How Control Over Critical Minerals and Supply Chains Shapes Leverage in US–China Rivalry: An Updated Perspective for 2024

The strategic contest between the United States and China continues to intensify in 2024, with control over critical minerals and supply chains at its core. As technological innovation accelerates and the global economy becomes increasingly dependent on advanced materials—such as rare earths, lithium, cobalt, and semiconductors—both superpowers are engaged in a high-stakes struggle to secure, dominate, and manipulate these vital resources. Recent developments across geopolitical, economic, and technological domains underscore a complex landscape where dependencies, vulnerabilities, and strategic leverage intertwine, shaping the future of international influence and security.

China's Structural Strengths and Expansions in Resource Diplomacy

China’s dominance in critical mineral processing remains a fundamental pillar of its strategic advantage, controlling approximately 60–70% of the world's rare earth processing capacity. This extensive capacity gives China significant influence over global supply, impacting prices, industrial stability, and geopolitical alignments. Its approach combines domestic resource control with aggressive overseas investments, many embedded within the Belt and Road Initiative (BRI).

Overseas resource diplomacy has become increasingly sophisticated, with China expanding its footprint across resource-rich regions to ensure long-term access and create resilient supply networks:

• In Africa, Chinese investments in copper, bauxite, and rare earth projects—particularly in Zambia, Zimbabwe, and Guinea—are designed to secure critical inputs for China’s industrial and military sectors.
• In Latin America, Chinese-backed lithium projects in Chile and Brazil are pivotal for batteries and electric vehicle (EV) supply chains, supporting China's push into green energy and EV markets.
• Asia sees infrastructure investments in Malaysia and Myanmar, aimed at regional processing and connectivity, further consolidating China's resource influence.

These initiatives deepen dependencies—both economically and strategically—and entrench China’s geopolitical position. Despite Western efforts to diversify sources, China’s processing capacity remains unrivaled. The Asia Society reports that scaling processing facilities outside of China faces significant technical, environmental, and economic hurdles, thus reinforcing China's dominant position.

Strategic Moves and Long-term Planning

China’s overseas investments serve multiple long-term strategic goals:

• Bypassing export restrictions: During diplomatic conflicts, China has historically weaponized export restrictions on rare earths, causing price spikes and disruptions to industries such as missile guidance, jet engines, and green energy infrastructure.
• Securing resource corridors: The Belt and Road Initiative facilitates resource-rich corridors, bolstering China’s influence over key supply routes.
• Resilience against sanctions: China aims to reduce vulnerability by integrating vertically—investing directly in mineral extraction, refining, and processing globally—creating entrenched dependencies that are difficult for rivals to dislodge.

Recent geopolitical moves include:

• Venezuela, once a key energy partner, has seen suspensions of oil deals, signaling possible recalibration of China’s energy diplomacy amid rising geopolitical tensions.
• In Africa and Latin America, Chinese-controlled mining projects continue to reinforce resource chains that support China’s industrial, technological, and military needs.
• The BRI continues to expand, creating resource corridors that not only secure supply but also extend China’s strategic influence.

Western Responses: Diversification, Innovation, and Resilience

Faced with vulnerabilities stemming from dependence on Chinese-controlled supply chains, Western nations are taking concerted actions to diversify sources and build resilience:

• Onshoring and domestic production: The Biden administration has pledged over $10 billion to strategic mineral reserves and incentives for domestic mining and processing—aiming to reduce reliance on Chinese supply.
• Policy measures:
  • Activation of the Defense Production Act expedites the development of critical mineral processing facilities.
  • Public-private partnerships foster the creation of new processing plants across North America and allied nations.
• Technological innovation:
  • AI-driven exploration enhances mineral discovery, environmental management, and extraction efficiency.
  • Investment in quantum computing seeks to revolutionize material analysis and processing techniques.
  • Development of alternative materials and battery chemistries aims to decrease reliance on Chinese inputs.

Despite these efforts, full independence remains a distant goal. The Information Technology and Innovation Foundation (ITIF) emphasizes that internal dependencies on Chinese technology and inputs persist, and breakthrough innovations are necessary to establish true resilience.

