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This article is part of the series—Jakarta Edit 2025
The global race is on to secure semiconductors and Critical Raw Materials (CRM)—, the building blocks for the green and digital economy. Countries globally are pushing towards achieving their net-zero emissions goals. As a focal point of global dynamism and rivalry, the Indo-Pacific region is no exception. However, decarbonisation amid geopolitical tension and geo-economic competition comes with extra challenges.
The People’s Republic of China (hereafter China) dominates the world’s clean-tech supply chains. It produces about 60 percent of the world’s rare-earth elements (REE) and processes approximately 80 percent. As the world’s largest importer of critical minerals, China processes and supplies CRM to the rest of the world. REE, much like neodymium, are essential for permanent magnets that are vital for wind turbines and electric vehicle (EV) motors, the foundation of the green energy transition. China is the world’s largest producer of lithium batteries, accounting for about 60 percent of the global EV sales in 2022.
The People’s Republic of China (hereafter China) dominates the world’s clean-tech supply chains. It produces about 60 percent of the world’s rare-earth elements (REE) and processes approximately 80 percent.
Locked in a strategic rivalry with the US, China has leveraged technology, diplomacy, and exports to reshape its global role, leading to supply chain vulnerabilities for nations that depend on it. Domestically, Beijing has focused on improving the efficient use of minerals and on innovation, and has promoted a circular economy. Internationally, it has sought cooperation in mining, but also weaponised its dominant position, translating its economic capabilities into geopolitical influence. In 2010, it imposed an export ban on REE to Japan. Between 2023 and 2025, China began imposing export restrictions of strategic materials, including gallium, germanium, graphite and tungsten, as well as a ban of REE extraction and separation technologies.
Southeast Asia (the Association of Southeast Asian Nations or ASEAN), a major global economic force, is also well-endowed with critical raw resources and REE. The region is the core of several global value chains, including CRM and semiconductors, but is burdened by regional tensions that involve China.
Cumulatively, ASEAN possesses 46 percent of the world’s nickel reserves, 22.7 percent bauxite, 20 percent rare earth elements (REE), and 6.9 percent cobalt. ASEAN also leads global production for nickel (63 percent) and tin (42 percent). Indonesia, the Philippines, Vietnam, and Malaysia hold significant reserves, yet face a challenge in refining and processing these resources, relying on external actors, namely China.
At the nexus of global trade, tech supply chains and regional security, ASEAN is strategically vital to China. It has sought – and often managed – to project itself as a stable and non-aligned bloc, with proven strategic potential, balancing between great powers. With the reconfiguration of supply chains, ASEAN has emerged as a winner. It serves as a key offshore manufacturing base for Chinese and international companies. Yet, with growing rivalry and a more assertive China, balancing has become more complex.
Furthermore, ASEAN also faces a China dilemma. Economic and trade cooperation has brought benefits, but produced economic overreliance on China. ASEAN remains vulnerable, forcing some of its members, particularly the Philippines, to reevaluate relations. With claims to 90 percent of the South China Sea, Beijing’s misapplication of international law is complex, supported by statecraft to gain control over this vital strategic waterway.
ASEAN also faces a China dilemma. Economic and trade cooperation has brought benefits, but produced economic overreliance on China.
The Philippines has displayed the most evident strategic caution vis-à-vis China, shifting from quiet diplomacy to direct defiance, calling out China’s actions at international forums, strengthening military deployments and defence with the United States (US), Australia, and Japan, but also the European Union (EU). The intensity of the China Coast Guard (CCG) patrols has increased in the exclusive economic zones of not just the Philippines, but Indonesia, Vietnam, and Malaysia. Their retaliation against harassment was described as a tactical success, standing up to grey zone pressure.
Building on these dynamics while holding significant CRM and REE reserves, ASEAN countries are increasingly learning how to leverage their strategic assets to boost their regional positions, navigate regional tensions, and contribute to efforts in meeting the net-zero emissions goals.
The Philippines was China’s largest supplier of nickel ore in the first quarter of 2023 alone. Indonesia and the Philippines are the primary mining countries in Southeast Asia, with the former holding 42 percent of the world’s nickel reserves. Malaysia is the regional leader in aluminium, iron and manganese production and the second-largest source of imported ore for China behind Myanmar. Vietnam has an abundance of mineral resources, including aluminium, coal, titanium, and 18 percent of both REE and bauxite, with China as a major importer of its resources.
By pooling expertise and resources, the region can help address bottlenecks in CRM processing. ASEAN is engaged in efforts to enhance its role in the critical minerals sector, with initiatives such as the ASEAN Minerals Cooperation Action Plan (AMCAP). Their collaboration should seek to establish regional standards and create a robust supply chain network for clean technologies, working with trusted partners, such as Japan, Korea, India, Canada or Europe.
Europe can be a reliable partner for ASEAN to reinforce CRM supply chains. However, this warrants significant effort on both sides.
The EU, heavily dependent on imports of CRMs, has adopted its own policy—notably, the Critical Raw Materials Act. Its objectives include increasing the EU’s raw material extraction to at least 10 percent of its annual consumption to boost processing capacity to 40 percent. Europe also has a China dilemma. The PRC accounts for 98 percent of its supply of REEs and 60 percent of its CRMs. The 27 EU countries can only produce 9 percent of the bloc’s CRM needs.
Europe can be a reliable partner for ASEAN to reinforce CRM supply chains. However, this warrants significant effort on both sides. Europe must address the trust deficit and credibility problem it faces in the region, often seen to overpromise and underdeliver. It must start treating the region in its own right, not through the China lens. ASEAN must be clear on its expectations vis-à-vis the EU, and reinforce its internal unity and cohesion.
Key Takeaway
In the short run, there is no way around China’s dominance in the green tech sector. In order to mitigate regional tensions and avert supply chain disruptions, the EU and ASEAN must continue diplomatic efforts to manage overreliance on China. In the long run, ASEAN should seek to position itself as a leader in the green economy and build strategic alliances, including with Europe. Sustainable resource management across the region can counter resource nationalism and align perfectly with both the EU and ASEAN.
Zsuzsa Anna Ferenczy is an Assistant Professor at the National Dong Hwa University, Taiwan.
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