Noting that Chinese rivals often copied his designs and then undercut him on price with foreign buyers, Mahendra said he “just can’t compete with them.”
In other lines of business, however, China is helping, not hurting. With Bali’s tourism industry booming thanks to a surge in the number of Chinese vacationers, Mahendra’s Khrishna Group is planning to build a hotel on the grounds of the shuttered garment plant.
The number of Chinese visitors to Bali increased by 53 percent in the first half of this year compared with the same period last year, according to official figures, making China the second-biggest source of foreign tourists, after Australia, and an important driver of the local economy.
The boom for tour operators and bust for local garment workers are a small part of a complex relationship between Asia’s biggest and third most populous nations and help explain why many in Indonesia, which has about 240 million people, see both promise and pain in their country’s increasingly intertwined relations with its neighbor to the north.
In the seven years since Chinese Communist Party chief Hu Jintao visited Indonesia and signed a raft of economic agreements to underpin a new “strategic partnership” between the world’s biggest autocracy and Southeast Asia’s largest democracy, Indonesia’s total trade with China has more than quadrupled and China is its second-biggest trading partner, after Japan.
But what had been an Indonesian trade surplus of $800 million in 2005 became a deficit of $3.3 billion last year as electrical appliances and other Chinese goods poured into Indonesia.
After years of debate about whether Indonesian industry can survive an onslaught of Chinese products, however, concern has shifted of late from a focus on China’s seemingly relentless rise to signs that its economy is faltering and could even be heading for a crash. A recent rash of gloomy figures suggest that China, where the economy grew last year by 9.2 percent, may miss what by Chinese standards is a relatively modest target of 7.5 percent growth for this year.
The slowdown could bring some relief to Indonesian manufacturers, by bankrupting Chinese rivals, though a surfeit of unsold goods means that surviving factories in China are desperate to unload their wares — at almost any price. This makes them even tougher competitors. At the same time, Indonesia is getting hit as China cuts back on imports of Indonesian coal for power plants — Indonesia is the world’s biggest exporter of coal — and other raw materials.