4.2.1. Overall Spatial Evolution Characteristics of China’s OFDIs in Indonesia
Due to the fact that the number of projects did not necessarily reflect the scale of the investments, it was found that the investment amount index was more realistic and comprehensive. In this study, based on the 2006 to 2016 China–Indonesia investment data, the investment gravity center of the provincial region was calculated using ArcGIS 10.2 software. Additionally, the investment center of gravity evolution curve was drawn, as detailed in Figure 2
. A statistical trend analysis module in ArcGIS (Ver.10.2, Esri, Redlands, California, USA) was used, and the OFDI data were projected onto the orthogonal plane in an east–south–north direction. Then, the quadratic curve (Figure 3
) was fitted to reflect the evolution of China’s OFDIs in Indonesia. The result of the above-mentioned process was the overall spatial pattern of China’s OFDIs in Indonesia.
A comparison was then made of the focus of China’s OFDI in Indonesia, along with the trend changes as follows:
(1) The spatial trend line of China’s OFDIs in Indonesia during the period ranging from 2006 to 2010 had basically maintained the overall characteristics of “west higher than east, and south higher than north”. The center of gravity remained small at between 106.76–107.89 E and 2.95–6.60 S. This study found that the spatial characteristics of China’s OFDIs were consistent with Indonesia’s socio-economic patterns. The investment activities were observed to be closely related to the size of the local economy, market demand, openness, industrial agglomeration, infrastructure constructions, and service industry development. The closer areas and regions with high levels of economic development tended to provide better investment environments for foreign investors. Therefore, the western region of Indonesia, which was characterized by better economic development, became a gathering place for Chinese investments. It was found that China’s OFDI pattern in Indonesia had generally formed a “west higher than east, and south higher than north” scenario. From the perspective of the trajectory of the gravity center of the examined space, the maximum offset was determined to be only 0.78° in the east–west direction, and 3.56° in the north–south direction. The minimum offset was only 0.17° in the east–west direction, and 0.13° in the north–south direction. In the initial exploration stage of the Chinese OFDI in Indonesia, the investment status was relatively stable in space and was determined to have had a certain inevitable connection with the investors’ cautious and tentative psychology.
(2) During the period ranging from 2011 to 2016, China’s OFDIs in Indonesia were highly volatile, and the direction of gravity center of the investments was observed to be significantly different during different time periods.
Specifically, the observed differences were divided in this study as follows:
(i) From 2011 to 2013, China’s OFDI focus in Indonesia continued to move from east to west, and four time nodes were located in the Java Sea. The “path dependence” on foreign capital was the internal force of China’s shift in focus in regard to Indonesia’s investment spaces during that period. First of all, China’s OFDIs in the area had accumulated a certain amount of experience and income over a short period of time. It was proven in practice that investment activities were more suitable in certain locations. Secondly, the economic aggregate of Java and Sumatra in the west accounted for 80% of Indonesia. In terms of political and economic absolute dominance, a good economic foundation, stable political environment, high level of openness, sufficient labor force, abundant market, as well as other excellent location factors, were found to have subtle influences on the locations of the Chinese investment enterprises. The above factors continued to attract the continuous influx of Chinese-funded enterprises and furthered the expansion of the investment scale. Therefore, China’s OFDI focus in Indonesia had still displayed a gradual shift to the western region. It can be seen from this study’s trend graph that China’s OFDIs in Indonesia had a certain agglomeration phenomenon during this stage, which was found to be a staged result of the industrial development. The east–west fitting curve was inverted by U-shaped pattern of “intermediate high two both side low” in 2011, which had changed to an “east high and west low” strong wave pattern by 2013. A north and south upward fitting curve, or a “south high and north low”, became increasingly significant, and indicated that China’s OFDI pattern in Indonesia had strong differentiation characteristics during the period ranging from 2011 to 2013. The overall investment pattern was determined to have been higher in the western region than in the eastern region, and the northern region was lower than the southern region. However, the investments in the central and southeastern regions had displayed an upward trend.
(ii) From 2014 to 2016, China’s OFDI gravity center on Indonesia’s investment space was opposite to that of the previous stage, and had continuously moved from west to east on the Java Sea. Then, as of 2016, the investment gravity center was located in South Kalimantan. It was determined that the first reason for these changes was that the “Belt and Road” initiative had proposed that Indonesia was the key to the Southeast Asian region. As a result, the Chinese government had scientifically designed and rationally invested in Indonesia, and the scale and intensity of investment increased significantly. Secondly, China’s OFDI in Indonesia had undergone a period of rapid expansion. Its investment activities were no longer limited to the Indonesian economy on the Javanese and Sumatra Islands, and the central and western parts of Kalimantan and Sulawesi had presented demands for a transportation infrastructure market. The rich gold mines, copper mines, coal, and other resources in Papua, as well as economic data that indicated that the Papua, Southeast Sulawesi, and West Papua Provinces had major development potential, and the economic shares of those provinces were rising. The above-mentioned elements forced and guided the investment center of gravity to move eastward. The third reason for the changes was that the investment industry had gradually expanded from capital-intensive industries (such as transportation infrastructures, energy, and electricity) to technology-intensive industries (such as tourism, finance, and electronic communications). Furthermore, the investment forms had changed from “quantity type” to “quality type” investments. This required changes in the location choices of the investment activities. In the trend distribution curve, it could be seen that the distribution trend of China’s OFDI in Indonesia during the period ranging from 2014 to 2016 was relatively flat. The spatial differentiation phenomenon had been alleviated, and the trend distribution had changed slightly. For example, the investment pattern was now higher in the western and southern regions in 2014. However, the eastern and northern regions were in a collapsed state, and there appeared to be trend of a slow tilting from west to east in the east–west direction in 2015. In 2016, there was a significant uplift observed in the central and southern regions. Therefore, China’s OFDI pattern in Indonesia was as follows: In the east–west direction, both of the sides were low, and the middle was high; in the north and south, the south was greater than the north.
