China has issued a multi-billion-dollar warning to the Indonesian government amidst the economic escalation across the global electric vehicle (EV) supply chain, Financial Times reports. According to a diplomatic letter obtained by the Financial Times, the Chinese Embassy in Jakarta warned the Ministry of Energy and Mineral Resources (ESDM) that $50bn of vital industrial investments face immediate risk due to recent regulatory shifts.

The sudden friction strikes at the heart of the world's green energy pipeline.

As the Prabowo Subianto administration deploys populist resource nationalism to claw back state revenue, China is warning that arbitrary mining quota cuts and aggressive pricing interventions are severely destabilising the nickel sector in Southeast Asia’s largest economy. Because Indonesia controls more than two-thirds of the global refined nickel supply, any sustained operational shutdown threatens to trigger widespread price shocks for international EV battery manufacturers.

The diplomatic document outlines deep structural damage rippling through Chinese-funded industrial parks across Sulawesi and Maluku. The embassy confirmed that the Ministry's newly deployed pricing mechanisms and restricted mining production quotas (RKAB) have triggered an unsustainable economic squeeze.

The cost of processing the specialised high-grade nickel ore required for EV battery chemistry (HPAL/MHP lines) has skyrocketed by nearly 200%, directly threatening the operational viability of almost every active refinery project in the country. China estimates the current regulatory framework directly endangers $30bn in active, brick-and-mortar investments alongside $20bn in planned future project capital.

If processing lines are forced to go dark due to high ore costs, Indonesia’s annual high-value nickel exports could plummet by an estimated $23bn, while threatening up to 400,000 industrial jobs across the domestic supply chain.

The Chinese outcry surfaces as the Prabowo administration faces growing international resistance over heavy state interventions into the private resources sector. The regulatory pressure was met with an even sharper rebuke in May, when the China Chamber of Commerce in Indonesia filed an official grievance directly to President Prabowo. The chamber stated that businesses are facing excessively stringent regulation and law enforcement that have severely disrupted normal day-to-day operations and directly undermined long-term foreign direct investment (FDI) confidence.

An executive at a major Chinese mining house echoed these concerns, telling reporters in Indonesia that Chinese firms feel targeted and treated unfairly - especially after pouring billions into building local infrastructure. He reportedly went on to warn that a significant volume of upcoming capital projects could now be frozen until the Indonesian government restores legal predictability.

Following the meeting, Energy and Mineral Resources Minister Bahlil Lahadalia maintained a firm state position, telling the media that while the government wants foreign refineries to survive, Indonesia must maximise its sovereign wealth.

"We will not interfere with anyone’s business here, as long as they operate legally," added Finance Minister Purbaya Yudhi Sadewa, directly alleging that several unnamed operators were engaging in illegal mining bypasses.

With mainland China and Hong Kong having funneled $18.1bn into the country last year, followed by an additional $4.9bn in Q1 2026, Indonesia is betting that its absolute monopoly over the world's nickel supply will force Chinese capital to accept lower profit margins and higher state tax burdens.