China Destroyed Pak Jokowi Don’t Worry, This Country Replaces!

Widya Finola Ifani Putri & Cantika Adinda PutriCNBC Indonesia


Monday, 15/05/2023 09:55 WIB

Photo: CNBC Indonesia/Muhammad Luthfi Rahman

Jakarta, CNBC Indonesia – The reopening of China’s economic activity after 3 years of lockdown, did not necessarily bring the economy of this Bamboo Curtain Country up.

BCA Chief Economist David Sumual explained that 25% of China’s economy comes from domestic demand, while the remaining 75% comes from exports, especially manufacturing exports.

However, the manufacturing sector in China is currently experiencing a contraction. This is a yellow light for the Chinese economy because manufacturing contributes 33% to China’s economic growth.

China’s manufacturing purchasing managers’ index (PMI) in April was recorded at 49.2, down from the previous month’s 51.9 and at its lowest level since December 2022.

What is currently happening in China, said David, is that the Bamboo Curtain country is carrying out “cleansing” alias dumping as China’s move to restart their economic activities in early 2023.

“For various sectors such as chemicals, spare parts, they are dumping them in many countries. That’s what causes the price level to fall. One of the contributions to global inflation (which has decreased) is China’s warehouse clearance,” David explained to CNBC Indonesia, Friday (12/ 5/2023).

The transmission line or the economic impact of China to Indonesia is through the trade route. However, it will not have a significant impact on Indonesia’s trade balance. This is because trade transactions between Indonesia and China are still in deficit.

Based on data from the Central Statistics Agency (BPS), throughout 2022 China will be one of the countries contributing to Indonesia’s largest trade balance deficit after Australia and Thailand.

Indonesia recorded a deficit with China of US$3.61 billion, the largest in the commodities of machinery/aircraft mechanics, electrical machinery/equipment, as well as plastic and plastic goods.

Precisely this dumping by China, said David, can bring its own blessings to Indonesia, because usually semi-finished goods that are needed, can be purchased at low prices.

“For growth, the cost is cheaper, if you want to wholesale commodities it is relatively cheap because the prices are subject to adjustments. Such as prices for building materials, spare parts, to chemicals,” explained David.

A similar sentiment was conveyed by Indef Executive Director Ahmad Tauhid, who said that the slowdown in China’s manufacturing would not significantly affect Indonesia’s trade balance.

“The effect on us is still relatively small, because the economy is starting to move, the industry is moving, and the impact has not been felt,” said Tauhid when contacted by CNBC Indonesia.

Nevertheless, according to Tauhid, Indonesia will not be able to get away from being tied to China, because a lot of investments coming into Indonesia come from China, plus China is one of the largest creditors or creditors for almost all countries in the world.

However, from a trade perspective, Indonesia should be able to seek new market share outside of China, and the market that can replace China, according to Tauhid, is India.

“India has a chance, because the market is big, the economy is stable above 6%, the consumption is big and the import trend with us is not bad. The market is the same, the economic growth is good,” he said.

Economist at the University of Indonesia, Fithra Faisal, also said that although currently Indonesia is not so dependent on China, Indonesia can still pursue potential markets that have not been exploited so far. As in South Africa and Latin America.

In South Africa, such as in Senegal, Ivory Coast, Nigeria, and several other traditional markets. In Latin America there are Brazil, Peru, Argentina. Also according to Fithra, what Indonesia can try to enter the market is India.

“We are not very dependent on China. But we have to pursue potential markets that we have not used so far,” said Fithra.

Watch the video below:

BPS: April 2023 Trade Balance Surplus Reaches USD 3.94 Billion


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2023-05-15 02:55:21

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