the direction this exercise suggests. The AUKUS submarine pathway, the longest-lead procurement in Australian military history, will not produce a deployable capability for more than a decade. In the meantime, the country's capacity to operate credibly in its own near-region, let alone deter something in the broader Indo-Pacific, is limited.

None of this means Indonesia has made its choice. One naval exercise, even a symbolically freighted one, does not constitute alignment. Parker's caution is reasonable: if this becomes a repeated occurrence in that location, you read more into it. But Australia should not be waiting for repetition before thinking harder about what its northern neighbour actually wants, what it fears, and what Australia is prepared to offer that China cannot.

The machinery of deterrence works quietly when it works. What it requires is that the people who need to be deterred believe you are serious. On the current trajectory, there is not much evidence that anyone in the region is particularly worried about Australia's seriousness. That is the problem the exercise off Taiwan's east coast just made slightly more visible.

Sources

ABC News — Taiwan condemns planned Chinese and Indonesian military exercise off its coast

The Bearing — China's Pacific missile test raises stakes for Australia's island partners

The Bearing — Indonesia hasn't collapsed. Yet.

Frequently Asked Questions

What is a PASSEX and why does it matter geopolitically?
A passing exercise, or PASSEX, is a low-level naval exchange between ships sharing the same waters — signals, formations, and goodwill, not coordinated operations. It matters geopolitically when the location and timing embed it in a larger pattern of strategic signalling, as with this exercise conducted off Taiwan's east coast during Chinese coastguard patrols and Taiwan's annual war games.

Why does it matter if Indonesia stays neutral in a Taiwan conflict?
Indonesia physically controls the key maritime straits — Lombok, Sunda, and Makassar — through which naval forces must pass to move between the Indian Ocean and the Pacific. Indonesian neutrality or quiet alignment with Beijing in a conflict would constrain Australia's ability to project force into its own near-region and complicate US operations across the Indo-Pacific.

How does Indonesia's economic relationship with China affect its strategic choices?
China is Indonesia's largest trading partner and a major source of infrastructure investment, and that relationship has grown steadily for a decade. With the rupiah now at levels not seen since the 1998 Asian financial crisis, Indonesia's economic vulnerability is deepening at the same moment Beijing is intensifying its strategic engagement — making the choice between autonomy and alignment harder to sustain.

Is Australia's defence spending enough to handle a deteriorating Indonesia relationship?
Australia currently spends just under two per cent of GDP on defence, a level long treated as roughly adequate. That figure is not calibrated to a scenario in which Indonesia tilts toward studied neutrality or alignment with Beijing, and the AUKUS submarine capability — the centrepiece of Australia's long-term deterrence strategy — will not be operational for more than a decade.

Why did the timing of this exercise raise suspicions about China's intentions?
Beijing announced the joint exercise on the same day a senior US defence official, Under Secretary Elbridge Colby, was meeting Indonesia's Defence Minister in Jakarta. That coincidence — Beijing publicly associating Indonesia with a Chinese naval operation at the precise moment Jakarta was hosting a high-level American interlocutor — is difficult to read as accidental.