Welcome to the 82ed edition of our weekly newsletter! I’m Chenghao Sun, a fellow with the Center for International Security and Strategy (CISS) at Tsinghua University, Council Member of The Chinese Association of American Studies, a visiting scholar at Yale Law School in 2024 and Munich Young Leader 2025.
ChinAffairsplus is a newsletter that shares articles by Chinese academics on topics such as China’s foreign policy, China-U.S. relations, China-Europe relations, and more. This newsletter was co-founded by my research assistant, Xueyu Zhang , and me.
Through carefully selected Chinese academic articles, we aim to provide you with key insights into the issues that China’s academic and strategic communities are focused on. We will highlight why each article matters and the most important takeaways. Questions and feedback can be addressed to sch0625@gmail.com
Today, we have selected an article written by SUN Haiyong on the Return of Geopolitics, International Competition for Critical Minerals and Supply Chain Restructuring.
Summary
The shifting power balance among major powers is intensifying global geopolitical competition, leading to restructuring pressures for the global supply chains of critical minerals. During this period, the priority of major powers on critical mineral supply chains has shifted from efficiency to security. The energy transition process, which relies on critical minerals, is increasingly linked to the geopolitical competition among major powers. Additionally, the critical mineral supply chain policies pursued by the United States and its key allies, as well as some mineral-rich countries, are motivated by “resource nationalism”, and misaligned with their respective industrial endowments. All these factors are shaping the critical mineral development and cooperation policies of raw material-importing and end-product-consuming countries, as well as major mineral-rich countries.
In the process of geopolitical return, Western countries led by the United States are attempting to build critical mineral supply chains that significantly reduce China’s influence and limit China’s rise. Meanwhile, some mineral-rich countries, particularly those in the Global South, are striving to maximize their resource benefits. On one hand, as this strategic competition unfolds, Western countries face difficulties in restructuring critical mineral supply chains due to domestic industrial conditions and the global industrial development landscape. On the other hand, the industrial autonomy of mineral-rich countries in the Global South continues to grow, as they benefit from China’s significant rise in national power and its support for their country. The influence of mineral-rich and mineral processing countries in the Global South within the international division of labor for critical minerals is also steadily increasing. In the future, industrial cooperation among mineral-rich and processing countries in the Global South, along with partnerships between these countries and select Western enterprises, could enable the Global South to build new critical mineral supply chains in certain mineral sectors, significantly reducing U.S. influence.
Why it Matters
In the third decade of the 21st century, the global political and economic landscape is undergoing its most profound systemic transformation since the end of the Cold War, asgeopolitical forces reassert their dominance over the international order in new ways. This process is vividly mirrored in the domain of supply chains. The global production chain system, once constructed by the neoliberal globalization narrative as a “depoliticized” arena, is experiencing a historic turning point where nations reshape value chains through the lens of national security and restructure production networks based on strategic competition.
Existing scholarship delineates the landscape of international competition on critical minerals through three primary lenses. First, the securitization theory perspective posits that the United States, experiencing hegemonic anxiety due to its inability to establish a “core-periphery” structure, frames China as a threat through securitizing discourse and policies while building institutionalized policy networks with its allies. Second, the geopolitical and power competition perspective argues that geopolitical shifts and the pandemic have exacerbated mutual distrust, intensifying competition centered on supply chain resilience. The U.S.and other West countries are restructuring supply chains under the banner of “de-risking,” driving shifts in geo-trade blocs and steering globalization toward compartmentalization and bloc-formation through club-based partnerships. Third, the geo-economic perspective highlights China’s heavy reliance on Pan-South China Sea nickel resources, which faces challenges from containment, political risks, and resource nationalism, even as China promotes regional cooperation and production network coupling. Concurrently, Latin American countries utilize asymmetric dependencies to enhance their agency, striving to translate resources into developmental autonomy, although the limits of this translation are determined by a trilateral game and vary across different mineral types. Meanwhile, the United States attempts to counter China’s dominance through geo-economic strategies.
While highly insightful, the corporate literature doesn’t fully grapple with the contradictions between competitive drivers and the holistic roles played by countries across various nodes of the supply chain, thereby limiting a systemic understanding of restructuring prospects. In reality, the driving factors are complex and contradictory. Although great power competition is the primary narrative, the policies of countries positioned at different nodes are just as important. This article breaks new ground by systematically assessing the structural limits on Western ambitions to restructure supply chains. It also explains why the Global South is steadily gaining influence across all nodes of the critical mineral supply chain.
