- Indonesia’s manufacturing, inflation and trade indicators improved, with China’s manufacturing recovery likely supporting exports, industrial activity and demand for Indonesian commodities.
- However, growing trade deficits and CNY settlement create an increasingly asymmetric relationship, exposing Indonesia to greater currency risks and dependence on Chinese manufactured goods.
- Chinese manufacturing investment and Panda bonds could help rebalance ties by strengthening domestic supply chains, capturing more value and addressing Indonesia’s structural CNY funding needs.
