Impact of China's Economic Slowdown on Indonesia, Purbaya Takes Action

Jakarta, CNBC Indonesia - Finance Minister Purbaya Yudhi Sadewa is not overly concerned about the effects of the slowdown in the economy of one of Indonesia’s key trading partners, China, and its impact on domestic economic activity. He says that the majority of Indonesia’s economic activity is driven by domestic demand, accounting for about 90%, while the remainder is derived from external sources, such as exports to major trading partner countries like China. ‘If I protect the 90%, the 10% that slows down isn’t too bad,’ Purbaya said when he was met in his office in Jakarta, on Friday (6 March 2026). Nevertheless, Purbaya did not simply let China’s current economic slowdown affect Indonesia’s export performance. He asserted that steps would be taken to ensure Indonesia’s export competitiveness in that country remains high, such as providing stimulus assistance to exporters. ‘So our market potential there still exists as long as we are smart about maintaining the competitiveness of our products. Later we will help exporting companies to compete more effectively in the global market, through LPEI and other instruments we have,’ he explained. As is known, the Chinese government had just announced a lower growth target for its economy, the lowest in three decades. This condition could have a large impact on Indonesia’s economy. The announcement was delivered during the annual Two Sessions, the two most important political forums in China, covering the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC). In this forum, the direction of China’s economic and political policy and development priorities are usually announced to the public and the international community. On that occasion, the Chinese government set this year’s GDP growth target at around 4.5% to 5%. The target was announced directly by Prime Minister Li Qiang, the second-highest official in China, as he read the government work report at the opening session of the National People’s Congress at the Great Hall of the People in Beijing, on Thursday (5 March 2026). That target is the lowest since 1991, and marks the first downward revision of China’s economic growth since 2023. China’s economic slowdown cannot be taken lightly by Indonesia. After all, China remains Indonesia’s largest trading partner. According to data from the Central Statistics Agency (BPS), China is Indonesia’s largest export market for non-oil and gas, with a value of US$64.82 billion or about 24% of total non-oil and gas exports in 2025. Meaning, when the Chinese economy slows, the fastest impact is usually felt in demand for Indonesian exported goods. Senior economist and former Finance Minister Chatib Basri has warned that the impact of China’s slowdown on Indonesia is quite real. According to his calculations, every 1% slowdown in China’s economy can shave around 0.3% off Indonesia’s growth. This occurs because China is Indonesia’s largest trading partner, so economic weakness in that country will directly affect Indonesia’s export performance and ultimately curb domestic economic growth.