China seeks stability in Indonesia's mineral policy: a key variable in ASEAN supply chain

The economic cooperation between China and Indonesia is entering a critical adjustment period. On July 19, Chinese Commerce Minister Wang Wentao and Indonesian Coordinating Minister for Economic Affairs Airlangga met in Shanghai, where Wang explicitly expressed hope that Indonesia would provide a "stable and transparent policy environment" for the mining industry. This direct appeal reflects Beijing's concerns over Jakarta's recent policy reversals and reveals how the mining policies of ASEAN's largest economy profoundly influence regional and even global supply chains.

The "Swing" Effect of Indonesia's Mineral Policy

Since President Prabowo took office, Indonesia's stance on mining permits, downstream processing, and export rules has shifted multiple times. On one hand, the government vigorously promotes the downstreaming of nickel ore, attracting companies like CATL and Foxconn to invest in battery and electric vehicle manufacturing. On the other hand, frequent adjustments to mineral export bans, local processing requirements, and tax policies make it difficult for investors to predict outcomes. For China, Indonesia is a major supplier of key minerals such as nickel, copper, and bauxite. A stable policy environment determines whether China can sustainably access raw materials to support its new energy industry and EV supply chain.

The "Two Countries, Twin Parks" and Regional Supply Chain Links

During the meeting, Wang Wentao specifically emphasized promoting flagship projects such as "Two Countries, Twin Parks." This refers to a model where China and Indonesia establish industrial parks in each other's countries, creating a two-way, linked investment pattern. This mechanism aims to deepen intermediate goods trade and industrial chain cooperation, combining Indonesia's mineral resources with China's manufacturing advantages. For example, Indonesia's nickel ore, after processing, can supply Chinese battery companies, which then sell back to Southeast Asia or globally. However, policy uncertainty is eroding the predictability of such linkages.

ASEAN Perspective: Indonesia's Policy Volatility Affects Regional Industrial Chain Integration

Indonesia is ASEAN's largest economy and a core node in the regional mineral supply chain. The stability of its policy environment directly impacts ASEAN's overall ability to attract external investment. If Indonesia frequently changes its rules, investors may turn to alternative suppliers such as the Philippines, Myanmar, or Papua New Guinea, disrupting intra-ASEAN industrial division. Meanwhile, Indonesia's ambition to become the "ASEAN EV Battery Hub" requires Chinese technology and capital support; policy fluctuations could instead push opportunities to neighboring countries like Thailand and Malaysia, which are also positioning themselves in the EV supply chain.

China's Role: From Investor to Policy Advocate

China is not only Indonesia's largest trading partner but also a key investor in its mining and infrastructure sectors. From the Jakarta-Bandung High-Speed Railway to nickel processing parks, Chinese capital is deeply embedded in Indonesia's economy. The recent public appeal by a Chinese official for policy stability indicates that Beijing is shifting from a passive response to actively shaping the investment environment. In the future, China may push Indonesia to establish a more predictable mineral governance system through bilateral dialogues, RCEP rules, or the Belt and Road framework.

Long-term Trend: The Game Between Resource Nationalism and Regional Synergy

Indonesia's tendency toward resource nationalism is not an isolated case; many ASEAN countries are strengthening resource control. However, regional economic integration requires coordination of rules among nations. China's latest statement can be seen as a "signal" to ASEAN's overall investment environment: if Indonesia's policy swings persist, Chinese capital may accelerate its diversification to other ASEAN countries, which would force Indonesia to reform but could also intensify intra-regional industrial competition.This can be seen as a "signal transmission" to the overall investment environment in ASEAN: if Indonesia continues to waver in its policies, Chinese capital may accelerate its dispersion to other ASEAN countries, which will force Indonesia to reform and may also intensify industrial competition within the region.

Overall, the transparency of Indonesia’s mineral policies not only concerns the investment returns of Chinese enterprises but also affects the maturation speed of ASEAN’s electric vehicle supply chain and the regional division of industrial labor. As the global energy transition accelerates, whether Indonesia can balance sovereign interests with open cooperation will become an important touchstone for the process of ASEAN economic integration.