Key Points
1. The Return of Geopolitics and the Dynamics of International Competition over Critical Minerals
Under the globalized division of labor, the critical mineral supply chain once took the form of a geo-economic competitive landscape, characterized by deep cooperation among resource-rich nations, processing nations, and downstream manufacturing/consuming countries. In contrast, geopolitical competition over critical minerals is now reshaping the industrial landscape through policy declarations, alliance-building, and coercive pressure—aimed at decoupling from “over-dependence” on rivals. Since the second decade of the 21st century, critical minerals have increasingly become a pivotal factor in geopolitical rivalries, with both geopolitical and geo-economic logics jointly shaping national policy orientations.
From Efficiency Supremacy to Security Primacy
Current supply chain adjustments are driven by a dual logic: first, the “power-security” logic under which the U.S. and the West promote domestic substitution and intra-alliance or friend-shoring circulation; second, the principle of efficiency optimization, which still exhibits path dependency on non-sensitive sectors. The spatial distribution of critical minerals across various stages is highly uneven, categorizing nations into three archetypes: mineral-exporting countries, import-dependent processing countries, and downstream manufacturing/consuming countries—with China positioning itself as a major import-dependent processing powerhouse. The current processing landscape is a market-driven outcome of developed nations downsizing their metallurgical capacities during globalization, while China scaled up capacity by leveraging factor endowment advantages. However, perceiving China’s industrial upgrading as a threat to the Western-dominated international division of labor, the U.S. and the West have begun to redefine what supply chain security really means.
First, the deepening external reliance of the U.S. and the West on critical raw materials has intensified their security anxieties. The U.S. depends heavily on imports for most of its critical minerals, and EU imports are similarly concentrated in a few sources such as China. Furthermore, the blurring boundaries of dual-use technologies have turned niche metals into strategic materials; China’s deep integration even into the U.S. military supply chain underscores the depth of this dependence.
Second, China’s advantages in smelting, processing, and downstream manufacturing, contrasted with the relative decline of Western capabilities following “deindustrialization,” have led the West to expose its lack of supply chain control as a security vulnerability.
Third, great power rivalry and crisis shocks have accelerated the “securitization” of the issue. The U.S. has pursued containment against China while amplifying the “China supply chain threat” narrative; meanwhile, the COVID-19 pandemic and the Russia-Ukraine conflict have exposed supply chain fragilities.
Consequently, competition over critical minerals has escalated from a market-driven pursuit of efficiency to a geopolitical confrontation encompassing economic, technological, and national security dimensions, with supply chain evolution increasingly shaped by the alliance systems’ foreign policies rather than market forces, disrupting established industrial cooperation patterns.
The Coupling and Alignment of the Green Transition and Great Power Geopolitical Competition
The return of geopolitics has allowed power competition to once again dominate international relations. Whilecooperation on the energy transition is essential to advancing the global climate agenda, the U.S. and otherWestern countries—driven by growing concerns over their lack of competitiveness in the new energy sector—have increasingly weaponized and restructured the critical mineral supply chain.
The clean energy industry has exponentially driven up demand for critical minerals, with market sizes for lithium, cobalt, and nickel multiplying, pushing energy transition minerals to the center of the mining industry and placing them at the core of major economies’ strategic mineral lists. Potential supply-demand gaps have fueled concerns over “greenflation,” which could exacerbate interstate tensions or even trigger conflicts—despite the fact that global reserves are not structurally scarce, scarcity expectations are inflated by commercial speculation, and emerging alternativetechnologies are poised to reshape demand.
Nonetheless, the U.S. and the West remain highly vigilant against China’s dominance in clean energy equipment manufacturing and mineral supply chains. They seek to constrain China’s competitiveness through supply chain restructuring. At its core, its essence does not lie in their unwillingness to import at scale based on market principles, which would only augment China’s power. Rather, it concerns the industrial standing and relative gains of major powers in the global energy transition. Even if some Western economies slow down their transition, global green investments will continue to grow, ensuring that the critical mineral gambit remains a focal battleground.
