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Xi Jinping's strategy may not be about winning the GDP race but achieving dominance in critical global supply chains. By becoming central to industries like EVs, China gains geopolitical leverage, allowing it to sustain export growth and national power even if its broader domestic economy stagnates.
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For the first time, China's economic power—measured by purchasing power parity, manufacturing output, and control over critical minerals—has shifted the global power balance. This gives President Xi a stronger negotiating position than his U.S. counterpart, as China can now weaponize economic dependencies more effectively.
China countered the Iran oil crisis by shifting 1.4M barrels/day of demand to EVs and cutting overall demand by 3-4M barrels/day. This move stabilized prices, demonstrated immense control over its energy consumption, and showcased its green tech dominance as a foreign policy tool.
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 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.
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's leadership in renewables isn't just in manufacturing. It has strategically secured control over the entire supply chain—from owning international mines and refining raw ore to producing the final solar panels and batteries—giving it immense geopolitical and economic leverage.
China's economic model, driven by internal provincial competition, creates massive overcapacity. This is intentionally turned into an asset by dumping subsidized products (like EVs) into foreign markets below cost. The goal is to eliminate foreign competitors, create dependency, and convert domestic economic chaos into international power.
China's 2026 growth target of 4.5-5%, its lowest since 1991, is not a sign of failure but a deliberate strategic shift. Beijing is moving away from massive, inefficient infrastructure spending to focus capital on high-tech manufacturing, technological innovation, and supply chain self-sufficiency.
China is no longer just mirroring US trade restrictions in a tit-for-tat manner. It is now offensively mapping its own supply chains to identify and control global choke points, proactively weaponizing its dominance in critical materials and technologies to exert geopolitical pressure.
As its economy weakens, China is leveraging its near-monopoly on refining critical minerals like gallium and germanium. By imposing export controls and manipulating prices, it attempts to exert geopolitical influence and counter deglobalization, turning its supply chain dominance into a weapon to offset its decline.
