In Geopolitics Today: Wednesday, May 28th
China and Indonesia Launch Yuan-Rupiah Trade Framework, France Secures Comprehensive Strategic Partnership with Vietnam, and other stories.
China and Indonesia Launch Yuan-Rupiah Trade Framework
China and Indonesia have signed 12 cooperation agreements during Premier Li Qiang's May 26 Jakarta visit, establishing yuan-rupiah bilateral trade framework through central bank memorandum between Bank Indonesia and People's Bank of China. The framework expands a February currency swap agreement worth 400 billion yuan ($55 billion) covering bilateral trade valued at $135.2 billion in 2024. Current local currency usage stands at 6% of transactions, with projections reaching 10-30% by 2028. Additional agreements target industrial supply chains, agricultural exports, tourism, and media cooperation. Indonesia operates similar arrangements with Australia, Malaysia, and South Korea.
The yuan-rupiah system reduces both nations' exposure to US dollar volatility while circumventing potential American financial sanctions. China gains direct access to Indonesian commodity flows, particularly nickel exports, where Chinese companies control refining infrastructure. Indonesia reduces foreign exchange costs on $135 billion annual trade while accessing Chinese technology transfers in manufacturing sectors. The framework aligns with Indonesia's January 2025 BRICS membership and China's broader de-dollarization strategy across Southeast Asia. Both countries reduce dependence on SWIFT payment systems, creating alternative transaction channels that limit US Treasury oversight of their bilateral economic activities.
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Australia Moves to Reclaim Darwin Port from Chinese Lease
Australia's government has announced plans to buy back Darwin Port from Chinese company Landbridge Group, which holds a 99-year lease secured in 2015 for the strategically located northern facility. The port hosts 2,000 US Marines conducting regular exercises and serves as critical infrastructure for rotational deployment of US bombers and fighter jets. Chinese Ambassador Xiao Qian condemned the buyback as “ethically questionable,” stating Landbridge transformed the unprofitable port through infrastructure investments.
The reclaim effort targets Chinese strategic positioning in Australia's north as Canberra expands military cooperation with Washington. Darwin Port's strategic value derives from its location supporting US defence operations and proximity to South China Sea shipping lanes. China-Australia trade reached AUD 285 billion in 2024-2025, with China representing 28% of Australia's total trade, yet security considerations are now overriding commercial relationships. Landbridge refuses to sell while maintaining normal port operations, creating diplomatic tension as Australia prioritizes strategic control over the existing lease.
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Russian Naval Base Agreement with Sudan Faces Disruption
Russia's arms-for-access naval base agreement with Sudan faces operational challenges after RSF drone strikes devastated the Flamingo Bay facility, the designated site for Russian Red Sea operations 15 kilometres north of Port Sudan. The unratified deal promises Sudan Su-30 and Su-35 warplanes in exchange for naval basing rights supporting up to 300 personnel and four ships.
The strikes threaten operational viability of Russia's planned Red Sea naval presence following Syria's cancellation of the Tartus port deal, forcing Moscow to seek alternative Mediterranean and Red Sea access. Domestic instability renders Port Sudan unsuitable for sustained Russian naval operations, while advanced air defence systems required for base protection remain undeplored due to sovereignty concerns. The agreement awaits parliamentary ratification, despite February 2025 confirmation from Sudan's Foreign Minister that terms remain agreed. Russia may accelerate alternative naval facility discussions at Libya's Tobruk port as Red Sea basing faces security constraints, while China benefits through its established Djibouti naval base controlling regional access.
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China Grants Visa-Free Access to Four GCC States
China has announced visa-free entry for nationals from Saudi Arabia, Oman, Bahrain, and Kuwait effective June 9, 2025, completing visa exemptions for all Gulf Cooperation Council members during the ASEAN-GCC-China summit in Kuala Lumpur on May 27. Beijing previously granted visa-free access to the UAE and Qatar in 2018, establishing mutual exemption agreements. The four newly covered countries maintain visa requirements for Chinese nationals, with varying durations.
The visa expansion facilitates increased economic integration as China remains the GCC's largest trading partner with $297.9 billion in bilateral trade during 2023, nearly double India's $150.4 billion. GCC crude oil exports to China totalled 4.06 million barrels daily in 2023, representing 36% of Beijing's total oil imports valued at $158.3 billion. The policy removes administrative barriers for Gulf business travellers and investors accessing Chinese markets, while strengthening Beijing's position in Middle Eastern energy corridors. China gains enhanced access to Gulf capital and energy resources essential for industrial production, while GCC states secure diversified economic partnerships beyond Western markets.
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US Launches Golden Dome Space-Based Missile Defence System
The United States announced the Golden Dome missile defence initiative this month, deploying thousands of low Earth orbit satellites integrated with terrestrial radar and kinetic interceptors to create multilayered homeland protection. The system targets incoming missiles across boost, mid-course, and terminal flight phases through a synchronized satellite constellation providing continuous global coverage. Each LEO satellite operates dual sensor-interceptor functions while establishing persistent US presence in orbital corridors.
Golden Dome abandons mutual assured destruction doctrine in favour of strategic invulnerability, compelling China and Russia to develop hypersonic glide vehicles, diversified launch platforms, and cyber capabilities targeting US command networks. The system creates alliance fractures as excluded partners question US extended deterrence commitments while included allies gain privileged access to missile defence coverage. LEO constellation presents a target-rich environment vulnerable to anti-satellite weapons and orbital debris attacks. The initiative triggers arms race dynamics as adversaries invest in shield-defeating technologies including AI-enhanced first-strike capabilities, stealth delivery systems, and orbital weapons platforms designed to circumvent US space-based defences.
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France Secures Comprehensive Strategic Partnership with Vietnam
France and Vietnam have signed 14 cooperation agreements on May 26 during President Macron's Hanoi visit. Key agreements include defence equipment cooperation, VietJet Air's $10.25 billion purchase of 20 Airbus A330neo aircraft, and Sanofi Pasteur's vaccine production technology transfer to Vietnam Vaccine Joint Stock Company. Defence cooperation establishes Vietnam-France Defence Strategy Dialogue covering cybersecurity, counter-terrorism, and officer training. Additional agreements target satellite technology deployment, nuclear energy cooperation, and port infrastructure expansion at Lach Huyen facility in Haiphong.
The agreements provide Vietnam alternative defence and technology sources, while maintaining its "Four No's" non-alignment policy that prohibits military alliances. France gains strategic positioning along Vietnam's 3,260-kilometre coastline adjacent to South China Sea shipping lanes carrying 25% of global maritime trade. Vietnam's $408 billion GDP economy offers French companies access to Southeast Asia's manufacturing corridors while reducing Vietnamese dependence on Chinese supply chains in critical sectors. The partnership enables French defence technology transfers without triggering alliance obligations, positioning Paris to compete with Beijing and Washington for influence across Indochina's strategic geography.