Jakarta. Indonesia and China on Sunday agreed to promote the use of their respective national currencies in bilateral trade, marking a significant step toward reducing dependency on the US dollar.

The agreement was formalized through a memorandum of understanding (MoU) signed by Bank Indonesia and the People's Bank of China during Chinese Premier Li Qiang’s official visit to Jakarta. The two central banks committed to establishing a framework that will encourage the use of the Chinese yuan and Indonesian rupiah in cross-border transactions.

This move builds on a February agreement between the two monetary authorities that allows for local currency swaps worth up to 400 billion yuan ($55 billion). Indonesia has similar arrangements in place with countries including Australia, Malaysia, and South Korea.

China remains Indonesia’s largest trading partner, with bilateral trade volume reaching $135.2 billion in 2024.

The local currency pact was among 12 cooperation agreements signed following a bilateral meeting between President Prabowo Subianto and Premier Li Qiang. The deals span various sectors, reflecting deepening ties between the two nations.

“We held productive talks today and reached cooperation agreements on many fronts that we believe will greatly benefit both nations,” President Prabowo said after the meeting.

The 12 agreements signed include:

1. Monetary Cooperation: MoU between Bank Indonesia and the People’s Bank of China on a framework to promote local currency transactions.
2. Economic Policy Collaboration: MoU between Indonesia’s National Economic Council and China’s National Development and Reform Commission on development policy cooperation.
3. Industrial and Supply Chain Partnership: MoU between Indonesia’s Coordinating Ministry for Economic Affairs and China’s Ministry of Commerce to strengthen industrial and supply chain ties.
4. Two Countries Twin Parks Initiative: Tripartite MoU involving Indonesia’s Coordinating Ministry for Economic Affairs, China’s Ministry of Commerce, and the Fujian Provincial Government.
5. Tourism Cooperation: Agreement between Indonesia’s Tourism Ministry and China’s Ministry of Culture and Tourism.
6. Agricultural Trade: Cooperation between Indonesia’s Agricultural Quarantine Agency and China’s General Administration of Customs on agricultural exports.
7. Traditional Medicine and Tuberculosis Control: Collaboration between Indonesia’s Health Ministry and China’s National Administration of Traditional Chinese Medicine.
8. Public Health Cooperation: Joint efforts between Indonesia’s Health Ministry and China’s National Administration of Disease Control and Prevention for tuberculosis prevention and control.
9. Investment Agreement: Partnership between Danantara Indonesia and China Investment Corporation.
10. Strategic Business Cooperation: Agreement between the Indonesian Chamber of Commerce and Industry (Kadin) and the China Chamber of Commerce in Indonesia.
11. Media Collaboration: MoU between Indonesia’s national news agency Antara and China Media Group.
12. News Agency Cooperation: Partnership between Antara and Xinhua News Agency.