Indonesian Ferronickel Plant Highlights Tighter Supply Chain Integration in Asia

Illustration: Tang Tengfei / Global Times

Indonesian President Joko Widodo on Monday inaugurated a new ferronickel plant invested by a Chinese company in the southeastern province of Sulawesi. In addition to creating local jobs and increasing taxes and foreign exchange reserves, the $ 2.7 billion project will vastly improve the resource-rich country’s status in the global value chain.

Indonesia is the world’s largest supplier of nickel. According to statistics, 22-24% of the world’s nickel demand comes from Indonesia. In order to strengthen the country’s position in the value chain, in 2020 the Indonesian government banned the export of nickel ore and encouraged foreign companies to invest in local smelters. This was followed by the Chinese company Jiangsu Delong Nickel Industry which won the project.

According to a statement from the Indonesian government, the plant is capable of processing 13 million tonnes of nickel ore per year. Nickel is a key raw material for the manufacture of stainless steel, batteries and electric vehicles (EVs).

After production starts, the Indonesian nickel plant will undoubtedly provide strong support to the global industrial chain, especially the growing electric vehicle industry.

Persistent supply chain disruptions continue to hamper the global economy. The nearly year-long global semiconductor chip supply crisis is causing more economic losses from the auto and home appliance industries to more sectors such as medical equipment. The global supply chain uproar is expected to last until 2023, according to the Wall Street Journal.

Objectively speaking, the main cause of the current global supply chain crisis is the fallout from the COVID-19 pandemic, but it is clear that the protectionism and “decoupling” measures led by the US government and the small clicks of his close allies can not shirk the blame.

In order to restrict the development of China’s high-tech industries, the United States relentlessly imposed restrictions on dozens of Chinese companies under the pretext of protecting their “national security.” In addition to banning US tech companies from doing business with Chinese companies, the US has used long-armed jurisdiction to arbitrarily interfere with foreign companies’ normal trade agreements with China, severely disrupting the global supply chain. .

Another culprit for supply chain problems is former US President Donald Trump’s higher tariffs against China and other major economies.

The recent moves by the Biden administration to remove punitive tariffs on steel and aluminum from the EU were just a political maneuver to win over its allies, rather than correct the flaws of its predecessor.

U.S. tariffs imposed on hundreds of billions of dollars on Chinese products continue to harm the interests of U.S. consumers and businesses, while exacerbating supply chain distortions. The global supply chain crisis sounded the alarm bells for US “decoupling” and protectionism long ago, but Washington is determined to follow the wrong path.

The US government recently halted US chipmaker Intel’s plan to build a silicon wafer manufacturing plant in Chengdu, southwest China’s Sichuan province. As the so-called US Xinjiang law sparks anger and anger among Chinese consumers and businesses, Intel’s recent declaration of “not sourcing from the Xinjiang region” has severely damaged its brand image .

The deliberate campaign by the United States to block cooperation between American technology companies and China is creating opportunities for companies in Asian countries. China’s State Administration for Market Regulation (SAMR) last week approved South Korean chip company SK Hynix Inc’s $ 9 billion buyout deal with Intel following review antitrust.

Today, economic globalization has penetrated all areas of production, circulation and consumption. Any attempt at “decoupling” from China is unrealistic and will inevitably be sanctioned by the laws of economics.

Whether the United States is willing to accept it or not, the integration and modernization of the Asian industrial chain is accelerating. With the entry into force of the RCEP, the largest free trade area in the world, in early 2022, the economic integration of the most dynamic region in the world will accelerate its pace. The petty actions of the United States to divide and undermine regional cooperation are doomed to failure.

It is hoped that policymakers in the United States and its allies can correct their mistakes, keep up with the trend of globalization, and work with other countries to take practical steps to address global supply issues and promote post recovery. -COVID.

The author is a journalist at Global Times.bizopinion@globaltimes.com.cn

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