Yes, Chinese investment in Indonesia is booming—and it’s not just a trickle, it’s a strategic flood.
With U.S. tariffs on Chinese goods exceeding 30%, many Chinese firms are relocating operations to Indonesia, where the tariff rate is just 19%. Indonesia is Southeast Asia’s largest economy and the world’s fourth most populous country, making it a prime market for expansion. This shift is part of the “China+1” strategy, where companies diversify manufacturing beyond China to reduce geopolitical and economic risks.
Key Sectors Seeing Investment
- Electric Vehicles & Batteries: Chinese giant CATL is investing nearly $6 billion in Indonesia’s EV battery supply chain, including plants in West Java and North Maluku.
- Industrial Real Estate: Demand for warehouses and office space has surged, with prices rising 15–25% year-on-year due to Chinese interest.
- Clean Energy: China has committed over $22 billion in green energy deals, including solar, wind, and lithium battery projects.
$8.2 billion from China and Hong Kong in the first half of 2025 alone—a 6.5% increase year-over-year. Total FDI into Indonesia reached $26.56 billion in H1 2025, with China as one of the top contributors.
Challenges Ahead
- Regulatory red tape
- Infrastructure gaps
- Ownership restrictions
- Concerns over fiscal policies under President Prabowo’s administration
Chinese investment impact on Indonesia
Chinese investments are reshaping Indonesia’s economy in powerful and complex ways—think turbocharged growth with a few speed bumps
Economic Boosts
Indonesia’s economy grew 5.12% in Q2 2025, partly fueled by Chinese capital inflows and supply chain relocations. Real estate prices in industrial zones like West Java’s Subang Smartpolitan rose 15–25% year-over-year, driven by demand from Chinese firms.
China has funded roads, power plants, and nickel factories, helping Indonesia modernize its backbone. New factories and logistics hubs are generating employment, especially in regions like Cikarang and Kendal.
In short, Chinese investment is a double-edged sword: it’s accelerating Indonesia’s rise but also testing its ability to manage growth responsibly. Still, the momentum is undeniable. Chinese companies are betting big on Indonesia’s future.
