Chinese firms shift to Indonesia amid U.S. tariff pressure and local demand

Chinese companies are ramping up investment in Indonesia to avoid steep U.S. import tariffs and tap into Southeast Asia’s largest consumer market.

Dozens of Chinese manufacturers are relocating or expanding operations in Indonesia, driven by U.S. tariffs exceeding 30% on goods from China compared with 19% for Indonesian exports.

Industrial park operators and consultants in West Java say demand from Chinese clients has surged since the U.S. and Indonesia finalised a bilateral trade deal in July. “Coincidentally, all of them were from China,” said Abednego Purnomo of Subang Smartpolitan, a 2,700-hectare industrial estate.

Investment from China and Hong Kong rose 6.5% year-on-year to $8.2 billion in the first half of 2025, according to Indonesia’s investment ministry. Foreign direct investment overall climbed 2.58% to 432.6 trillion rupiah (about $26.56 billion), with officials forecasting further growth this year.

“Most Chinese firms are looking for immediate opportunities... it’s like a crash programme,” said Rivan Munansa of Colliers International.

Chinese manufacturers, ranging from toy and textile producers to electric vehicle firms, are also attracted by Indonesia’s vast population of more than 270 million. Household spending makes up more than half of GDP, which grew 5.12% in the second quarter—its fastest pace in two years.

Land and rental prices have surged as a result. Gao Xiaoyu, who runs a land consultancy in Jakarta, said industrial real estate prices rose by up to 25% year-on-year—the sharpest increase in two decades.

President Prabowo Subianto has reinforced ties with Beijing, meeting Chinese President Xi Jinping in November and hosting Premier Li Qiang in Jakarta in May.

With Chinese exporters seeking alternatives to maintain profit margins, many see Indonesia as a long-term strategic base.

“In Indonesia, it’s relatively easy to achieve net profit margins of 20% to 30%,” said Zhang Chao, a motorcycle parts maker who recently leased new office space in Jakarta.

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