The world is slowly but inevitably moving toward two separate economic-technological spheres: one led by the United States and its allies, and the other by China and its partners. In this rivalry, neither side can count on a quick or complete victory. Instead, what lies ahead is a long-term, complex process in which modern technologies, access to critical minerals, and the capacity to process them will become key symbols of a new global distribution of power
In today’s world, where economic interdependence is inevitably transforming into geopolitical competition, the rivalry between the US and China is increasingly taking the form of a systematic struggle for technological supremacy. At the core of this conflict is no longer a classic military confrontation, but a strategic contest in high-tech sectors and raw materials—more specifically, in the fields of semiconductors and critical minerals. This new “Cold War-style” competition has become most evident through mutual export control measures aimed at limiting each other’s technological capabilities, while the battle for the support of third-party countries—which may play a decisive role in forming new global blocs—is intensifying.
The American strategy focuses on preserving and expanding its technological leadership in the areas of advanced semiconductors, chips, artificial intelligence, and sophisticated manufacturing equipment. President Joe Biden’s administration has introduced a series of strict export restrictions on chips and related technologies to China, attempting to slow down—or at least delay—China’s development of AI capabilities and technological independence. China, on the other hand, has responded by building its own export control regime, relying on its dominance in critical raw materials—especially minerals essential for the production of chips, batteries, weapon systems, and green energy.
From a supply chain perspective, China is tightening the valve at the entry point—in the segments of raw materials and components—while the US is cutting off access at the exit point, in terms of knowledge, patents, and advanced technology. In other words, China controls the early stages of production, while the US seeks to protect the final phases of development and implementation of complex technologies. This difference in approach—or rather in comparative advantages—shapes the strategies that these two superpowers employ in their ongoing battle for global primacy.
Specifically, the position at the input or output side of the supply chain raises a key question: where does the long-term advantage lie? Is it in the American technological ecosystem or in China’s control over raw material flows? The answer to this question depends on each side’s ability to effectively implement its strategy and secure allies.
Over the past decade, U.S. officials have clearly recognized the vulnerabilities stemming from excessive dependence on global supply chains, particularly regarding critical minerals and strategic technologies. In Executive Order 13817 issued by President Donald Trump in 2017, America’s overreliance on imports of critical minerals was acknowledged as a potential serious threat to both the economy and national security. Subsequent administrations, including that of Joe Biden, continued these policies through legislation such as the Bipartisan Infrastructure Law (2021), the Inflation Reduction Act (2022), and activation of the Defense Production Act (2022), particularly to accelerate the production of critical minerals (such as lithium and cobalt) essential for batteries, clean energy, and military technologies.
Alongside efforts to further energize the domestic tech environment, Washington also launched an offensive against China’s technological advancement. This began in 2018 with the export ban on components to Chinese company ZTE (Zhongxing Telecommunications Equipment Corporation) for selling equipment to Iran and North Korea using U.S. technology, and has since evolved into a systematic expansion of the Commerce Department’s Entity List (a list of foreign companies, organizations, and individuals restricted from accessing U.S. goods, software, and technology) and a tightening of the Foreign Direct Product Rule – which allows the U.S. to control who can purchase foreign-made products that incorporate U.S. software, technology, or equipment. For example, if a foreign factory uses American machines or software to make a chip, and then wants to sell it to a Chinese company on the Entity List, the U.S. claims the right to block that sale. This rule gained particular attention in 2020 when it was used to restrict China’s high-tech company Huawei from accessing the most advanced chips, significantly slowing its technological progress.
From a supply chain perspective, China is closing the tap at the input side – in the realm of raw materials and resources, while the U.S. is blocking access on the output side – in terms of knowledge, patents, and advanced technology.
Arguably the most significant step in this strategy was the passing of the CHIPS and Science Act (Creating Helpful Incentives to Produce Semiconductors) in 2022, which secured major funding for domestic chip production and defined a strategic course for achieving technological independence and scientific dominance in the 21st century. No less important, the U.S. has continually tried to improve its export controls on semiconductors going to China – which some American companies (e.g., Nvidia) have found ways to circumvent. These controls aim to hinder the development of Chinese artificial intelligence and supercomputing capabilities. However, enforcement has often been ineffective, with many loopholes and exemptions that China has skillfully exploited.
