A Tale of Two Liberalization Episodes with China: Impact on Poverty in a Developing Nation
Authors
Deasy Pane
Natanael Waraney Gerald Massie
We investigate the impact of increased trade with China on poverty in Indonesia, focusing on two key liberalization phases: China's WTO entry in 2001 and the ASEAN-China Free Trade Agreement (ACFTA) implementation in 2010. Using district-level trade exposure and an instrumental variable approach, we find that regions facing greater import competition post-ACFTA experienced faster poverty reduction, particularly driven by increased imports of raw materials and intermediate goods. However, expanded market access to China had a limited impact on poverty. Regional disparities, shaped by urbanization, education, and literacy, underscore the need for targeted policies to ensure equitable distribution of trade benefits.
