The Dynamics of China's Economy and Its Impact on Indonesia's Economy
Keywords:
Commodity, Economy, Consumption, Investment, Export, Import
Abstract
This study analyses the impact of China’s economic growth dynamics on Indonesia’s economy through changes in global commodity prices. As a country with significant commodity usage, China’s economic dynamics greatly influence commodity prices at the global level. These fluctuations in commodity prices, in turn, can have negative effects on the economies of poverty-exporting countries including Indonesia. This study analyses the impact of China’s real output growth on the Indonesian economy. Using simultaneous analysis, this study finds that although the effect is not direct, China’s real output growth has a significant impact on Indonesia’s economy through the global non-fuel commodity price index, with these exports accounting for 85 percent of Indonesia’s total export value. The study also found that China plays an important role in influencing global non-fuel commodity prices, where a 10 percent increase in China’s real output can raise global commodity prices by 3.99 percent.
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Raz, A. F., Indra, T. P. K., Artikasih, D. K., & Citra, S. (2012). GLOBAL FINANCIAL CRISES AND ECONOMIC GROWTH : EVIDENCE FROM EAST ASIAN ECONOMIES. Buletin Ekonomi Moneter Dan Perbankan, 15(2), 35–54. https://doi.org/10.21098/bemp.v15i2.420
Sugema, I. (2012). dan Implikasinya pada Perekonomian Indonesia th Global Financial Crisis and Its Implications on Indonesian Economy). In Jurnal Ilmu Pertanian Indonesia (JIPI), Desember (Vol. 17, Issue 3).
Sun, J. (2024). The Impact of Globalization on Chinese Economy. SHS Web of Conferences, 193, 01014. https://doi.org/10.1051/shsconf/202419301014
Sznajderska, A. (2017). The role of China in the world economy: evidence from global VAR model. www.nbp.pl
Wihardja, M. M. (2016). Challenges in energy global governing The effect of the Commodity boom on indonesia’s macroeconomic Fundamentals and industrial development.
Buckle, R.A., Kim, K., Kirkham, H.,McLellan, N., Sharma, J. (2007). A structural VAR Business Cycle Model for a Small Volatile Open Economy. Journal of Economic Model. 24, 990–1017.
Bayoumi, Tamim., Swiston, Andrew. (2007). Foreign Entanglements: Estimating the Source and Size of Spillovers Across Industrial Countries. IMF Working Paper 07/182.
Billon, Philippe Le,. Good, Elizabeth. (2015). Responding to the commodity bust: Downturns, policies and poverty in extractive sector dependent countries. Elsevier.
Dizioli, Allan., Guajardo, Jaime., Klyuev, Vladimir., Mano, Rui., & Raissi, Mehdi. (2016). Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies. IMF Working Paper 16/170.
Djaja, Komara. (2009). Impact of the Global Financial and Economic Crisis on Indonesia : A Rapid Assessment. Coordinating Ministry for Economic Affairs Indonesia.
Dungey, M., Osborn. (2009). Modelling International Linkages for Large Open Economies: US and Euro Area. JEL classification: F41, C32.
Dungey, M., Fry-McKibbin, R., Linehan, V. (2014). Chinese Resource Demand and the Natural Resource Supplier. Journal of Applied Economy. 46, 167–178.
Ebert, Laura., Menza, Tania La. (2015). Chile, copper and resource revenue : A holistic approach to assessing commodity dependence. Elsevier, Jurnal of Resources Policy 43 page 101–111.
Ekananda, Mahyus. (2013). Analisis Data Time Series. Mitra Wacana Media.
Enders, W. (2004). Applied Econometric Time Series. Wiley.
Friedman, M. (1957). A Theory of the Consumption Function. Princeton University Press.
Hoshray, Atanu., Pundit, Madhavi. (2016). The Impact of a People’s Republic of China Slowdown on Commodity Prices and Detecting the Asymmetric Responses of Economic Activity in Asian Countries to Commodity Price Shocks. ADB Economics Working Paper Series No. 493.
Gruss, Bertrand. (2014). After the Boom–Commodity Prices and Economic Growth in Latin America and the Caribbean. IMF Working Paper 14/154.
Gujarati, Damodar N. (2004). Basic Econometric. McGrow-Hill.
Gurría, Angel. (2011). China’s Emergence as a Market Economy: Achievements and Challenges. OECD.
Hanson, Gordon H., Robertson, Raymond. (2008). China and the Manufacturing Exports of Other Developing Countries. UCSD and NBER.
Hossain, Akhtar. (2006). Sources of Economic Growth in Indonesia, 1966-2003. Applied Econometrics and International Development. AEID.Vol. 6-2.
Kose, M. Ayhan., Lakatos, Csilla., Ohnsorge, Franziska., & Stocker, Marc. (2017). The Global Role of the U.S. Economy : Linkages, Policies and Spillovers. World Bank.
Krugman, Obstfeld, Melitz. (2012). International Economics. Theory and Policy. Addison-Wesley Pearson.
