As the United States and China careen toward intensified economic decoupling and geopolitical rivalry, trends in the semiconductor and minerals sectors will define their strategic competition. Both great powers aim to consolidate competitive advantages by hampering the other’s technological development and hammering their trading partners. Both are doing so using increasingly damaging measures—but from opposite ends of tech supply chains. The American position remains strongest in advanced technologies, an edge that the Joe Biden administration sought to preserve and extend through an unprecedented series of export controls. China, meanwhile, is just beginning to implement a parallel export control regime that leverages its dominant market share in critical minerals as well as niche but strategic industries.
Recent tit-for-tat actions mark a troubling new level of severity in this escalating struggle for technological advantage. On December 3, 2024, the People’s Republic of China (PRC) Ministry of Commerce (MOFCOM) imposed its first outright ban on the export of certain “dual-use” critical minerals to the United States. This export control went into force for germanium, gallium, superhard minerals like synthetic diamonds, and imposed additional licensing restrictions on graphite exports. In adopting this ambitious new measure, China was retaliating against U.S. semiconductor chip and manufacturing equipment export controls unveiled only the day prior. On February 4, 2025, in response to new U.S. tariffs on Chinese goods, MOFCOM announced restrictions on additional minerals including tungsten, tellurium, bismuth, indium, and products that include molybdenum. In initiating these outright bans, Beijing has aimed to mirror U.S. long-arm jurisdiction by, likewise, seeking to enforce its export controls extraterritorially in third countries, which could re-export the restricted goods to America.
Juxtaposing “chips” and “rocks” reveals a basic asymmetry between each party’s points of strategic leverage. Beijing is building a dam upstream, threatening to choke off the flow of raw materials and intermediate goods required to produce certain advanced technologies—including semiconductor chips, high-capacity batteries, and a range of defense and aerospace products. Washington’s fortress is further downstream and depends heavily on guarding the intellectual property of American and allied firms employing the technical capabilities of a network of allies and industrial partners. This position has enabled U.S. government efforts to restrict Chinese entities’ access to the latest semiconductors and delay, but not halt, their development of cutting-edge artificial intelligence (AI) capabilities.
My understanding from past reading is that China’s strength mostly isn’t in access to raw materials, but rather in processing of those raw materials. That is, China is not especially unique in terms of what’s in the ground, but rather in that it has large-scale industry to refine those materials, so withholding access to these processed materials permits for leverage. My guess based on past reading as to why processing has gone to China and without looking into individually-processed substances, is that their advantages lie in (1) low labor costs, (2) restricted environmental regulations, and perhaps (3) scale of domestic market and possibly (4) government subsidies.
The first item, high labor costs, is inevitably going to be a US weak point, but we can find a poor-but-friendly country to trade with, probably one poorer than China is in 2025. It’s also possible to possibly partly make use of automation to partially mitigate that; I doubt that this will wholly offset this, though, or manufacturers would have done so.
The second item, restricted environmental regulations, are also probably going to be hard. Maybe some US ones are going to be unnecessary, could be removed, but there are also probably going to be countries that would rather have the economic activity than reduced pollution, so, again, trade is an answer.
The third item, scale of domestic market, is going to be hard to overcome in the longer term. China has a population over four times larger than the US, and even around 2100, after which point the US is projected to have grown and China will have dropped in size, is expected to be about double. China will tend to develop, converge on a per-capita wealth basis with the US. That’s probably going to involve international trade, and not just with one or two countries.
The fourth item, government subsidies, are doable if the US wants to do it, though doing so will weaken other industries. Probably somewhat-easier for the US than China; the US has a larger GDP in 2025.
It’s also important to note that one critical US advantage regarding chip
And the article makes the same prediction that I made above, that if the Trump administration truly wants to restrict international trade on a serious and continued basis, rather than conduct political theater to score domestic points, that’s going to make life a lot harder for competing with China:
Under these conditions, the U.S. will need to accelerate domestic and allied mining efforts while tightening enforcement on chip exports through global cooperation. This will be a challenging task given mounting international resistance to the Trump administration’s potential trade policies
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My understanding from past reading is that China’s strength mostly isn’t in access to raw materials, but rather in processing of those raw materials. That is, China is not especially unique in terms of what’s in the ground, but rather in that it has large-scale industry to refine those materials, so withholding access to these processed materials permits for leverage. My guess based on past reading as to why processing has gone to China and without looking into individually-processed substances, is that their advantages lie in (1) low labor costs, (2) restricted environmental regulations, and perhaps (3) scale of domestic market and possibly (4) government subsidies.
The first item, high labor costs, is inevitably going to be a US weak point, but we can find a poor-but-friendly country to trade with, probably one poorer than China is in 2025. It’s also possible to possibly partly make use of automation to partially mitigate that; I doubt that this will wholly offset this, though, or manufacturers would have done so.
The second item, restricted environmental regulations, are also probably going to be hard. Maybe some US ones are going to be unnecessary, could be removed, but there are also probably going to be countries that would rather have the economic activity than reduced pollution, so, again, trade is an answer.
The third item, scale of domestic market, is going to be hard to overcome in the longer term. China has a population over four times larger than the US, and even around 2100, after which point the US is projected to have grown and China will have dropped in size, is expected to be about double. China will tend to develop, converge on a per-capita wealth basis with the US. That’s probably going to involve international trade, and not just with one or two countries.
The fourth item, government subsidies, are doable if the US wants to do it, though doing so will weaken other industries. Probably somewhat-easier for the US than China; the US has a larger GDP in 2025.
It’s also important to note that one critical US advantage regarding chip
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And the article makes the same prediction that I made above, that if the Trump administration truly wants to restrict international trade on a serious and continued basis, rather than conduct political theater to score domestic points, that’s going to make life a lot harder for competing with China: