Geopolitics 101: China, America’s Supply Chains, and Strategic Materials

For years now, the Peoples’ Republic of China (PRC) has made it clear that it intends to displace the United States as a hegemonic power. It has taken some time, but U.S. policy makers seem to be coming around to a recognition of this reality.

Seduced by the conceit that the fall of the Soviet Union heralded the triumph of a liberal world order based on free trade and interdependence, the United States and other liberal countries opened their markets to China, believing that Beijing would happily accept the tenets of a liberal economic order and willingly “play by the rules” of that order. But despite the fatuous optimism of liberal internationalists and market fundamentalists, China remains unwaveringly committed to authoritarianism and to exploiting the international system in order to improve its position at the expense of liberal states, most notably the United States. While market fundamentalists see trade as a positive-sum game improving the position of all parties involved, Beijing treats trade as a zero-sum game in which one party improves its position at the expense of others.

Even before the COVID emergency revealed the danger of U.S. overreliance on China and Chinese-controlled supply chains, China’s refusal to play by the economic rules, its employment of massive government support for Chinese firms, and its atrocious environmental and labor standards were upending global markets. Accordingly, it pulled one key American industry and supply chain after another into its orbit, eliminating millions of U.S. jobs along the way. 

Members of both parties have become increasingly wary of maintaining the kind of deep economic integration with China that has marked the last two decades. Exploiting rare bipartisan support, the Trump Administration took steps to counter the PRC’s economic predation, stop the further erosion of critical American industries, and reinvigorate others that have been allowed to atrophy. To its credit, the Biden Administration has followed suit. 

Nowhere has the danger of China’s predation been more visible than in its vice-like grip on mineral production and processing, especially rare earth metals, the critical minerals at the heart of high technology, clean energy, and especially high-end U.S. defense platforms. In May 2019, Foreign Policy reported China “is the No. 1 producer and processor of at least ten critical minerals and metals that are essential to high-tech industries . . . giving China both an economic edge in the next high-tech industrial revolution and increasing geopolitical power.”

Critical metals include: Copper, an irreplaceable element for advanced energy technology, including electric vehicles (EVs), wind turbines, and solar panels; lithium, which is essential for producing the lithium-ion batteries used in EVs; antimony, which has applications in everything from EV batteries, wind turbines, and solar panels to semiconductor chips, iPhone screens, and energy-efficient windows; and tellurium, which is essential to solar panels. These strategic materials are key elements of semiconductor chips and solar photovoltaic cells that convert sunlight into electricity.

U.S. domestic supplies of these materials are more than adequate to sustain emerging technologies and industries but the higher cost of production has made it cheaper to import them. The United States imports more than 80 percent of these materials directly from China with much of the rest coming from counties acting as intermediaries for China. This situation provides immense geopolitical leverage to the PRC.

The confluence of China’s strategic vision for the growing importance of mining and mineral production and U.S. antipathy toward engaging in resource development has created a perfect storm. Despite vast domestic mineral reserves, U.S. reliance on imports of critical minerals has more than doubled in little more than two decades with China now the dominant supplier of 23 of 35 minerals deemed critical to U.S. interests. This situation led to corrective steps by the Trump Administration, from a 2017 executive order seeking to ensure supplies of critical minerals to a 2019 Commerce Department report suggesting ways to do so.

Confronting China’s ambitions will require a coherent plan that emphasizes the reinvigoration of U.S. mining and material supply chains. During the Trump Administration, the Pentagon placed strategic minerals at the center of the annual defense acquisition bill three years in a row, with plans to increase existing Pentagon funding of production and processing. The Biden Administration needs to follow up on these steps.

When all parties play by the rules, there is little question that free trade is more efficient than the alternatives. But to make a fetish of free trade fails to account for changing geopolitical circumstances. Support for certain essential industries is an overdue recognition of the limited ability of the market to address strategic vulnerabilities. 


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About Mackubin Owens

Mackubin Thomas Owens is a retired Marine, professor, and editor who lives in Newport, RI.

Photo: Sean Gallup/Getty Images