China-Indonesia Economic Ties: From Bandung Conference to Trade Deficit Concerns
Quick Look
- Seven decades after the Bandung Conference, China and Indonesia share strong economic ties, with China as Indonesia's largest trading partner and a top investor.
- However, Indonesia recorded a significant US$20.5 billion trade deficit with China last year, raising concerns about the displacement of domestic producers.
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Why It Matters
In April 1955, 304 representatives from 29 Asian and African nations convened in Bandung, Indonesia, to discuss principles for a more complex future world order amid the Cold War.
In April 1955, amid the Cold War, 304 representatives across 29 Asian and African nations convened in Bandung, Indonesia, to discuss the principles of a more complex future world order. Among them were India, China and host Indonesia.
Seven decades on from Bandung, China is the world’s second-largest economy while Indonesia is the largest economy in the Association of Southeast Asian Nations (Asean), which is China’s top trading partner. China is Indonesia’s largest trading partner, and it has ranked among Indonesia’s top three investors for the last five years.
Such remarkable growth in ties inevitably comes with undercurrents that must be taken seriously. Indonesia recorded a US$20.5 billion trade deficit with China last year, and some view the surge in high-quality and affordable Chinese imports as displacing domestic producers, especially in the textile and manufacturing sectors.
Open Questions
- How will Indonesia address its trade deficit with China?
- What specific policies will be implemented to protect Indonesian domestic producers?
