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[Kavi Sampson, Shongjog columnist]

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In his recent research paper for the Hinrich Foundation, Stewart Paterson examines China’s strategy for securing critical minerals through domestic management and overseas investments, particularly in Southeast Asia. He highlights both the opportunities and challenges this presents for ASEAN countries as they navigate global supply chains and relationships with major powers.

This commentary aims to very briefly discuss Paterson’s findings and their broader implications for regional economic sovereignty.

The intricate dynamics of global mineral supply chains are coming to the fore, with China’s strategic maneuvers highlighting both the vulnerabilities and opportunities for Southeast Asian nations.

As detailed in Stewart Paterson’s research paper published by the Hinrich Foundation, China’s aggressive investment in critical minerals—particularly in resource-rich Southeast Asia—illustrates a broader geopolitical chess game.

Deng Xiaoping’s quip about China’s rare earths contrasted with the Middle East’s oil underscores a fundamental truth: control over essential resources is a cornerstone of economic and geopolitical power.

China’s heavy investment in its domestic extractive industries, coupled with state subsidies and a light regulatory environment, has allowed it to dominate the critical minerals market. This approach has not only ensured supply security but has also drawn criticism from other global economies, which see it as a form of state capitalism that can undermine fair competition.

The influx of Chinese foreign direct investment (FDI) into Southeast Asia, particularly in Indonesia, has transformed local markets. While these investments bring economic benefits, they also pose significant risks.

Domestic miners, stripped of export options due to Indonesia’s raw nickel export ban, find themselves at the mercy of Chinese processors, often selling at below-market prices. This scenario raises serious questions about sovereignty and the long-term sustainability of resource extraction. Local communities are increasingly voicing concerns over environmental degradation and the economic pressures stemming from over-exploitation.

However, as Paterson notes, the strategic competition between the EU, US, and China for critical minerals presents Southeast Asian nations with a pivotal opportunity.

The demand for minerals required for green technologies and electronics can empower ASEAN states to negotiate favorable long-term supply contracts. By doing so, these nations can not only secure better economic terms but also enhance their agency in the global supply chain, allowing them to navigate their relationships with major powers more effectively.

The evolving landscape calls for a careful balance: ASEAN countries must leverage their mineral wealth while ensuring that the terms of engagement with global powers safeguard their economic interests and environmental integrity. This delicate negotiation could redefine the region’s role in the global economy, granting it a voice that extends beyond mere resource extraction.

The interplay of Chinese investments and local responses in the critical minerals sector as detailed by Stewart Paterson in the Hinrich Foundation’s research paper reveals a crucial moment for Southeast Asian nations.

By seizing the initiative, they can transform potential exploitation into a strategic advantage that fortifies their sovereignty and enhances regional stability in the face of global economic competition.