China, on the other hand, has based its response on decades-long development of control over mineral resources. Since the time of Deng Xiaoping, Chinese authorities have pursued a policy of “self-sufficiency” in the mineral resource sector. As early as 1986, the PRC Mineral Resources Law established the foundation for state monopoly over natural resources. This legal framework, supplemented by a series of policies and regulations in the 1990s and 2000s, enabled Beijing to dominate the production and processing of rare earth elements, gallium, germanium, antimony, and graphite. Through state regulation and industrial policy, China established vertically integrated supply chains for key raw materials – from mining and processing to export. Today, China processes over 90% of the world’s rare earth elements and supplies the U.S. with more than half of its needs for 24 key minerals.
As Deng Xiaoping famously said in 1992: “The Middle East has oil, China has rare earths.” China turned that philosophy into practice, using its market size to push out competition and strengthen its position. By 2009, China had effectively become a monopoly in the rare earth sector, which it used in 2010 against Japan by briefly banning exports following a diplomatic and territorial conflict over the Senkaku/Diaoyu Islands. Though the ban was short-lived, it had a profound impact: it sparked international concern over dependency on Chinese raw materials, accelerated the development of alternative supply chains, and prompted Japan and others to invest in recycling and mining outside China.
The U.S. continues to attempt to tighten semiconductor export controls to China, which some American companies manage to bypass in various ways.
Further, in 2017, China began a public discussion on the draft Export Control Law, a legal framework for restricting or banning the export of sensitive technologies, equipment, and materials to counteract growing U.S. pressure, particularly in trade and tech. Ultimately, the law was adopted in late 2020 and granted China the right to apply export restrictions extraterritorially and impose countermeasures on individuals and organizations outside China that undermine its enforcement. In the context of Xi Jinping’s “comprehensive national security outlook,” the Export Control Law is a key instrument for economic defense and potential retaliation.
However, it was only from 2022 that China began implementing concrete steps – it compiled a list of technologies and products subject to export restrictions. In July 2023, it introduced licensing requirements for gallium and germanium exports, used in chip and optical device production. By October, similar measures were extended to graphite, a key component in lithium-ion batteries. In December, China banned the export of machines used to manufacture rare earth magnets essential for producing goods ranging from drones and fighter jets to electric vehicles – further tightening its control over strategic sectors.
In December 2024, new regulations enabled bans on exports of dual-use materials and products – raw materials, software, and technologies that can be used for both civilian and military purposes. For example, dual-use critical minerals include lithium, which powers phone and electric vehicle batteries but also military drones and communications equipment, and neodymium (a rare earth element), which is used in wind turbine magnets and hard drives, but also in precision-guided missiles and radar systems.
By using a resource-leverage strategy, China may be accelerating the erosion of its own monopoly.
On December 3, 2024, China’s Ministry of Commerce, for the first time, imposed a direct ban on exports of certain dual-use critical minerals to the U.S. – including gallium, germanium, antimony, and superhard metals. The very next day, the U.S. responded with new export regulations that further restricted Chinese firms developing advanced chips. In February 2025, China took an even stronger stance by expanding bans to minerals such as tungsten, tellurium, bismuth, indium, and molybdenum – opening the door for broad application of its Export Control Law beyond its borders, in an effort to prevent re-export of banned critical minerals to the U.S. via third countries – a move that strongly mirrors the U.S. extraterritorial export control practices.
Importantly, China has deliberately chosen not to use its restrictions to create mass disruptions in global markets, but rather as a precise weapon aimed at vulnerable sectors of the U.S. economy – particularly defense, energy, and advanced manufacturing. Its bans are designed to press on America’s pressure points without jeopardizing its own markets or triggering countermeasures that would accelerate diversification.
Still, China’s use of raw materials as a strategic weapon could prove counterproductive in the long run. Every new restriction increases pressure on countries like Australia, Canada, Japan, the European Union, and South Korea to deepen cooperation and develop parallel supply chains. Although the transition will be painful and costly – especially for high-tech industries – in the long term, China’s market position may weaken. In other words, through resource blackmail, China may be accelerating the dilution of its own monopoly.
On the other hand, the American approach – based on technological superiority and alliances – remains strong but vulnerable. Implementation is often slow, industrial interests dilute legal intentions, and global markets struggle to adapt to new realities. The future of this contest will depend not only on resources and technology but also on each side’s ability to build lasting coalitions and institutional resilience.
In conclusion, the world is gradually but inevitably moving toward two separate economic and technological spheres: one led by the United States and its allies, and the other by China and its partners. In this competition, neither side can expect a quick or total victory. Instead, what lies ahead is a long-term, complex process in which modern technologies, access to critical minerals, and processing capabilities will become the key symbols of a new global balance of power.
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