Recent Developmental Shocks (2024–2025)

A series of recent events highlight the evolving strategic landscape:

• Congo’s cobalt controls: Although Congo is the world’s largest cobalt producer, recent export restrictions and regulatory challenges reveal weaknesses in China’s supply chain dominance. This illustrates that overreliance on a single source can be a strategic liability, emphasizing the importance of diversification.
• South Korea’s strategic countermeasures: South Korea is investing heavily in alternative processing capacity and technological development to reduce dependency on China’s rare-earth supply, positioning itself as a regional counterweight.
• Suspension of Chinese-Venezuelan oil deals: Reflects China’s reassessment of energy security amid geopolitical tensions, potentially signaling a shift in China’s energy diplomacy and a more cautious approach.
• Semiconductor supply chain vulnerabilities: Taiwan’s TSMC continues to be a critical node—controlling over 50% of high-end chip fabrication. Any Chinese military action or blockade could cripple global electronics, with profound military and economic repercussions.

Strategic Dynamics in 2024–2025

The current landscape is characterized by:

• China’s deepening resource diplomacy: Moving toward strategic alliances with resource-rich nations, aiming to buffer against Western sanctions and secure energy and mineral security.
• Global governance challenges: African and European cooperation are challenging Western dominance, promoting sovereign control over resources and often emphasizing non-interference.
• Sino-centric multilateralism: Forums like BRICS promote regional resource sovereignty, countering Western-led initiatives.
• Bypass strategies: China’s direct investments in mining and processing facilities across Africa, Latin America, and Asia serve to reduce exposure to trade restrictions, but entrench dependencies.

Weaponization of Dependencies

Recent analyses underscore China’s capacity to manipulate dependencies as geopolitical tools. Export restrictions on rare earths have caused price volatility, disrupted industries, and impacted military capabilities—notably missile systems and renewable energy infrastructure. Such measures amplify China’s leverage but also risk escalation and global instability.

Policy Implications and Strategic Recommendations

In light of ongoing developments, policymakers should prioritize targeted de-risking over full decoupling:

• Invest in mineral processing capacity outside China, especially in Africa, South America, and Australia.
• Accelerate R&D for technological substitutes and processing innovations capable of bypassing Chinese dominance.
• Strengthen multilateral supply chain initiatives—such as U.S.–EU–AU collaborations—to counterbalance China’s influence.
• Enhance semiconductor resilience by supporting domestic foundries and reducing reliance on Taiwan.

Current Status and Broader Implications

As of 2024, China remains the dominant force in critical mineral processing and resource diplomacy. Its long-term investments and resource weaponization tactics continue to shape global supply chains and geopolitical dependencies.

However, Western efforts—focused on diversification, technological innovation, and resilience building—are gradually diminishing some of China’s advantages. The weaponization of dependencies remains a powerful but risky tool, with potential for escalation and global disruption.

Supply chain disruptions, whether from trade conflicts, natural disasters, or military conflicts, pose serious threats to global stability, military readiness, and technological leadership. The control over critical resources and infrastructure is now central to the geopolitical contest, heavily influencing the future balance of global power.

---

Additional Insights from Recent Developments

• The case of Congo’s cobalt underscores the limits of China’s resource control—highlighting vulnerabilities that could undermine its supply chain dominance. Export restrictions and local regulatory changes have demonstrated that overdependence on a single source can pose strategic risks.

• South Korea’s strategic investments aim to counterbalance China’s rare-earth leverage. By building processing capacities and technological capabilities, South Korea provides a regional alternative, reducing reliance on Chinese supply chains.

• Middle powers like Australia, Canada, and European nations recognize that full decoupling is often impractical due to deep economic and technological linkages. Instead, strategic hedging, alliances, and resilient supply chains are the pragmatic approaches.

---

In conclusion, control over critical minerals and supply chains remains the linchpin of US–China strategic competition. China’s dominance in resource processing and resource diplomacy grants it significant leverage, yet Western efforts in diversification, technological innovation, and resilience-building are gradually shifting the balance. Weaponization of dependencies—through export restrictions and strategic investments—remains a powerful but risky strategy that could trigger escalation.

The evolving landscape underscores that supply chain security is not just economic but geopolitical, influencing military capabilities, technological progress, and international stability. Policymakers must continue to adapt strategies—focusing on targeted de-risking, international cooperation, and technological breakthroughs—to navigate the complex terrain of 21st-century resource geopolitics.