Beijing’s critical raw material weapon - And how to dismantle it
www.iss.europa.eu
China’s critical raw material export squeeze has proven a powerful geo-economic weapon. Initially retaliation against US tariffs and tech restrictions, Beijing’s leverage now advances its far greater ambitions.

cross-posted from: https://mander.xyz/post/51927967

Here is the full report: Beijing’s critical raw material weapon - And how to dismantle it - (pdf)

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Among other measures,

  • Europe, the G7 and other key partners like South Korea and Australia should first bring material production online through state financing and other forms of state support, underpinned by a (preferably temporary) joint price floor.
  • To sustain production, they should introduce coalition-wide, demand-side measures like sectoral tariffs, as well as ‘Europe and partner’ content requirements in public procurement.
  • The coalition should extend an open invitation to non-rival countries to join, provided they adopt the same protections. The focus should be on material producers or deposit holders like Malaysia, the Democratic Republic of Congo, Brazil and Indonesia, and countries with large skilled workforces like India.
  • The coalition should extend these measures to chemicals, semiconductors, and other core industrial sectors well before China establishes chokepoint control over them too.

Whereas these demand-side safeguards can be replicated across industries, using state-support to onshore all of the strategic industrial value chains that China dominates (or is likely to dominate within the next decade) would risk the ‘Sovietisation’ of European and partner economies.

To strengthen deterrence, Europe should activate the Anti-Coercion Instrument (ACI), leverage export controls – especially on semiconductor technologies – to develop a more forceful and credible counter-threat, and work closely with partners like Japan and the United States to align retaliation in line with an ‘escalate-to-deescalate’ approach.

The EU should establish a Geoeconomic Office of Net Assessment (GONA) to reduce China’s information dominance in supply chains and be better prepared for future geoeconomic threats.

Finally, Europe should tailor its industrial policies to secure a pivotal role for its industries in strategic value chains – ensuring their ‘indispensability’ – thereby maintaining leverage with both China and the United States.

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  • imeansurewhynot@sh.itjust.worksEnglish
    3·
    3 days ago

    “chemicals, semiconductors, and other core industrial sectors well before China establishes chokepoint control over them too”

    …uhhh, the 'before" qualifier is useless at best, china’s dominance in practically all forms of industrial production is already well established, the best the EU can hope for is to begin to catch up.

    Even if everything goes according to hope, the years of lead time to bring EU and partners production online will be happening while China’s own intact, dominant and functioning industrial production continues to advance.

    Competition is a good idea, but the EU pretending that China has not already crossed the finish line seems very unhelpful for their proposal.