🇨🇳 China Tightens Its Grip on Critical Raw Materials as the 🇺🇸 US Faces Pressure on Multiple Fronts: What Does This Mean for 🇪🇺 Europe?

October 15, 2025

Imagine the following scenario: fully assembled electric vehicle motors are sitting on a factory floor – but they do not turn. No magnets. No propulsion.

The United States is attempting to contain pressure on four fronts: Russia, China, Iran and the instability spreading across the Middle East.

And China? China is turning a barely visible valve – rare earth elements, magnet exports and refining capacity – and steadily tightening the flow.

Europe is standing in the slipstream of this raw-material storm. Without an airbag. Without independent supply lines.

Key question: Who will control our motors – and our security – tomorrow?

1) The Silent Blade: Rare Earth Elements as Strategic Leverage

Rare earth elements, or REEs, are not exotic technological curiosities. They are the arteries of the modern technology and defence industries.

The group comprises 17 elements, including neodymium, dysprosium and terbium. They are used in electric motors, drones, radar systems, wind turbines and fighter aircraft.

These elements are extremely difficult to replace because they combine magnetic properties that other materials cannot provide in the same way: strength, low weight and resistance to high temperatures.

However, the core problem is not their geological availability. It is their processing.

The real power lies in refining.

China controls more than 80% of global refining capacity and therefore dominates the entire value chain – from separation and processing to magnet production.

Over recent decades, the United States, Japan and Europe closed many of their own facilities for cost reasons. They now lack viable alternatives.

China is currently tightening its approval procedures for magnet exports dramatically.

This means that every gram of exported magnetic material may require official approval – and can potentially be blocked.

The consequences could be severe: delivery times increase sharply, prices rise and factories in Europe may be forced to suspend production.

Thesis: If China reduces magnet production, military manufacturing is likely to be prioritised over civilian production. This could mean that electric vehicle or wind turbine production is halted in favour of defence programmes.

⚔️ 2) Ukraine as a Material Trap: Attrition as Strategy

Russia is playing for time. Its strategy is based on attrition rather than speed.

Every additional week of war costs Western countries billions.

China and North Korea are reportedly supplying Moscow with ammunition, components and spare parts. Russia is therefore increasing its ability to sustain the conflict, while Western countries continue to consume material resources.

Europe is rebuilding its defence industry, but capacity quickly encounters structural limits. Intermediate products are missing – particularly high-performance magnets, sensors and semiconductors.

Every artillery shell, tank and missile requires components that depend on rare earth elements. When these components are unavailable, even substantial defence budgets cannot solve the problem.

Key question: Which will last longer – the budget or the supply chain?

Consequence: The war in Ukraine is therefore not only a military conflict. It is also an economic war of attrition. Russia is attempting to exhaust Western inventories, financial resources and political patience – and China benefits indirectly from this process.

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3) Oil as Oxygen: Strategy Within the Global Petroleum Network

Oil is the lifeblood of the economy. Without it, almost everything comes to a standstill.

While the United States has its Strategic Petroleum Reserve, or SPR – a national oil reserve designed to stabilise energy markets during short-term disruptions – China is preparing for the longer term.

Beijing is quietly expanding its oil and gas inventories.

China’s objective is to become sufficiently independent during a global crisis to operate for weeks or even months without Western supplies – while simultaneously gaining greater influence over market prices.

The war in Gaza is increasing the pressure. Tanker routes are becoming riskier, insurance costs are rising and crude oil prices are experiencing significant volatility.

If China uses its oil reserves strategically, it could create a two-sided pressure mechanism against Western economies:

Price leverage: Through targeted market activity, China can influence prices or apply pressure to Western economies.

Supply squeeze: If China accumulates additional reserves, less oil remains available on global markets. Prices may rise before a conflict has even escalated.

Term explained: The Strategic Petroleum Reserve, or SPR, is the United States’ government-controlled emergency oil stockpile. It is intended to act as a buffer during supply disruptions.

Consequence: Oil becomes more than an economic commodity. It becomes a strategic weapon. Whoever controls the reserves can influence the stability of entire economies.

Read more:

4) Taiwan: The Exposed Nerve – and the Potential Collapse of the Technology Supply System

Taiwan is the centre of global microchip production.

More than 60% of the world’s semiconductors and over 90% of its advanced chips are manufactured there – primarily by TSMC, the world’s largest semiconductor foundry.

Without these chips, smartphones, vehicles, aircraft and weapons systems cannot function.

Any military or political escalation surrounding Taiwan could interrupt the flow of this critical technology.

Even a Chinese military exercise, blockade or attack affecting Taiwanese supply chains could destabilise the global economy.

China’s strategic leverage does not arise solely from its military threat. It also comes from the ability to influence shipping routes, insurance markets and freight costs.

As risk increases, prices rise. Western manufacturers pay twice: once through higher transport costs and again through the loss of semiconductor supplies.

Question: Can Washington protect Taiwan without technologically draining Europe?

Consequence: A crisis surrounding Taiwan would affect Europe far more severely than many decision-makers assume – not primarily in military terms, but industrially.

