In a strategic move that mirrors U.S. efforts to restrict China’s technological rise, Beijing has announced new rules that could significantly impact the global supply chain. Under these regulations, any product that contains Chinese rare earth elements—regardless of where it’s manufactured—will require Chinese approval before being exported. This shift gives China sweeping control over key materials essential to modern technology and defense systems, including those used in smartphones, electric vehicles, and advanced military equipment.
The United States has, for years, pursued economic measures aimed at slowing China’s ascent, including bans on semiconductor exports and blacklisting Chinese tech firms. In response, China is now leveraging its dominant position in rare earth refining. While the minerals themselves are not uniquely found in China, the country currently refines roughly 85% of the world’s supply and nearly all of the high-grade materials necessary for advanced electronics and defense applications.
President Donald Trump reacted swiftly by threatening 100% tariffs and signing a rare earth agreement with Australia. However, experts argue that this may have limited impact since most global manufacturing occurs outside the U.S. and is still reliant on Chinese rare earth materials. Sean Rin, founder of the China Market Research Group and a long-time U.S. expatriate in China, emphasized that this policy is not an unprovoked act of aggression, but a retaliatory response to years of American restrictions.
Rin notes that while the U.S. suffers from inflation, China is battling deflation, with consumers holding back on large purchases in anticipation of falling prices. The trade war, which began in earnest in 2018, has resulted in significant economic disruptions on both sides. Rin also highlighted the strategic misstep of trying to isolate China, which has only accelerated its domestic innovation. Chinese firms like Huawei and domestic chipmakers have rapidly advanced, narrowing the technology gap despite continued U.S. export controls.
As China shifts its export markets toward Asia and the Global South, its dependency on U.S. trade has diminished. In 2017, 17% of China’s exports went to the U.S.; that figure has now dropped to about 12%. Meanwhile, China is becoming the primary technology partner for many countries across Asia, the Middle East, and Africa, bolstered by distrust in the U.S. stemming from its use of economic tools like SWIFT and export bans.
The underlying issue, according to Rin and others, is the U.S. reaction to a rising China. Rather than competing through innovation and investment at home, American policy has largely focused on containment. Rin argues that this approach is not only ineffective but counterproductive, spurring China to become more self-reliant and undermining U.S. economic influence.
Cultural and ideological differences further complicate the relationship. While Americans often view liberal democracy as the only viable political system, many in China respect American values and education, yet prefer their own system’s long-term planning and stability. U.S. political cycles, marked by frequent policy reversals and short-term thinking, contrast with China’s decades-long strategic planning.
Despite ideological divides and geopolitical competition, Rin suggests that collaboration, not confrontation, offers a more constructive path forward. Rather than labeling China an enemy, the U.S. should focus on strengthening its own capabilities—revitalizing domestic manufacturing, securing critical supply chains, and fostering innovation. Only then can it effectively compete in a global landscape increasingly shaped by a confident and technologically advancing China.
