Export Controls

Indonesia is finalizing a centralized export framework for crude palm oil, coal, and ferroalloys through its Danantara sovereign wealth fund vehicle, potentially affecting $65 billion in annual commodity shipments. Trade Vice Minister Dyah Roro Esti told Bloomberg an update would come within weeks, following President Prabowo's claim that Indonesia lost $908 billion over 34 years to under-invoicing and export manipulation. The policy will route transactions through a state-managed digital platform starting January 2027, raising concerns among palm oil producers about contract continuity and pricing flexibility in niche markets. Indonesian commodity-linked equities have already declined on implementation uncertainty.

Indonesian palm oil stocks tumbled after the government introduced export allocation requirements for used cooking oil and palm residues to support its B40 biodiesel program. UCO and palm residue exports from January-November 2024 totaled 3.95 million tonnes, down 13.75% from 2023. The move echoes the three-week palm oil export ban in April-May 2022 that sent global food prices spiking and weakened the rupiah. Indonesia plans to produce 15.6 million kiloliters of B40 biodiesel in 2025 and wants to prevent subsidized cooking oil from being mislabeled as UCO and exported. The world's largest palm oil producer is prioritizing domestic energy security over export revenue, tightening feedstock supply for European biodiesel plants.

Treasurer Jim Chalmers has ordered several China-linked investors to sell down their 10.4% stake in Northern Minerals, a rare earths producer with a strategic heavy rare earths project in Western Australia. The decision targets Yuxiao Fund and associates who tried to build toward 20% ownership without proper approvals, threatening Australia's effort to break China's dominance in critical minerals. Northern Minerals feeds into the government-backed Eneabba refinery with $1 billion in taxpayer funding, making any Chinese control politically impossible.

China's semiconductor companies are pivoting to AI inference chips designed specifically for token-based computing, creating unexpected winners as Western export controls reshape the market. Companies like Biren Technology and Cambricon are targeting the exploding demand for high-throughput token processing rather than competing directly with Nvidia's training chips. The token economy architecture requires different chip designs optimized for parallel processing over raw compute power, giving Chinese firms a cleaner competitive slate.

Beijing is deploying export restrictions like cruise missiles — precise, targeted, and designed to cripple supply chains before anyone notices the launch. The soaring use of trade controls signals China's pivot from global integration to strategic fragmentation, choosing economic leverage over market access. This isn't protectionism; it's weaponisation. While Washington debates TikTok bans, China is quietly strangling critical material flows to anyone who crosses it. The West built globalisation assuming everyone would play by free-market rules. China learned the rules, then wrote new ones.