China Issues Danger Warning to Indonesia: Do Not Underestimate!

China’s economy lost further momentum in the second quarter of 2026, with growth slowing to its lowest level since the end of 2022. According to the latest data, China’s gross domestic product (GDP) grew by only 4.3% year-on-year in the April-June 2026 period. This figure fell short of economists’ forecasts of 4.5% and marked a deceleration from the 5% growth recorded in the first quarter of 2026. The slowdown places increasing pressure on Beijing, which had set a growth target of between 4.5% and 5% for the year, already one of its lowest targets in decades. The second-quarter data suggests the economy is facing heavier headwinds. The problem is not just slowing growth; the economic structure also appears increasingly unbalanced. While exports and industrial production remain robust, investment has slumped and household consumption has yet to recover. The biggest pressure came from investment. Urban fixed-asset investment, including property and infrastructure projects, fell by 5.7% in the first half of 2026 compared to the same period last year, a deeper contraction than the market forecast of 4.9%. Property investment plummeted by 18%, infrastructure investment fell by 2.4%, and manufacturing investment weakened by 1.2%. The prolonged property downturn remains a major problem, with home sales yet to recover strongly and many developers still under pressure. Meanwhile, local governments, burdened by debt and fiscal restructuring, are less able to drive new infrastructure projects. Household consumption also remains too weak to become a strong pillar of growth. Retail sales in June grew by only 1% year-on-year, indicating persistently weak purchasing power as households remain cautious amid income pressures, job uncertainty, and the lingering effects of the property crisis. The one bright spot was exports, which surged 27% year-on-year in June, far exceeding market expectations. This was largely driven by global demand for technology products, including chips, computers, and components related to artificial intelligence. However, the strong export performance also raises the risk of trade friction with major partners like the United States and the European Union. For Indonesia, China’s economic slowdown is a significant concern. China is Indonesia’s largest non-oil and gas export destination, accounting for 25.93% of total non-oil and gas exports in the January-April 2026 period. A sustained slowdown in China could dampen demand for Indonesian commodities and raw materials, posing a direct threat to the country’s trade performance.