An Analysis of The Performance of Indonesian Natural Rubber Export Development To China

Abstract

Natural rubber is one of Indonesia’s leading export commodities, with the country ranked as the world’s second-largest producer. China, as the largest global consumer of natural rubber, plays a strategic role as Indonesia’s key export destination. This study aims to analyze the factors influencing Indonesia’s natural rubber exports to China by employing a quantitative approach using Two-Stage Least Squares (2SLS). The results show that Indonesian rubber prices, Chinese rubber prices, Indonesian rubber production, and Chinese inflation significantly affect Indonesian natural rubber exports to China. Conversely, competitor countries’ rubber production, Chinese GDP, and Indonesian export quota policies are found to be insignificant. Furthermore, world rubber prices and competitor countries’ rubber prices significantly influence Indonesian domestic rubber prices. World rubber prices and Chinese rubber demand also significantly affect Chinese rubber prices, while the price of rubber substitute products in China shows no significant effect. These findings imply that price strategies, domestic production strengthening, and macroeconomic stability in the destination country must be considered when formulating Indonesia’s natural rubber export policies. Overall, the study provides valuable insights for enhancing Indonesia’s competitiveness in the global rubber market.