Will Indonesia's proposed high tariffs impact China’s rayon fabric exports?

Recently, Indonesia's plan to impose high tariffs on certain imported products has raised concerns across various sectors. (As relevant policies have not yet been implemented, please refer to official information for details). This move has sparked worries in the market about the global economy and free trade. What about the export volume and proportion of rayon fabric exports to Indonesia?

1. Escalation of trade protectionism

On June 28th, local time, Indonesia's Minister of Trade, Zulkifli Hasan, announced plans to impose protective tariffs ranging from 100% to 200% on imported products such as textiles, apparels, footwear, cosmetics, and ceramics. This decision aims to revive measures to protect domestic industries. According to the statistics bureau, Indonesia primarily imports apparel and accessories from China, Vietnam, and Bangladesh.

Indonesia is the largest economy in Southeast Asia and the fourth most populous country in the world. Data indicates that in 2023, the national GDP totaled 20,892.38 trillion Indonesian Rupiah, with a nominal growth of 6.66% year-on-year and a real growth of 5.05%. With a population of 281 million as of December 2023, Indonesia represents a potential market in Southeast Asia. Therefore, if the proposed tariffs are implemented, how significantly will this affect the export of rayon fabrics from China to Indonesia?

2. Impact on rayon fabric export market

China's exports of rayon fabrics are relatively dispersed geographically, achieving export performance to over 90 countries and regions in 2023, with the top 10 destinations accounting for 79.2% of the total. Among these, significant exports go to Mauritania, Thailand, Greece, Brazil, with Indonesia ranking seventh. In 2023, exports to Indonesia amounted to 7.823 million meters, occupying 2.9% of the total, indicating moderate direct export volume.

Exports of dyed rayon fabrics from China are even more diversified, reaching over 124 countries and regions globally in 2023, with the top 10 destinations taking up 63.3% of the total. There were more exports to Indonesia, Brazil, Mauritania, Somalia, and Myanmar. Notably, Indonesia is the largest destination, with exports in 2023 reaching 96.756 million meters, accounting for 10.4% of the total.

Exports of printed rayon fabrics follow a similar pattern, with China exporting to 130 countries and regions globally in 2023, and the top 10 destinations accounting for 58.3% of the total. There were more exports to Somalia, Kenya, Algeria, Iraq and Uzbekistan. Indonesia ranks 20th in this category, with exports in 2023 totaling 27.636 million meters, representing 1.6% of the total.

3. Conclusion

Given Indonesia's status as the fourth most populous country globally and the largest economy in Southeast Asia, the potential implementation of high tariffs could impact exports of textiles and apparels from China. This move may also increase costs of importing fabrics by Indonesian apparel enterprises. In addition, in recent years, global trade frictions and geopolitical risks have increased, impacting the stability of the global supply chain. However, due to the diversified export destinations for Chinese rayon fabrics and relatively modest direct export volume to Indonesia, the actual impact needs further observation.