4.2.2. Local Spatial Evolution Characteristics of China’s OFDI in Indonesia
In this research study, using the natural break method of ArcGIS, the investment amounts and the number of projects in Indonesia for the three time nodes in 2006, 2011, and 2016 were effectively divided into four grades. These were referred to as the high-value zone, middle high-value zone, middle low-value zone, and low-value zone, which were identified using numerical values. Then, the illustration shown in Figure 4
was used to explore the evolution characteristics of China’s OFDI in Indonesia’s local spatial patterns as follows:
(1) The number of investments in Indonesia’s high-level provinces was small and were mainly distributed in the developed regions. According to China’s OFDI projects in Indonesia, there were only two high-level provinces under the three time sections (three consecutive years), namely Jakarta and East Java. Only DKI Jakarta had reached the highest level for three consecutive years. The four total middle high-level provinces: North Sumatra, Banten, South East Sulawesi, and West Java. In terms of China’s OFDI in Indonesia, the highest-ranking provinces in 2006, 2011, and 2016 were as follows: West Java; Riau Island; Middle Sulawesi; DKI Jakarta; Banten; and South East Sulawesi. However, none of the aforementioned provinces had reached the highest level for three consecutive years. The middle- and high-level provinces included Banten, Middle Java, South East Sulawesi, West Java, Aceh, and South Sulawesi, which all displayed increases when compared with the number of investment projects. Also, the number of high-level provinces in the three time sections only accounted for between 5.89% and 17.65% of the all the provinces, and the proportion of middle- to high-grade provinces had ranged from 12.50% to 17.65%. The total number of middle- to high-grade provinces was greater than that of high-level provinces, which were mainly distributed in Java Island, Sumatra, and Sulawesi. The reason for these changes was that Jakarta was the capital of Indonesia, and as the political, economic, and cultural center of the country, it was also the largest city in Southeast Asia. Jakarta is known for its world-famous seaport, and its unique geographical and economic advantages have attracted the majority of investments from China. Java, Sumatra, and the islands of Sulawesi and Indonesia are the most important islands in the country. These are the largest islands in the region and contain the largest proportion of mountainous terrain. They are rich in oil, gas, coal, and metal resources, and have better industrial bases than the other Indonesian provinces. Also, the financial services industry has a high level of development, and the investment environment is relatively open. Therefore, China’s OFDIs are concentrated in the above-mentioned islands. Secondly, China’s OFDIs are highly concentrated in some areas, and the majority of the provincial investments are currently scattered due to the fact that China’s OFDI initiatives in Indonesia have begun to expand. At the present time, the high-level investment areas are often regions with frequent economic and trade activities and long investment histories. The majority of the low-level investment provinces still have fewer interactions with China. China’s OFDI is in a stage of trial and expansion in those locations, and the investment initiatives and projects are currently limited.
(2) The majority of the Indonesian provinces continued to be in a low-level stable state of investment. According to China’s OFDI projects in Indonesia, the number of the lowest-level provinces in the three time sections were 26, 24, and 25, which had accounted for 76.47%, 70.59%, and 73.53% of the total provinces, respectively. In terms of the investment amounts, the number of lowest-level provinces in 2006, 2011, and 2016 were 28, 23, and 19, respectively, which had accounted for 82.35%, 67.65%, and 55.89% of the total provinces. respectively. It was determined that the lowest-level provinces in the three time sections accounted for more than 50% of the total provinces. These findings indicated that the majority of China’s OFDIs in Indonesia were in low-level zones. One of the reasons for this was determined to be that the infrastructures of the majority of the provinces in Indonesia were seriously backward; logistics costs were too high, power supplies were insufficient, and the throughput capacities of the ports were limited. Therefore, the Chinese entities which were involved in long-distance transportation faced the problem of increasing production costs. A second reason was that the administrative inefficiency and bureaucratic style of the provincial governments were serious factors which had directly affected the approvals and operations of the Chinese enterprise investment projects, and had interfered with the investment activities of foreign-funded enterprises. The third factor was that the Indonesian people had concerns regarding China’s rising global power, and the public believed that the strength of China’s economy was a threat. Chinese products were squeezing out Indonesia’s domestic products at lower prices, forcing them to close down operation. Also, the arrival of Chinese workers had impacted employment resources and had resulted in Indonesia’s serious unemployment problem becoming more sensitive. Some of the Indonesian people had believed that the resources which were being transported to China had damaged Indonesia’s environment. This study determined that the above-mentioned reasons caused China’s OFDI in the majority of Indonesian provinces to remain at low levels.