Mankiw, G. (2003). Macroeconomics. Worth Publishers.
Morrison, Wayne M. (2018). China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Congressional Research Service.
Nezky, Mita. (2013). The Impact of US Crisis on Trade and Stock Market in Indonesia. Bulletin of Monetary, Economics and Banking.
Osborn, Denise R., Vehbi, Tugrul. (2015). Growth in China and the US: Effects on a small commodity exporter economy. Journal of Economic Modelling 45 page 268–277.
Prasmuko, A., Anugrah, D. F. (2010). Dampak Krisis Keuangan Global terhadap Perekonomian Daerah. Buletin Ekonomi Moneter dan Perbankan.
Raz, Arisyi F., Indra, Tamarind P. K.., Artikasih, Dea K.., & Citra, Syalinda. (2012). Global Financial Crises and Economic Growth : Evidence from East Asian Economies. Bulletin of Monetary, Economics and Banking.
Roache, Shaun K. (2012). China’s Impact on World Commodity Markets. IMF Working Paper 12/115.
Romer, David. (2012). Advanced Macroeconomics. McGrow-Hill.
Sato, K., Zhang, Z., McAleer, M. (2011). Identifying Shocks in Regionally Integrated East Asian Economies with Structural VAR and Block Exogeneity. Journal of Math. Comput. Simulation No: 81, 1353–1364.
Sugema, Iman. (2012). 2008-2009th Global Financial Crisis and Its Implications on Indonesian Economy. JIPI. Vol. 17 (3): 145-152.
Stiroh, K. J. (2000). Investment and Productivity Growth: A Survey From the Neoclasiccal and New Growth Perspective. Research Publications Program Industry Canada.
Takatoshi, Ito., Sato, Kiyotaka., (2007). Exchange Rate Pass-Through and Domestic Inflation: A Comparison between East Asia and Latin American Countries. The Research Institute of Economy, Trade and Industry.
Tambunan, Tulus T. H. (2010). The Indonesian Experience with Two Big Economic Crises. Journal of Modern Economy, page 156-167.
Yuliadi, I. (2008). Analisis Impor Indonesia: Pendekatan Persamaan Simultan. Jurnal Ekonomi dan Studi Pembangunan, Vol. 9, No. 1.
Zhai, Fan., & Morgan, Peter. (2016). Impact of the People’s Republic of China’s Growth Slowdown on Emerging Asia : A General Equilibrium Analysis. Asian Development Bank Institute, Working Paper Series No.560.
Zhu, Xiaodong. (2012). Understanding China’s Growth: Past, Present, and Future. Journal of Economic Perspectives, Volume 26, Number 4, Pages 103–124.
Eichengreen, B. (n.d.). Standard-Nutzungsbedingungen: China’s Slowdown †. Korea Development Institute (KDI), Sejong, 46(1), 1–19. https://doi.org/10.23895/kdijep.2024.46.1.1
Gereffi, G., Bamber, P., & Fernandez-Stark, K. (2022). China’s Evolving Role in Global Value Chains: Upgrading Strategies in an Era of Disruptions and Resilience. In China’s New Development Strategies: Upgrading from Above and from Below in Global Value Chains (pp. 1–29). Springer Nature. https://doi.org/10.1007/978-981-19-3008-9_1
Ibrahim, I., Winarno, T., Viva, M., & Yanfitri, Y. (2014). The Regional Impact Transmission via International Trade: An ASIAN-IO Approach. Buletin Ekonomi Moneter Dan Perbankan, 16(4), 315–346. https://doi.org/10.21098/bemp.v16i4.449
Raz, A. F., Indra, T. P. K., Artikasih, D. K., & Citra, S. (2012). GLOBAL FINANCIAL CRISES AND ECONOMIC GROWTH : EVIDENCE FROM EAST ASIAN ECONOMIES. Buletin Ekonomi Moneter Dan Perbankan, 15(2), 35–54. https://doi.org/10.21098/bemp.v15i2.420
Sugema, I. (2012). dan Implikasinya pada Perekonomian Indonesia th Global Financial Crisis and Its Implications on Indonesian Economy). In Jurnal Ilmu Pertanian Indonesia (JIPI), Desember (Vol. 17, Issue 3).
Sun, J. (2024). The Impact of Globalization on Chinese Economy. SHS Web of Conferences, 193, 01014. https://doi.org/10.1051/shsconf/202419301014
Sznajderska, A. (2017). The role of China in the world economy: evidence from global VAR model. www.nbp.pl
Wihardja, M. M. (2016). Challenges in energy global governing The effect of the Commodity boom on indonesia’s macroeconomic Fundamentals and industrial development.
Published
2025-07-24
How to Cite
Aulia Keiko Hubbansyah, & Bronson Marpaung. (2025). The Dynamics of China’s Economy and Its Impact on Indonesia’s Economy. International Journal of Economics, Business and Innovation Research, 4(04), 1639-1655. https://doi.org/10.63922/ijebir.v4i04.2081
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