The Misalignment Between Economic/Resource Nationalism and Industrial Endowments
Against the backdrop of intensifying great power competition, both Western manufacturing/consuming nations and energy/mineral-producing nations seek to enhance resource control and industrial yields. “Resource nationalism” manifests not only as the Global South strengthening resource control but also as the West’s strategic intervention in supply chains. The policies of certain countries have detached from their factor endowments, exacerbating competitive disarray.
Under the traditional “core-periphery” configuration, mineral-producing countries in the Global South occupied the low end of the value chain, processing nations like China sat at the “semi-periphery,” while developed nationsmaintained core positions in certain downstream sectors. The rise of emerging powers and middle powers is driving the evolution of this landscape. The new wave of resource nationalism in the Global South focuses heavily on critical minerals but is more moderate than in the past, tightening regulation while still welcoming foreign capital, thereby shifting the relationship between resource states and foreign capital toward “cooperative competition.” Concurrently, Western economic nationalism has experienced a resurgence, particularly post-2020. Its resource nationalism policies deploy subsidies, investment barriers, market protectionism, and overseas control to suppress rivals and solidify its position in the division of labor—a phenomenon that is both a product of power transition and an extension of value chain restructuring.
In policy execution, certain Western consuming nations disregard their endowment constraints, attempting to forcibly alter the international division of labor through industrial policies and geopolitical maneuvers. Meanwhile, some mineral-rich nations, constrained by market access and geopolitical coercion, implement measures detached from their own economic structures and technological capacities. This exhibits a stark misalignment between policy and endowment, ultimately distorting the evolution of the critical mineral supply chain.
2. Geopolitical Competition and the Restructuring Paths of the Global Critical Mineral Supply Chain
Geopolitical competition deeply influences the policy evolution of countries across all segments of the supply chain. Guided by perceptions of “threats,” Western consuming nations prioritize security logic over efficiency, tightening their grip on supply chains through industrial policies, diplomatic coordination, and geopolitical competition. Conversely, mineral-producing countries in the Global South leverage the policy space carved out by great power rivalry to actively pursue “resource nationalism” and advance their industrialization processes.
Western Consuming Nations: Advancing Upstream Supply Chain Diversification and Restricting China’s Role
The U.S. and the West support domestic mining and smelting internally while strengthening resource control externally, aiming to build a “de-Sinicized” supply chain, squeeze China’s overseas mining cooperation space, and weaken its industrial capabilities.
(1) Supporting Domestic Production
Successive U.S. administrations have utilized executive orders and industrial policies, such as the Inflation Reduction Act, to incentivize domestic critical mineral extraction and processing through subsidies and tax credits, explicitly positioning the country as a major producer of non-fuel minerals. The European Union, via the Critical Raw Materials Act, has set benchmarks for domestic extraction, processing, and recycling to curb import reliance on single sources, reflecting a decline in the weight of free trade and a rise in industrial security demands.
(2) Fostering Allied Collaboration
Constrained by factor costs, the West views “friend-shoring” collaboration as the cornerstone of supply chain diversification. Mechanisms led by the U.S., such as the Minerals Security Partnership (MSP), the Indo-Pacific Economic Framework (IPEF) Supply Chain Agreement, and the “C5+1” Critical Minerals Dialogue, aim to construct exclusive international clubs. These mechanisms propagate Western environmental and social governance standards to execute a strategy of “soft balancing.” Under U.S. pressure, countries like Australia have reorganized their mining supply chains, causing setbacks to Sino-Australian cooperation. The EU, by contrast, emphasizes a balance between strategic autonomy and openness.
(3) Strengthening Control over Critical Mineral Resources
The U.S. and the West reinforce control over resource-rich nations through sanctions, proxy interventions, and economic inducements. In the Democratic Republic of the Congo (DRC), for instance, the G7-backed “Lobito Corridor” project forces the country to strike a balance between China and the West. The Trump administration even used coercive tactics with allies. Its repeated expressions of interest in annexing Greenland or purchasing resource access from Canada underscored a clear intent to seize rare earths and other resources. Likewise, it sought to trade aid for the rights to develop Ukraine’s minerals—highlighting a geopolitical logic that prioritizes resource control over alliance commitments.
Mineral-Exporting Countries: Enhancing the Value-Add of Mineral Resources
Mineral-exporting countries are taking advantage of the strategic space opened up by the return of geopolitics to increase their share of resource revenue by raising royaltiesand taxes, advancing nationalization, and developing downstream industries.
