context: Indonesia is home to the world’s largest reserves of nickel, a key battery material for the manufacture of NEVs (new energy vehicles), which has seen significant price increases and market volatility over the past year. With the booming of both China’s domestic NEV market and exports, PRC car manufacturers have been investing heavily in Indonesia’s nickel processing industry to secure control of global NEV supply chains.

A visit by Indonesian President Joko Widodo to the PRC will take place from 25-26 Jul 2022, announced Ministry of Foreign Affairs. The Indonesian leader and President Xi are expected to discuss potential topics for the upcoming G20 summit, which will be chaired by Indonesia in November 2022.

China has become Indonesia’s largest trading partner as total bilateral trade volume kept growing during the pandemic and reached $124 bn in 2021. Indonesia has been a major destination of Chinese outbound direct investment in sectors including mining, electricity and infrastructure, manufacturing and the digital economy, as well as ag and fisheries. PRC-funded Belt and Road Initiative projects in Indonesia include the Jakarta-Bandung high-speed rail and industrial parks.

Indonesia is the largest economy among ASEAN countries and has relatively well-developed industrial chains, notes Yuan Bo 袁波 Ministry of Commerce Research Institute Asia department deputy director. The Indonesian trade authority is accelerating the domestic ratification process of RCEP (Regional and Comprehensive Economic Partnership), which will create more opportunities for Chinese investment in manufacturing sectors like automobiles, steel, home appliances and electronic communications. RCEP is also expected to further expand bilateral cooperation in the maritime economy with Indonesia’s rich fishery and marine resources. In addition, Chinese internet and tech giants, including Alibaba, Tencent and JD.com, are actively entering the Indonesian market to take advantage of the country’s population dividend and great potential in the digital economy.