How China’s chokehold on drugs, chips and more threatens the U.S.

Not just rare earths. Three products show how Beijing’s supply-chain control can impose pain on trading partners

- Yoko Kubota

China now accounts for about one-third of the globe's mature semiconductor production capacity.

(REUTERS)

China has demonstrated it can weaponize its control over global supply chains by constricting the flow of critical rare-earth minerals. President Trump went to the negotiating table when the lack of Chinese materials threatened American production, and he reached a truce last week with Chinese leader Xi Jinping that both sides say will ease the flow of rare earths.

But Beijing's tools go beyond these critical minerals. Three other industries where China has a chokehold—lithium-ion batteries, mature chips and pharmaceutical ingredients—give an idea of what the U.S. would need to do to free itself fully from vulnerability.

Behind China’s supply-chain dominance lie decadeslong industrial policies.

Once Chinese companies have come to dominate a wide stretch of the supply chain, flooding global markets with lower-priced products in the process, Beijing brings in export controls that allow it to leverage its advantage and impose pain or threaten rival economies. Sometimes countries can procure alternatives at higher cost, but in other cases it is hard—or nearly impossible—to find suppliers outside China.

In a 2020 essay, Xi said supply-chain control shouldn't be weaponized, yet he also said China must “tighten the dependence of international industrial chains on our country” to deter others from hurting China.

Here isa guide to China’s playbook for flexing its export muscle.

Lithium-ion batteries are used in electric vehicles, energy storage and consumer electronics. Whoever controls them has an edge in automotive technology and green energy.

The top two global battery produc-