(1) Developing Downstream Industries
Indonesia serves as a textbook case: by banning raw ore exports and mandating domestic processing, it attracted multi-nation investments and replaced China as the largest producer of refined nickel. African nations like the DRC and Zambia have jointly developed a cross-border Battery Economic Zone, striving to capture more value from copper and cobalt. Similarly, Brazil and Australia are actively expanding processing capacities, proving that regardless of developmental levels, states are committed to extending their domestic value chains.
(2) Advancing Nationalization
Mineral-producing states increase returns by restricting foreign equity and nationalizing strategic minerals. Indonesia mandated that foreign equity must not exceed 49%, while Chile designated lithium as a strategic mineral and promoted public-private partnerships, diluting the equity and returns of certain foreign enterprises. Such policies shift the dynamic between resource states and foreign capital from a zero-sum game to a competition over interest distribution.
(3) Constructing Monopolistic Alliances
Certain countries with highly concentrated resources have attempted to replicate the OPEC model. South American “Lithium Triangle” nations and Brazil once deliberated on forming a lithium alliance, while South Africa has called for a unified African stance on specific minerals. Although facing hurdles due to supply shocks from producers like Australia, such visions inject substantial uncertainty into the market.
(4) Diversifying Investment Sources and Export Markets
To balance external partnerships and hedge against geopolitical risks, Brazil actively courts Western investment for its rare earth and graphite projects. Under U.S. influence, the DRC obstructed acquisitions by Chinese firms under the pretext of preventing investment source monopolization, seeking partnerships with Western corporations instead. This indicates that U.S. geopolitical maneuvering has altered the cooperative configurations of certain mineral-rich nations.
3. Geopolitical Competition and the Restructuring Prospects of the Global Critical Mineral Supply Chain
While the U.S. and the West attempt to decouple supply chains from China through industrial policies and geopolitical maneuvers, they face insurmountable barriers due to structural deficiencies in their factor endowments and a lack of downstream competitiveness. Conversely, China’s rise has bolstered the industrial autonomy and supply chain standing of the Global South, forging a new paradigm for the critical mineral supply chain.
Strategic Implementation Limits of Western Supply Chain Restructuring
First, factor endowments severely constrain localization.The U.S. suffers from stagnant power generation capacity, protracted permitting processes, and a shortage of technical talent, leaving domestic mining and metallurgical projects sluggish. The EU faces an energy crisis and risks of deindustrialization, making the domestic replication of supply chains prohibitively expensive. Allies similarly face a deficit in mining talent; the case of the Lynas rare earth plant relocating processing back to Australia from Malaysia due to technical and cost dilemmas underscores the economic infeasibility of “decoupling and breaking chains.”
Second, geopolitical hurdles obstruct allied collaboration. The West attempts to redirect Central Asian mineral logistics; however, countries like Tajikistan still rely on China for processing. Alternative routes heading south through Afghanistan or west across the Caspian Sea and the South Caucasus lack economic and security viability. Conversely, the advancement of the China-Kyrgyzstan-Uzbekistan (CKU) railway and the operationalization of the Chancay Port reinforce China’s mineral cooperation with regional states.
Third, capability deficiencies fail to deliver on strategic commitments. The West’s inadequate infrastructure and financing capabilities have rendered initiatives like “Build Back Better World” (B3W) largely ineffective. Even if completed, projects like the “Lobito Corridor” cannot substitute for China’s industrial presence and market absorption capacity in the region.
Fourth, restructuring inflicts negative externalities on mineral-producing nations. Unilateral U.S. actions, such as imposing tariffs on Canada, undermine allied synergy. Some mineral-rich countries that brought in the U.S. and other Western actors for the sake of “diversification” may experience slower industrial development and wastedresources due to the West’s lack of industrial capabilities or purely geopolitical motives. This stands in sharp contrast tothe developmental efficacy of China’s mutually beneficial cooperation model.
Supply Chain Restructuring and the Rising Power Status of the Global South
The ascent of China’s comprehensive national power has broken the Western monopoly over high-tech industries and markets, offering the Global South superior options for cooperation. In the critical minerals sector, China has supported nations like Indonesia in developing localized processing capabilities—transforming Indonesia from a raw ore exporter into the world’s largest refined nickel producer, which has now begun venturing into the battery industry. This has significantly enhanced resource nations’ industrial autonomy and revenue sharing.
