Analysis of The U.S.-China Trade War on Exports From Indonesia’s Key Manufacturing Sectors to China 2003–2023

Farozak Alamin; Emi Maimunah; Nindya Eka Sobita

doi:10.61132/moneter.v4i3.2323

Authors

Farozak Alamin Universitas Lampug
Emi Maimunah Universitas Lampung
Nindya Eka Sobita Universitas Lampung

DOI:

https://doi.org/10.61132/moneter.v4i3.2323

Keywords:

Manufacturing Exports, Panel Data, Random Effects Model, Trade Tariffs, Trade War

Abstract

This study examines how the US-China trade war affected Indonesia's exports of major manufacturing products to China from 2003 to 2023. The researcher used a quantitative approach with panel data consisting of 11 manufacturing sectors over 21 time periods, giving a total of 231 observations. Based on the Chow test, Hausman test, and Lagrange Multiplier test, the Random Effect Model (REM) was selected for estimation.The study includes several independent variables: trade tariffs (representing the trade war), China's GDP, Indonesia's inflation rate, the rupiah exchange rate, the Wholesale Price Index (WPI), export competitiveness (RCA), and Foreign Direct Investment (FDI).The findings reveal that trade tariffs had a negative and significant effect on Indonesia's manufacturing exports to China, while China's GDP showed no significant impact. Indonesian inflation also had a negative and significant effect, whereas the exchange rate had a positive and significant impact. Additionally, WPI, RCA, and FDI all had positive and significant effects on Indonesia's manufacturing exports to China. Overall, all variables collectively had a significant impact, with an F-statistic value of 70.43. The model explains 68.86% of the variation in Indonesia's manufacturing exports to China.

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