One day recently an Indonesian businessman of Chinese origin was leaving his parents' shop in a village near Bandung when one of a group of youths struck him on the head with a knife, opening a deep gash. The youths later returned and robbed the shop.

"The police knew who they were, but did nothing," said the man's cousin, an Indonesian Chinese journalist here. He recalled an earlier incident in which he was robbed himself by a youth on a bus in the capital in the presence of a military policeman. When asked why he did not intervene, the policeman replied with an Indonesian expression roughly meaning, "Boys will be boys," the journalist said.

He said his cousin this month applied to emigrate to Australia.

According to members of Indonesia's Chinese minority, incidents such as these illustrate the continuing hostility of indigenous Indonesians and declining security, especially in the countryside. This attitude may even find some encourage- ment in the government's policies favoring indigenous businessmen over the Chinese and suggestions that the "hoa", or overseas Chinese, could become a fifth column.

Yet, according to Western businessmen and Indonesian sources here, the Chinese continue to dominate the economy, and some wealthy hoa entrepreneurs have even been adopting a higher profile lately. With the country facing tougher than expected economic problems including a severe revenue shortfall and serious unemployment, some observers fear that tensions could erupt in another wave of anti-Chinese violence.

There have been at least six major outbreaks of anti-Chinese rioting in the last two decades, the most recent in November 1980 in Central Java. It started in the city of Solo with a fight between an Indonesian and a Chinese youth and spread to at least nine cities and numerous villages before the Army could restore order. By then, eight persons lay dead and millions of dollars of damage had been done to Chinese-owned property and businesses.

Hostility between natives and ethnic Chinese also exists in other Southeast Asian countries, but it seems to be more pronounced in Indonesia where a small, relatively unintegrated Chinese minority of about 3 percent of the population controls as much as 80 percent of private trade.

"The Chinese control our economy from top to bottom," complained an Indonesian Moslem activist. "Government policy is to encourage the native Indonesians, but the reality is different. The Chinese are getting stronger and stronger. If you go to a Chinese restaurant, you can see almost only Chinese," he added. "Only they have money, and they show off their wealth more than they used to.

"We're not racist, but I think we should try to increase the rule of the native economy," he said. "It's impossible to compete with the Chinese because they have more experience, they cooperate among themselves and they have relations with foreign business."

"The Chinese business community is not happy" with the regulations that promote indigenous entrepreneurs, often at the expense of the Chinese, said the Indonsian Chinese journalist. "But they have accepted it as the only way to operate."

He said he felt conditions for Indonesia's approximately 4 million Chinese were "gradually getting worse" and that many Chinese fear the spread of the country"s small Moslem fundamentalist movement.

"There's a danger it can happen again," he said of the 1980 riots. "The envy is still there."

In addition to physical attacks, other complaints are that Chinese--even those whose families have lived in Indonesia for generations--are being excluded from joining the Army or the civil service. And those who are still stateless are being charged exorbitant bribes to acquire citizenship, Chinese sources said.

Much of the eminity can be traced to Indonesia's 300-year colonial period under the Dutch, who used the Chinese as middlemen to help them rule the country. Indonesians accuse the Chinese of having largely sided with the Dutch during the 1945-49 struggle for independence.

Indonesian Chinese also took some of the blame for an abortive 1965 coup attempt that the government said was instigated by the Indonesian Communist Party and China. Subsequent Army-backed reprisals against Communists took on an anti-Chinese character in some places, and about 25,000 Chinese -- both party members and noncommunists -- are believed to have died.

Today, Indonesians say, the hostility toward the Chinese also in part reflects resentment of the ruling military leaders. Many generals maintain partnerships with Chinese entrepreneurs to handle their private business interests in return for patronage and protection.

"The Chinese are like scapegoats because they cooperate with the military," said one leading dissident.

The wealthiest Chinese businessman in Indonesia, according to Indonesian businessmen and Western sources, is President Suharto's business associate, Liem Sioe Liong. He got his start by running guns and other supplies to the Indonesian forces during the independence struggle. One of his clients in Central Java was Suharto, then a young officer. The relationship blossomed to include numerous business enterprises as Suharto rose through the ranks and became president after he put down the 1965 coup attempt.

"Liem gets things done for the president," said a western executive who has lived in Indonesia for more than 10 years.

The 64-year-old Chinese immigrant's financial empire of more than 30 companies includes a flour mill monopoly, a Volvo assembly plant and the Bank Central Asia, one of the country's largest. Liem and a group of partners now also are moving to acquire the California-based Hibernia Bank.

Although his relatively modest house in Jakarta's Chinese quarter belies his wealth, Liem has a fulltime bodyguard supplied by the Army and round-the-clock surveillance of his home.

"Apart from relatively discreet tycoons like Liem, the Chinese are more visible now than I've ever seen them," said the Western executive. "I keep thinking this will lead to another anti-Chinese explosion."

"Now the Chinese are scrambling to build the tallest buildings in Jakarta, whereas before they did it in Singapore," said an American banker. "

One aspect of Indonesia's development problems is that with the work force growing by about 2 million people a year, and unemployment already at about 22 percent by Western criteria, there is an urgent need to create more jobs. "But since the private sector is mainly Chinese," a Western diplomat said, "if you allow more market forces, you run the risk of exacerbating Chinese-Indonesian tensions."