Concurrently, the influence of the Global South is rising comprehensively across all supply chain nodes:
(1) Processing: Countries like Indonesia and Zambia have established industrial parks and processing bases with Chinese assistance.
2) Downstream Manufacturing: Thailand has emerged as an electric vehicle (EV) manufacturing hub driven by Chinese investments, upgrading the ASEAN value chain.
3) Consumption: EV markets in Indonesia and South Africa are expanding rapidly, boosting the Global South’s market absorption capacity.
4) Pricing Power: The rising status of the Shanghai Futures Exchange, alongside BRICS initiatives to establish precious metals exchanges, is steering the global mineral pricing architecture toward a multipolar configuration.
Geopolitical Return, Great Power Competition, and the Emergence of a New International Supply Chain
Western supply chain restructuring acts are reshaping trade flows, giving rise to a new critical mineral supply chain relatively independent of the West.
First, supply chain integration among emerging economies like China, Russia, and Brazil is deepening.United Company RUSAL and Norilsk Nickel have secured raw material supplies and integrated into the battery supply chain through equity cooperation and capacity transfers to China. Brazil and China collaborate deeply on permanent magnet motors, new energy vehicles, and niobium resource development, forging a mutually beneficial industrial relationship.
Second, investment and financing collaboration between China and the Global South is reshaping the capital landscape. Joint-venture plants between GEM and Vale in Indonesia, as well as a consortium of Chinese and Russian enterprises winning bids for Bolivian lithium projects, demonstrate the continuous deepening of mutual dependence within the Global South.
Third, China actively engages in tripartite cooperation with Western mining countries and corporations.Chinese corporate investments in Australian mining and metallurgical projects, alongside collaborations with firms like Glencore in Global South nations, blunt the allied synergy of US “de-Sinicization” efforts and construct new industrial dependencies. Concurrently, the contradiction between unilateral, protectionist U.S. policies and its reliance on allied strategies will prompt more nations to strengthen economic ties with China. This is poised to trigger a “domino effect,” ultimately further circumscribing U.S. leverage over the global critical mineral supply chain.
Conclusion
Geopolitical factors have deeply permeated international competition over critical minerals. As China counters Western technological sanctions with export controls and Global South nations steadily elevate their position in supply chains, a paradox emerges: by deliberately inflating the “China supply chain threat” narrative and constructing exclusive supply chains, the West has self-fulfilled its own supply security dilemmas.
During the “Trump 2.0” era, the United States is expected to intensify its containment of high-tech industries, continuing to apply securitized thinking and geopolitical competition logics to the realm of critical minerals. With the exception ofa few minerals like rare earths, China’s raw ore reserves and extraction output remain relatively limited compared to its smelting and processing capacities. The U.S. strategy of supporting domestic downstream industries through industrial policies while exerting geopolitical pressure on mineral-producing nations will inevitably threaten China’s downstream industrial advantages and security. Therefore, expanding and deepening industrial cooperation with mineral-producing countries is crucial to sustaining China’s downstream capacity and preserving room for industrial upgrading.
The Western-led Minerals Security Partnership (MSP) is actively providing financing to Global South mineral producers while promoting its environmental and social governance standards. Although this framework advancesgreen mining, it also seeks to leverage rule-based systems to obstruct cooperation with Chinese enterprises. In response, China should take proactive initiatives through sectoral and regional platforms to strengthen international collaboration with the Global South on institutional rules for critical minerals. Backed by its steadily growing industrial capabilities, China’s external mineral cooperation will play a greater role in shaping a more equitable global critical mineral industrial landscape—one that better serves the interests of the Global South.
About the Author
SUN Haiyong孙海泳：Dr. Sun is Senior Research Fellow of Institute for Public Policy and Innovation Studies/Center for American Studies of SIIS. Dr. Sun got his Ph.D from School of International Studies, Renmin University of China. He specializes in the study of high-tech competition in international relations and Chinese outward investment on infrastructure.
About the Publication
The Chinese version of the article was published by Foreign Affairs Review (《外交评论》). It is a Chinese academic journal on international politics, sponsored by the China Foreign Affairs University and overseen by the Ministry of Foreign Affairs of the People’s Republic of China. It was founded in 1984, delving into various significant theoretical and practical issues within the disciplines of “macro-international relations” and “macro-diplomacy”, with a focus on exploring Chinese diplomacy and related matters.
