China using its supply chain dominance as coercive tool

Yangon, Jan 2 (IANS) China is using its supply chains and dominant control over rare earth elements (REEs) and other critical minerals as a lever to gain asymmetric leverage over global industrial networks, according to an article in Mekong News.

These 17 metals and their compounds are essential for manufacturing electric vehicle motors, microchips, precision-guided munitions and renewable energy projects.

Chinese firms control over 90 per cent of the world’s rare earth processing capacity, which it has been using to bolster its bargaining power by withholding exports even to countries like the USA.

The article highlights the fact that President Donald Trump had to ease off on the US tariff hikes against China due to Beijing withholding exports of rare metal magnets, which hit the American industry

The article states that China’s economic strategy is no longer blind to geopolitical considerations but actively incorporates coercive capability. Export controls are deployed not just as commercial regulation but as policy instruments to influence external actors.

It further points out that a recent analysis commissioned by the U.S. government itself notes that Beijing has “intensified this strategy by prioritising control over key supply chains… deploying export controls on critical minerals as a coercive tool, including to seek policy concessions in trade negotiations.”

The impact has been more than theoretical. Industries across the U.S., Europe and allied states have faced tangible disruptions. Output constraints and uncertainty over access to rare earths and associated materials have forced companies to reassess global production strategies, while governments have scrambled for alternatives, the report states.

A report from the European Union Chamber of Commerce found that over 70 per cent of EU firms in China have re-evaluated their supply chains — often shifting parts of their value chains away from China because of unpredictable export policies and market conditions.

In the U.S., industries as diverse as automotive and defence are feeling the strain. The shortages, driven by Beijing’s regulatory approach, have exposed how vulnerable key sectors remain even after years of policy attention.

The strategic use of export controls is part of a broader practice some scholars call “weaponised interdependence” — where economic networks are engineered or exploited to generate strategic advantage or coercive pressure, the article added.

sps/dan