Following US policy moves, China is likely to expand its use of export controls on critical materials. Silver, essential for EVs, solar panels, and AI data centers, has been added to its list, signaling a willingness to leverage its supply chain dominance as a geopolitical tool against rivals.
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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.
The concept of 'weaponized interdependence,' highlighted by China's use of export controls, is driving Asian nations like Japan, India, and South Korea to implement economic security acts. This shifts investment toward domestic supply chains in critical minerals, semiconductors, and defense, creating state-backed opportunities.
The strategic competition with China is often viewed through a high-tech military lens, but its true power lies in dominating the low-tech supply chain. China can cripple other economies by simply withholding basic components like nuts, bolts, and screws, proving that industrial basics are a key geopolitical weapon.
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.
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.
Facing China's export restrictions on rare earth metals, the U.S. immediate strategy is "ally-shoring": striking a major deal with Australia. This secures the supply chain through geopolitical partnerships as a faster, more pragmatic alternative to the long process of building domestic capacity from scratch.
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.
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.