Every automotive manufacturer, defence company and energy technology provider depends on these chips.

Read more:
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☢️ 5) Iran and the Nuclear Grey Zone: Between Deterrence, Energy and Supply Chains

Iran is operating within a dangerous grey zone.

It continues to enrich uranium while remaining just below recognised weapons-grade capability.

An Iranian missile or drone could potentially be interpreted as a nuclear threat – even if it carries only a conventional payload.

This dual-use uncertainty – the possibility of either civilian or military application – increases the risk of misinterpretation and escalation.

However, Iran’s influence extends far beyond its nuclear programme:

  • Energy prices: As an OPEC+ member and a major actor in the Persian Gulf, Iran can influence global oil prices. Attacks or blockades in the Strait of Hormuz could significantly disrupt oil flows.
  • Supply chains: Approximately 20% of global oil shipments and a substantial proportion of liquefied natural gas transportation pass through the strait. A single serious incident could sharply increase global energy and transport costs.
  • Geopolitical relationships: Through its relationships with Russia, China and allied militias across the Middle East, Tehran can use regional tensions to disrupt Western trade routes or destabilise markets.

Consequence: Every exchange of fire between Iran and Israel, every drone attack against a tanker and every new sanction imposed on Tehran acts like a needle striking the global economic system.

Commodity prices rise, insurers increase their premiums and supply chains – particularly those dependent on the Suez Canal – come under growing pressure.

Logic: More pressure → more covert programmes → higher energy prices → deeper global uncertainty.

6) The Invisible War: Information, Finance and Sanctions

Modern wars are not fought only with weapons. They are also fought through information, data, financial systems and supply chains.

This new form of conflict often remains invisible, but its effects can be devastating.

Information Warfare

Disinformation campaigns, fabricated news and AI-generated content manipulate public opinion and weaken democratic societies from within.

When people no longer know which sources they can trust, every decision – political or economic – becomes more uncertain.

Financial Warfare

Sanctions, frozen accounts and exclusion from the SWIFT system are modern strategic weapons. They can paralyse entire economies.

However, every sanction creates secondary effects. Targeted countries develop alternatives, including China’s CIPS system and bilateral trade agreements settled in national currencies.

This process creates parallel financial structures that gradually weaken the Western-dominated system.

Term explained: SWIFT is the global messaging network used by banks to process international financial transactions. If a country is excluded, it effectively loses access to a substantial part of the global economy.

⚙️ Economic Warfare

Export restrictions, tariffs and supply suspensions destroy trust between states.

Companies are suddenly forced to create new supply chains – often at greater cost and with lower efficiency.

Consequences:

  • Costs rise because materials must be transported through longer routes or sourced from alternative suppliers.
  • Planning certainty declines as projects become more expensive and investors become more cautious.
  • Political polarisation increases because economic uncertainty divides societies.

Europe is positioned at the centre of this invisible conflict. It is vulnerable because of its open economy, yet simultaneously dependent on global stability.

If financial and information systems continue to fragment, Europe risks becoming trapped between two competing worlds: too interconnected to remain neutral, but too dependent to act independently.

7) Europe Between the United States and China – Without an Airbag

Europe is balancing on a geopolitical tightrope.

Its security guarantee comes from the United States. A significant share of its industrial supply base comes from China.

The two major powers are moving in opposing directions – and Europe is caught between them.

Pressure from the United States

Washington expects loyalty in military, political and economic matters.

In practice, this means:

  • higher defence expenditure;
  • participation in sanctions against China;
  • continued dependence on US technologies, including cloud infrastructure, semiconductors and artificial intelligence.

However, these measures often affect European industry first.

For example, a sanctions package targeting China may immediately harm German machinery manufacturers or automotive suppliers – long before it creates substantial pressure on Beijing.

Dependence on China

Europe sources 98% of its rare earth elements from China, along with solar cells, batteries, electronics and chemicals.

An export suspension could endanger the energy transition and disrupt entire industrial sectors.

China understands this dependency – and uses the resulting leverage with surgical precision.

Term explained: “Rare earth elements” are a group of 17 chemical elements that are essential for high-technology products – from wind turbines and electric vehicles to missile guidance systems.

A Divided Strategic Identity

Europe wants to act as a normative power, manufacture sustainably and achieve strategic independence.

Yet without secure access to energy, raw materials and military protection, these objectives are extremely difficult to realise.

The result is a permanent strategic balancing act: economically connected to China, dependent on the United States for security, but lacking a coherent independent strategy.

Consequences:

  • Industrial relocation: Companies move production to countries offering more stable conditions, including the United States.
  • Social pressure: Unemployment and rising energy prices place additional strain on the middle class.
  • Political fragmentation: Eastern European countries align more closely with the United States, while Southern European countries seek stronger economic ties with China. Internal divisions within the EU increase.

Example: If France actively attracts Chinese investors while Poland expands US military infrastructure, two competing models for Europe’s future collide.

The central question is therefore unavoidable:

Does Europe want to remain a geopolitical playing field – or become a strategic player again?

8) Scenarios: What Could Happen Next?

Scenario 1 – Controlled Escalation

China gradually restricts exports, while Western governments respond in a measured manner.

