The US-China trade war has posed economic challenges globally, especially for third-party countries like Indonesia, which maintains a neutral "free and active" foreign policy. This paper examines how Indonesia’s neutrality supports its economic development by maintaining balanced trade relations, increasing foreign direct investment (FDI), fostering strategic partnerships, and stabilizing its currency. Employing a qualitative methodology based on secondary data from government reports, trade statistics, and peer-reviewed studies, the findings reveal that Indonesia’s neutrality allowed it to sustain vital trade ties with both the US and China, attract significant investments through initiatives like the Belt and Road Initiative (BRI) and the Comprehensive Strategic Partnership (CSP), and position itself as a preferred destination for manufacturers relocating from China. This strategy contributed to a trade surplus with the US, reduced deficits with China, and enhanced the stability of the Rupiah. The results highlight the effectiveness of neutrality in fostering economic resilience and growth, offering a blueprint for other developing nations. To optimize these benefits, Indonesia must address regulatory and infrastructure challenges to solidify its economic foundation further.