According to long-time China analyst James Kynge, a recent U.S.-China summit marked a historic reversal. For the first time, the U.S. president was in a position of asking for concessions, not demanding them, driven by China's leverage over critical mineral exports essential for U.S. tech and weapons.

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 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.

After initially planning a hardline stance, the second Trump administration was checkmated by China’s control over rare earth minerals. This forced a significant policy climb-down, leading to concessions on export controls and attempts to mollify Beijing.

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.

A recent showdown demonstrated China's new economic leverage. After the U.S. imposed heavy tariffs, China retaliated by threatening to restrict exports of critical minerals essential for U.S. tech and defense industries. This move successfully forced the White House to back down and significantly lower the tariffs, showcasing a shift in economic power.

For the first time in history, China's leader, Xi Jinping, is negotiating from a position of relative strength compared to the U.S. president. This power shift is driven by China's larger manufacturing base, peer-level technology, and ability to weaponize control over critical economic resources like rare earth minerals.

The U.S. readout emphasized securing rare earth supply, while China's was silent on the topic. This suggests China is holding its mineral leverage in reserve to pressure the U.S. for concessions regarding its stance on Taiwan, particularly concerning arms sales.