Indonesia's trade with China grows more lopsided

Sixteen years after Indonesia and China opened up to nearly tariff-free trade, the deal is looking increasingly one-sided. Writing in The Diplomat, Fajar Hidayat reports that Indonesia's trade deficit with China, outside oil and gas, roughly doubled to US$22.1 billion in 2025. Indonesia sells more to China than before, but it buys far more back.

The gap is not just about volume, but about value. On average, Indonesia sold goods to China for about US$272 a tonne, while paying US$1,867 a tonne for what it imported. In plain terms, Indonesia has to export about seven tonnes of its goods to afford one tonne of China's. That is because most of what Indonesia sends, nickel, coal, copper ore, and palm oil, is cheap raw material, while China sends back machines, electronics, and vehicles.

One example captures the trap. Indonesia's exports of processed nickel to China jumped from US$4.5 billion in 2020 to US$15.7 billion in 2025, but China turns much of it into stainless steel that Indonesia then buys back, now meeting about 55 percent of its own steel needs. A new upgrade to the trade pact, signed in late 2025, is likely to deepen the imbalance rather than fix it.

Why it matters

A lopsided trade relationship shapes what Indonesia makes, what jobs exist, and how much wealth stays at home rather than flowing abroad. Selling cheap raw materials and buying back expensive finished goods keeps the country lower on the value ladder. Watch whether Indonesia can move into making higher-value products, or whether the gap with China keeps widening.