On April 17th, Hannover Messe, known as the “global industrial vane”, officially opened. Hannover Messe was cancelled in 2020 due to COVID-19 epidemic, and the exhibition scale was greatly reduced in 2021 and 2022 due to epidemic control measures.
The theme of this exhibition is climate-friendly industrial production, and environmental protection technology, energy efficiency improvement and industrial application of artificial intelligence technology are all included in the key topics of the exhibition.
However, there is an undercurrent behind the politically correct theme of environmental protection. In particular, the opening speeches of German Chancellor Angela Scholcz and Indonesian President joko widodo, the guest of honor of this exhibition, pointed to the sensitive topic of reshaping the global supply chain.
Germany-Indonesia FTA is ready to come?
When Germany, which is based on the automobile industry and takes environmentalism as the mainstream of public opinion, and Indonesia, which has the largest nickel resources in the world, appear on the same stage, the electric vehicle industry chain is undoubtedly an unavoidable topic.
Indonesia’s proven nickel reserves total 21 million tons, equivalent to a quarter of the global reserves. Nickel, as an indispensable raw material of ternary lithium battery for electric vehicles, has become a problem that automobile manufacturing countries must face when rebuilding their supply chain in the era of electrification.
Scholcz said in his opening speech: “I am committed to promoting the establishment of the EU- Indonesia Free Trade Agreement”. If the EU and Indonesia can make progress in establishing a free trade area, this market covering more than 700 million people will become one of the largest free trade areas in the world. The two sides started negotiations on a free trade agreement as early as 2016, but reached an impasse after the 11th round of negotiations in 2021.
Scholcz explained this without hesitation: “If more industrial export processing links can be established in raw material mining countries, it will not only create more wealth for the local area, but also have more than one raw material supplier in the future. At present, all countries are committed to reducing their dependence on specific suppliers. “
Germany’s dependence on China, the world’s largest producer of automotive power batteries and the largest country in rare earth resources, is undoubtedly the key to the Berlin government’s anxiety. When talking about reshaping the supply chain, Scholcz said: “We have imported many products from China, but in fact, rare earth, copper and nickel are not mined locally, but in Indonesia, Chile or Namibia. We are working hard to change this situation. “
De-risk rather than decoupling is a new term put forward by Scholcz.
Scholcz’s new concept was greatly welcomed by Indonesian President Joko, who called on German enterprises to “join the wave of climate-friendly economic transformation” and increase their direct investment in Indonesia.
Indonesia, which has huge nickel reserves, has always been dissatisfied with its position as a pure resource mining country, trying to use nickel as bait to attract international capital investment and establish its own electric vehicle industry chain.
In 2020, the Zoco government issued a ban on the export of nickel ore, allowing only nickel processed products to be exported overseas. Stimulated by the ban, Indonesia’s nickel processing exports soared to more than 30 billion US dollars in 2022, and successfully signed production agreements with multinational companies such as Hyundai Group and LG Group for more than 15 billion US dollars.
However, compared with Japanese and Korean enterprises, Chinese-funded enterprises are more important in Indonesia’s local nickel industry chain. China is not only the largest exporter of Indonesia’s nickel processing products, but also contemporary Ampere Technology Co., Ltd., Qingshan Group, Huayou Cobalt, Weiming Group and Zhongwei New Materials are all major overseas investors who directly invest in the construction of production bases in Indonesia.
Zoco has indicated that it will extend the export ban to bauxite, another major resource in Indonesia, in June this year, and consider adding unprocessed tin and copper to the list in the future.
German industry losing its competitiveness
Compared with Scholcz, who has always “retreated”, Siegfried Russwurm, president of the German Industry Association, clearly warned at the opening ceremony: “Germany’s competitiveness is disappearing, and Germany is in danger as an industrial production area. German companies now need to think twice when investing, and many companies have turned their attention to North America. “
At the 90-minute opening forum, Karl Haeusgen, Chairman of VDMA of German Machinery Manufacturing Association, and Gunther Kegel, Chairman of German Electronic and Digital Industry Association, also expressed their concerns about the prospect of German industrial competitiveness. In addition to innuendo, the three industrial representatives also expressed the great attraction of the US Inflation Reduction Act to German enterprises, including excessive energy prices, excessive bureaucracy and excessive labor prices.
Contrary to Scholcz’s speech, Siegfried Russwurm expressed a negative opinion on the German Chancellor’s “de-risk” policy: “An important part of our advantages comes from globalization. There are risks, but I can’t understand how things would be better without trade with China. “
Gunther Kegel, who represents the electronics industry, put it more bluntly: “If we can only purchase raw materials from Germany and Europe, then we will fail.”
According to the forecast of German Industry Association, German GDP will maintain zero growth this year, and exports will increase by about 2%. Considering that the International Monetary Fund predicted that the global economy would grow by 2.8% in 2023, “we will lose the world market share again because our growth rate can’t keep up with the world level”, Siegfried Russwurm said.