New refining facilities, recycling programmes and supply agreements with countries in Africa, South America and Australia are developed across Europe and the United States.

The transition takes years, but companies learn to use rare earth elements more efficiently and reduce unnecessary consumption.

This scenario requires endurance but ultimately allows stabilisation. Industry suffers, but it does not collapse.

Scenario 2 – Raw-Material Shock

China abruptly activates comprehensive export restrictions.

Export bans hit high-technology and energy industries in the middle of active production cycles.

Defence projects are prioritised, while civilian manufacturing is suspended.

Prices for magnets, semiconductors and batteries rise sharply.

Europe experiences shortages affecting automotive production, wind energy and electronics manufacturing.

Political pressure increases, resulting in emergency legislation, priority allocation systems and direct government intervention.

Scenario 3 – Formation of Competing Economic Blocs

The global economy divides into two major systems:

  • East: China, Russia, Iran and BRICS-aligned states
  • West: The United States, the European Union and Japan

Supply chains are reorganised and global cooperation declines.

Europe faces a historic strategic decision:

Does it remain firmly aligned with NATO while potentially losing industrial capacity – or does it attempt to establish an independent position between the blocs?

This scenario carries enormous political and social risk and could challenge prosperity and security simultaneously.

9) Early-Warning Indicators

The following indicators can reveal whether a geopolitical raw-material conflict is intensifying.

They can help businesses, investors and policymakers identify developments before they become acute:

  • Longer approval periods for Chinese magnet exports or processing equipment: This may indicate that Beijing is tightening restrictions further.
  • Rising prices for neodymium, praseodymium and dysprosium: An early sign of market scarcity.
  • Declining oil reserves in the United States combined with growing reserves in China: This may indicate asymmetric preparation for future crises.
  • Expanded North Korea–Russia cooperation: Evidence of weapons or ammunition deliveries would demonstrate that alternative supply networks in the East are functioning.
  • EU programmes for rare-earth recycling and magnet manufacturing: The speed of implementation reveals whether Europe is taking the threat seriously.

Consequences: If several of these indicators emerge simultaneously, a shortage cycle becomes increasingly likely.

Prices rise, delivery times increase dramatically and governments begin stockpiling strategic materials.

This could trigger a new wave of economic uncertainty – from higher energy costs to broader inflationary pressure.

10) What Europe Can Do

Europe is facing a strategic test.

If China controls the global raw-material valve, Europe must learn to act more independently.

This does not require complete autarky. It requires sovereignty through resilience.

  1. Support European refining and magnet productionEurope can only reduce its dependence on Chinese processing by rebuilding its own industrial capabilities. Joint projects involving Germany, France and the Nordic countries could provide a starting point.
  2. Establish strategic reserves of rare earth elementsJust as oil reserves can stabilise markets during a crisis, strategic REE reserves could prevent production disruptions in critical industries.
  3. Expand recycling at an industrial scaleDecommissioned wind turbines, electric vehicles and electronic products contain significant quantities of recoverable materials.These circular material flows must be used commercially and systematically – not treated merely as public-relations initiatives.
  4. Regulate dual-use technologies clearlyTechnologies that can be used for both civilian and military purposes must not be exported without effective controls. Otherwise, Europe loses strategic oversight of its own technological capabilities.
  5. Define industrial prioritiesEurope should determine in advance which sectors would receive priority access to scarce materials during a crisis – for example defence, energy and healthcare.Without predefined allocation rules, shortages could result in political and operational chaos.
  6. Invest in knowledge and researchMaterials science and recycling technologies require substantial investment.Without its own skilled workforce and specialist expertise, Europe will remain dependent on external powers.

Consequences of Inaction

If current policies remain unchanged, Europe risks a double loss of control – technological and economic.

Production capacity will migrate abroad, jobs will disappear and Europe’s vulnerability to political coercion will increase.

A stable future therefore requires a clear decision:

Raw-material sovereignty now – or dependency for decades.

11) Conclusion – The Unresolved Strategic Question

While Washington focuses on deterrence and Beijing calibrates access to critical resources, Europe’s future will not be decided in political speeches.

It will be decided on factory floors.

Whose components will we use to build our freedom tomorrow?

And what value does nuclear deterrence have if we lack the materials required to preserve peace?

Sources

Credits

“The heads of state of the BRICS countries on June 28, 2019, in Osaka, Japan.

From left to right: Xi Jinping, General Secretary of the Chinese Communist Party, Vladimir Vladimirovich Putin, President of Russia, Jair Bolsonaro, President of Brazil, Narendra Modi, Prime Minister of India and Cyril Ramaphosa, President of the Republic of South Africa.”

Original image on Wikimedia Commons, by Alan Santos/PR, licensed under CC BY 2.0. No modifications.

“Viatura Blindada Escola (VBE)—Leopard 1 A5 BR and Viatura Blindada de Combate Antiaérea (VBC AAe) Gepard 1A2.”

Original image on Wikimedia Commons, by 1º Regimento de Carros de Combate (1º RCC), licensed under CC BY-SA 4.0. No modifications.