Indonesia and China are advancing regional financial connectivity through a landmark collaboration on Local Currency Transactions (LCT) and cross-border QRIS payment trials. This initiative aims to streamline trade, investment, and everyday transactions between the two nations, reducing reliance on foreign exchange and enhancing monetary stability. As global dynamics shift, the partnership reflects a shared commitment to building a secure, inclusive, and tech-driven financial ecosystem in Asia.
Key Facts & Background:
- Bank Indonesia (BI) and the People’s Bank of China (PBoC) have launched a bilateral initiative to strengthen financial cooperation.
- The collaboration includes:
- Expansion of the Local Currency Transaction (LCT) framework
- Pilot testing of cross-border QRIS (Quick Response Code Indonesian Standard) payments
- Objectives:
- Facilitate more efficient and cost-effective trade and investment
- Enable seamless retail transactions between Indonesia and China
- Reduce dependency on third-party currencies like the US dollar
- LCT transactions between Indonesia and China reached USD 6.23 billion (Jan–Jul 2025), nearly triple the USD 2.17 billion recorded in the same period of 2024.
- The initiative coincides with the 75th anniversary of Indonesia–China diplomatic relations.
- BI has also expanded LCT cooperation with other countries:
- Japan: USD 5.08 billion
- Malaysia: USD 2.03 billion
- Thailand: USD 644 million
- South Korea: USD 85 million
- UAE: USD 72 million
- QRIS cross-border payments are currently in sandbox trials, aimed at enabling interoperable digital payments for consumers and businesses.
Strategic Insights:
The Indonesia–China financial partnership marks a strategic leap toward regional monetary autonomy and digital payment integration. By promoting LCT, both countries aim to insulate their economies from exchange rate volatility and reduce transaction costs associated with dollar-based settlements. This is particularly relevant as global financial systems face fragmentation and rising geopolitical tensions.
The cross-border QRIS pilot represents a bold step in retail payment innovation, allowing Indonesian consumers to make purchases in China using familiar domestic apps and vice versa. This not only enhances convenience but also fosters tourism, e-commerce, and SME participation in international markets. For central banks, such interoperability strengthens oversight and data transparency, while supporting financial inclusion.
As Indonesia expands LCT agreements with other strategic partners, it positions itself as a regional leader in currency diversification and payment modernization. The long-term impact could include greater resilience in external accounts, improved trade competitiveness, and a more balanced global financial architecture. For businesses and consumers alike, the initiative promises a future of faster, cheaper, and more secure cross-border transactions—anchored in regional cooperation and digital transformation.