China has repeatedly demonstrated that it will weaponize its control over global supply chains. This tactic of control can be seen in the flow of rare earth minerals, lithium-ion batteries, mature computer chips (older technology), and pharmaceutical ingredients. In each market, the Chinese use the same playbook to gain leverage and threaten the West.
China’s dominance in the global supply chain reflects decades of strategic industrial policies. China plans to have Chinese companies flood markets with cheap, low-quality products and establish dominance. Once dependence is established, Beijing enacts export controls, thereby using pressure to disrupt and force trading partners to bend to its will.
In a 2020 essay, Chinese leader Xi Jinping criticized the weaponization of supply chains, warning that they might be used against China. Hypocritically, he also had no problem in saying that China must “tighten the dependence of international industrial chains on our country” to keep others from acting against communist China’s interests.
Dominating the Green Revolution: Lithium-Ion Batteries
One central area of supply chain control is the production of lithium-ion batteries. Those who control these components will have an advantage in shaping the future of automotive technology and clean energy.
The top two global battery producers, CATL and BYD, are Chinese companies controlled by the Chinese Communist Party (CCP). Even when batteries are manufactured elsewhere, their key components still contain a significant amount of Chinese materials.
This dominance is intentional. In 2015, Beijing began developing its domestic EV industry, leading to a surge in local car and battery manufacturers. From 2015 to 2019, the government ordered Chinese EV companies only to use approved, locally made batteries, effectively excluding foreign competitors.
China has also tightened its protection of technology. In July, Beijing announced that companies outside the country would need licenses to transfer certain technologies related to lithium-ion battery manufacturing overseas.
This is an ironic imposition since, for decades, communist China has stolen untold amounts of intellectual property from nearly every company doing business in China!
Holding Technology Hostage: Semiconductors
China now makes about one-third of the world’s mature semiconductor capacity. Though not cutting-edge, these chips are essential for industries like automotive, consumer electronics and defense.
China controls almost all production of gallium and germanium, which are needed to make these chips. According to the U.S. Geological Survey, China accounted for 99 percent of worldwide gallium production in 2024 and remains the top producer of germanium.
China has invested billions of dollars in semiconductor manufacturing to achieve self-sufficiency. This monopoly has sparked global concern since China could flood the market with its mature chips, drive prices down, bankrupt international producers and increase Western reliance on the communist dictatorship.
In 2023, China demonstrated its willingness to use this dependency as a strategic tool by imposing export restrictions and requiring licenses for all gallium and germanium shipments to foreign nations. Beijing argued that the blockade was a retaliation for the Dutch government seizing control of Nexperia from its former Chinese parent company, which is on the U.S. trade blacklist.
The impact was immediate and severe. Global automakers like Honda were forced to shut down factories within weeks.
Weaponizing Medicine: Pharmaceuticals
Most drugs sold in U.S. pharmacies might not say “made in China.” However, the active pharmaceutical ingredients (APIs) in many prescriptions come from China. For example, most acetaminophen and ibuprofen (the active ingredients in Tylenol and Advil) come from China. The country also supplies a good portion of antibiotics and anesthetics.
The U.S. imports many generic drugs from India. However, India relies heavily on China for the APIs used in those generics.
In 2015, China targeted medicines and medical devices as a top priority for its industry. Because of the political sensitivity of weaponizing medicine, Beijing has rarely issued direct threats. However, its leverage during the early stages of the COVID-19 pandemic offers some insight into how dangerous this dependence can become.
When the world faced shortages of personal protective equipment (PPEs), the official Xinhua News Agency ominously warned that if China were to restrict medical exports, the “U.S. will be plunged into the vast ocean of coronavirus.” This message was a clear threat of blackmail.
China’s goal: Hold the U.S. Hostage to Cheap Chinese Goods
China’s stranglehold is a ticking time bomb that threatens to go off in the West.
Western leaders need to realize that communists do not play fair; they play hardball while the West plays by the rules. America is not falling behind because it is unproductive, but because China cheats with impunity, and the U.S. has been foolishly optimistic about the evils of communism.
Communist China exploits every advantage to blackmail the world, using its economic and military power as leverage to force compliance and silence criticism. The West needs to respond in kind.
The CCP has the economic and military power it has because the West foolishly thought it could make a deal with the devil. The recent supply chain threats show that the time is ripe to cut off the deal.
Photo Credit: © sharpner – stock.adobe.com
First published on TFP.org.