Chinese companies are increasingly flocking to Indonesia to establish operations and bypass hefty U.S. tariffs, with industrial land consulting firm founder Gao Xiaoyu reporting being "inundated with calls" from Chinese investors eager to expand into the Southeast Asian market.
Investment from China and Hong Kong into Indonesia surged 6.5% year-on-year to $8.2 billion in the first six months of 2025, while total Foreign Direct Investment (FDI) grew 2.58% to 432.6 trillion rupiah ($26.56 billion) during the same period.
Indonesia offers a strategic advantage over other regional competitors with its 19% U.S. tariff rate—significantly lower than China's current rates exceeding 30%—and matching favorable rates with Malaysia, Philippines, and Thailand while remaining just below Vietnam's 20%.
As Southeast Asia's largest economy and the world's fourth most populous country, Indonesia presents an attractive alternative for Chinese manufacturers seeking to access the U.S. market while benefiting from lower labor costs and robust economic growth of 5.12% in Q2 2025.
The Indonesian government has expressed optimism about continued investment momentum, expecting even more substantial capital inflows in the second half of 2025 as Chinese companies accelerate their strategic relocation to avoid escalating trade tensions.
