INDONESIA: CAN OPPORTUNITIES BE GAINED FROM THE US-CHINA TRADE WAR?

SIANY GUNAWAN WRITES – For Indonesia, the world’s two major trading partners -China and the US- and the multiplier effects of their trade war- have intensified pressure on Indonesia’s aim to accomplish its targeted growth goal in Jakarta.

Yes, the US-China trade war could end up benefiting the Indonesian economy by investments in the resettlement or expansion of Indonesian industries away from China. Nevertheless, the President of Indonesia, Jokowi Widodo, worries about Trump’s tariffs and so has called for a realignment of policies, as well as an intergovernmental approach, to address trade deficits. Instead of competitiveness, Indonesia sees solidarity and partnership as the best choice.

To date, the US and China have placed tariffs on each other’s products worth hundreds of billions of dollars. President Donald Trump of the United States has long accused China of unfair trade practices and intellectual property theft.  China now has a strong feeling that America is attempting to suppress its growth as a world economic power.

The two largest nation’s bitter fight for trade first started when Trump set out a four-part strategy to negotiate a fair deal with China: 1) branding China a currency manipulator; 2) resolving China’s complaints regarding copyrighted works; 3) eliminating China’s use of imported goods,  as well as weak labor and safety regulations; and 4) reducing America’s corporate tax rate to increase competition within the United States.

President Donald Trump says that trade wars are good and easy to win, but it doesn’t seem that way now, for the US. But according to the Vice-President of Indonesia, Jusuf Kalla, the U.S.-China trade war could provide Indonesia with an ability to take advantage of the change in global supply chains.

Will innovations in the enforcement agreement succeed where others have failed?  A great deal will depend on China’s commitment to transform those agreements into legislation. For now, as a result of the COVID-19 pandemic, the U.S. economy is in its worst state since the Great Depression.

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