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Indonesia and China Today

New Challenges with a Long History

J. Thomas Lindblad is Swedish-born but received his academic education in the United States and the Netherlands. He has been working as an economic historian at the University of Leiden since 1975 and currently holds a joint appointment at the Department of History and the Department of Southeast Asian Studies. His specialization is the modern economic history of Indonesia, in particular since independence. In recent years, he has held positions as a guest researcher/lecturer at the Australian National University in Canberra, the Hankuk University of Foreign Studies in Seoul, and the Nagoya University in Japan. His recent publications include the co-authored textbook The Emergence of a National Economy: An Economic History of Indonesia, 1800–2000 (Allen & Unwin, 2002), and the monograph Foreign Investment in Southeast Asia in the Twentieth Century (Macmillan, 1998). Address: Department of History / Southeast Asian Studies, University of Leiden, PO Box 9515, 2300 RA Leiden, The Netherlands. Email: j.t.lindblad{at}let.leidenuniv.nl

There is a lively debate about the ‘China effect’ on economies in Southeast Asia that have embarked on industrialization in recent years.Will rapid growth and structural transformation of the Chinese economy undermine competitiveness in international markets of a low-wage country like Indonesia? This contribution focuses on the new challenges faced by industrialization policies in Indonesia with specific attention given to Chinese exports of similar types of products. Statistics on trade flows and revealed comparative advantage are discussed.This article also contains a historical background referring to two separate themes. The first concerns the economic position of Indonesians of Chinese descent, which goes far back in history. What does the ‘China effect’ mean to Indonesia, keeping in mind that a significant part of the Indonesian economy is dominated by Chinese Indonesians? Second, the necessity of an accelerated industrialization is considered in the context of the extreme dependence on world markets for an economy rich in natural resources like the Indonesian one. Does industrialization in competition with China imply exchanging one type of dependence for another?

Journal of Developing Societies, Vol. 23, No. 3, 369-392 (2007)
DOI: 10.1177/0169796X0702300304


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