China Tightens Economic Grip Amid US Sanctions and Trump’s Return
China has announced stricter export controls on "dual-use" materials, including tungsten, magnesium, titanium, aluminium alloys, and graphite. These materials are vital to industries ranging from tech and aerospace to defence, transportation, and construction. Experts describe China’s move as a significant escalation, highlighting the intensifying tensions with Washington.
Dual-use items—those with both civilian and military applications—are now subject to licensing requirements, with exporters required to disclose the end users and intended purposes of the goods. The Chinese Foreign Ministry described the measures as a way to "safeguard national security and interests" while ensuring the "stability and smoothness of global industrial supply chains."
This step underscores growing fears over US reliance on Chinese dominance in critical material supply chains, which American lawmakers are calling a national security risk. Republican Representative Rob Wittman of Virginia has described the newly imposed controls as a "wake-up call," emphasising the urgency of diversifying supply chains and enhancing domestic production.
Dual-Use Materials at the Heart of the Dispute
Materials subject to these new export restrictions make up a considerable portion of global production dominated by China. For instance, China accounts for more than 80% of global tungsten production and nearly 90% of magnesium output. These materials are integral not only for military purposes—such as armour-piercing rounds—but also for civilian uses, including industrial cutting tools and microchip production.
The export controls follow US sanctions targeting Chinese companies accused of exporting electronics and other dual-use items to Russia, aiding Moscow’s wartime capabilities. Washington has also restricted the export of advanced chipmaking technology produced by ASML in the Netherlands to curb China's technological progress for military purposes. These measures have further fuelled tensions between the two global powers.
China has a precedent for leveraging its supply chain dominance, as seen in the 2010 rare-earth elements embargo against Japan, initiated after maritime disputes. Analysts are now questioning whether these new measures represent a "shot across the bow" aimed at the incoming Trump administration.
Trump’s Return Could Escalate Trade Tensions
President-elect Donald Trump, who will take office on 20 January 2025, has indicated plans to enforce tariffs of up to 60% on Chinese goods, significantly escalating the trade war that began during his first administration. Experts see the timing of China's export controls as a pre-emptive response, potentially reshaping trade relations between the world’s two largest economies.
The Biden administration, meanwhile, has held firm on tariffs punitive to Chinese exports, including higher duties on lithium-ion electric vehicle batteries earlier this year. This continuity in policy signals a bipartisan approach to countering China’s trade practices.
The Economic Impact of Export Disruptions
The repercussions of China’s export controls extend beyond geopolitics to the global economy. A study by the US Geological Survey (USGS) revealed that a complete ban on gallium and germanium—other minerals restricted by China earlier in 2023—could cost the US economy over $3.4 billion. The USGS is currently assessing the risk of supply disruptions for other critical mineral commodities, including tungsten and aluminium.
Sarah Ryker, associate director of energy and minerals at USGS, highlighted the importance of bolstering domestic supply chains. "We are working with state geological surveys to locate mineral resources within the United States, either in the ground or in legacy mine waste," she stated. These measures aim to strengthen the supply of materials critical for economic stability and national security.
China’s Position and International Perception
Liu Pengyu, spokesperson for the Chinese Embassy in the United States, has refuted claims that the measures target specific nations. He characterised the move as supporting "trade security" and aligning with international norms, positioning China as a "strong trading nation." Liu criticised other countries, saying, "Some nations abuse the concept of national security to suppress particular nations or enterprises," in an apparent reference to US policies.
China’s export restrictions have prompted mixed reactions, with proponents highlighting its right to maintain control over critical resources, while critics argue that it destabilises global supply chains and raises risks for international businesses.
A Global Wake-Up Call
The tightening of controls has spurred calls for action. Representative Wittman’s comments reflect a broader sentiment among US policymakers, who see dependency on China as an existential threat to technological resilience and national defence. The controls serve as both a wake-up call and a directive to accelerate domestic production and diversify supply chains.
However, reliance on China will not be easily mitigated. The country’s dominance in material supply chains has been years in the making, with its control extending across production, refinement, and distribution stages. Building alternative supply chains will be a long-term endeavour requiring cooperation across both private and public sectors.
China's Strategic Leverage in Critical Materials
China’s recent actions serve as a calculated reminder of its dominance in vital materials. With geopolitical tensions increasing, these export restrictions underscore the critical role of supply chains as instruments of economic leverage. The anticipated return of Donald Trump to the Oval Office may reignite trade war escalations, with higher tariffs and additional restrictions likely to further strain relations. The response of the Biden administration during this transitional period could significantly influence the future trajectory of US-China relations. Washington must not overlook the economic and strategic necessity of securing access to essential materials. By diversifying supply chains and investing in domestic mining and innovation, the US can reduce its dependence on China. Yet, until concrete measures are put in place, the sheer scale of China’s production capabilities will continue to exert considerable influence over global trade dynamics.
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