The Economic Growth and Development between China and Indonesia

INTRODUCTION

China and Indonesia are the two of Asian countries which still will record positive economic growth at a relatively high level at the time when the other countries are experiencing negative growth or at least experiencing low growth after they were affected by the global financial crisis in 2008. Cashmore (2009) explains that the China will lead production in Asia, but on the other hand, the country is not rich in natural resources, so without the help of the natural resources of other countries, it will hamper the production process. While Indonesia is the commodity and rich in natural resources, with a geographic location that is quite close to China which is about only 3,200 km. High population in the country makes the economy is not collapsed on the reducing demand from the other countries due to maintained domestic demand, which is mainly driven by public consumption remains high.

In the World Economic Outlook October 200, IMF projected economic growth of China and Indonesia in 2009 respectively to 8.5% and 4.0%. In the next few years, China’s economic growth is projected to remain high by the IMF, China’s economic growth was forecast to reach 9.0% in 2010, then increased to 9.7 to 9.8% in 2011 until 2013, but in 2014 it was projected to experience a slight slowdown to 9.5%. On the other hand, the projected economic growth in advance countries is estimated to remain low, although it was estimated to have experienced normal growth after the economic recovery after the global financial crisis (Bary 2009).

Actually, Indonesia is a country whose the economic system is not clear, many people state that Indonesia has been adopting a directed democracy or a democratic system of Pancasila but not least also those who states that the economic system of Indonesia is a economic system of capitalism even as Indonesia in the Orde Baru regime led by Suharto showed Indonesia had occasion to adopt communism economic system which actually the economic system is strongly opposed by the people at that time. Indonesia is called to adopt the traditional economic system or the directed democracy or economic system of Pancasila was true. There are many evidences that supported such words or statements. After independence and post-independence from the colonizer, the economy of Indonesia was based on the “kinship principle”.

China changes the system economy into better condition. There is no restraint on the press, giving freedom to the citizen to regulate their own economy, adding the power of local employees and officials in the refinery industry, justifying various industrialists of services and light refinery, and opening the economy to the outside trading and resurfacing. Escort prices have also been loosened. It has been realizing the exchange system which based on the communist economy to a mixed economic system communism and capitalism.

In the last few years, China has asserted further a refinement of targets and tasks of the socialist market economic system, namely a market economy in which public ownership is a main stream, as evidence that between 1989 and 2001, the number of state enterprises was dropped from 102 300 pieces into 46,800. While the number of private firms exploded from 90,000 pieces to more than 2 million pieces.

DISCUSSION

1. Identification State (location, population, system of government, economic system and map)

INDONESIA

  • Location

Geographical location is determined based on the real position compared to the position of other regions. Indonesia lies between the continent of Asia and Australia, as well as the Indian Ocean and the Pacific Ocean. Indonesia’s position is very strategic and important in relation to the economy. Indonesia is in the intersection of world traffic. Geographical location is one of the determinants that determine the future of a country in conducting international relations. Although for the time being ignored, the geography of a country is crucial for events that have an influence globally. Indonesia is located in Southeast Asia and is a member of ASEAN.

  • Population

According to projections made by the United Nations (UN) by considering the absolute population Indonesia in the future, then this country will have population of more than 250 million people in 2015, more than 270 million people in 2025, more than 285 million people in 2035 and 290 million in 2045. Only after 2050 the population of Indonesia will be reduced. According to UN projections in 2050 two-thirds of Indonesia’s population will live in urban areas. Since 40 years ago, Indonesia is undergoing a process of rapid urbanization so now about half of Indonesia’s total population lives in urban areas. This process shows a positive development for the Indonesian economy due to urbanization and industrialization will create more advance economic growth and making Indonesia as the country with the upper middle income levels.[1]

  • System administration

After the amendment of the 1945 Constitution, NKRI government system was being truly presidential. It can be identified easily after the president and vice president directly are elected by the People in a Public Election. As has been described above that the characteristics of the presidential system of government are both the executive and the legislative is directly elected by the people and there is no accountability relationship between them.

  • Economic System

Economic system implemented by Indonesia is Pancasila economy system. This means that the economic system executed in Indonesia must be based on Pancasila. So normatively Pancasila and the 1945 Constitution are the real anvil of the economic system in Indonesia.

  • Map

CHINA

  • Location

Astronomically layout: LU 180 – 540 and 750-1350 BT

Geographical location:

  1. The north borders are Mongolia and Russia.
  2. The east borders are Korea and Japan.
  3. The south borders are Myanmar, Los and Vietnam.
  4. The west borders are Pakistan and India.
  5. Population
  • System administration

In the political field, the values ​​of communism can be seen from the existence of the Chinese Communist Party (CCP) with the politburo machine characteristic which still remains in the life.

  • Economic System

China with the history Chinese and the other device of history have been known as a communist state. The Chinese economy is also implementer by the communist principle but the economy in the state has become private and described as a private company since 30 years ago. The state government is still monitoring the Chinese economy as political, especially when the state is working with other governement companies or from the banking business. If it is viewed from the political side, the Chinese economy is still controlled by the government of a particular party. China with all its advantages in terms of human resources make this country could become the leading country in every situation, especially in the economy of the country.

  • Map
  • Identification of the economic growth and development (statistics on economic growth, the labor force, GDP, quality of life, and other indicators).

INDONESIA

Economic growth and development (statistics on economic growth, the labor force, GDP, quality of life, and other indicators)

Indonesia is currently facing policy choices that are difficult. Solid growth over the past decade has pushed real development progress. According to the recent figures Indonesia is now the world’s tenth largest country in purchasing power parity adjusted (purchasing power parity adjusted). However, the risk of a slowdown in economic growth recently has increased. By the slowdown in revenue growth and increased spending on energy subsidies, this will more restrict spending which is important for the development, such as infrastructure, social security and health.

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