China's dominance isn't limited to rare earths; it accounts for 35% of global manufacturing—three times the US. This industrial might gives it the theoretical ability to apply similar coercive licensing regimes in sectors from EVs to renewable energy, posing a systemic risk.
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From China's perspective, producing more than it needs and exporting at cutthroat prices is a strategic tool, not an economic problem. This form of industrial warfare is designed to weaken other nations' manufacturing bases, prioritizing geopolitical goals over profit.
China's investment in green technology is driven less by environmentalism and more by strategic goals. By dominating renewables and EVs, China reduces its dependence on foreign oil—a key vulnerability in a potential conflict with the US—while building global soft power and boosting its GDP through green tech exports.
For 30 years, China identified rare earths as a strategic industry. By massively subsidizing its own companies and dumping product to crash prices, it methodically drove US and global competitors out of business, successfully creating a coercive dependency for the rest of the world.
China is leveraging its 90% control over rare earth processing not just against the US, but globally. By requiring licenses from any company worldwide, it creates a chokehold on high-tech manufacturing and establishes a new template for economic coercion.
China demonstrated its significant leverage over the U.S. by quickly pressuring the Trump administration through a partial embargo on rare earth metals. This showcased a powerful non-tariff weapon rooted in its control of critical mineral supply chains, which are also vital for defense applications.
While headlines focus on advanced chips, China’s real leverage comes from its strategic control over less glamorous but essential upstream inputs like rare earths and magnets. It has even banned the export of magnet-making technology, creating critical, hard-to-solve bottlenecks for Western manufacturing.
The Nexperia dispute reveals China's strategic leverage. By controlling the supply of mid-tech chips for basic car functions like airbags and windows, Beijing can cripple major European automakers, demonstrating its influence over global supply chains beyond just high-end tech.
China is restricting exports of essential rare earth minerals and EV battery manufacturing equipment. This is a strategic move to protect its global dominance in these critical industries, leveraging the fact that other countries have outsourced environmentally harmful mining to them for decades.
China's campaign against "evolution" (excessive competition) is not a broad economic stimulus. It specifically benefits sectors like EV batteries, steel, and cement where state control or rapid market consolidation can restore pricing power and profitability.
The latest US-China trade talks signal a shift from unilateral US pressure to a negotiation between equals. China is now effectively using its control over critical exports, like rare earth minerals, as a bargaining chip to compel the U.S. to pause its own restrictions on items like semiconductors.
