Resource War: How commercial assets are turned into weapons in the front line

Copyright © HT Digital Streams Limit all rights reserved. N Madhavan 9 min Read 01 Jun 2025, 06:19 pm ist China, for his side, think in the long run to raise the US. (Tarun Kumar Sahu/Mint) Summary Donald Trump wants to retain US domination over China. This denies China all from chips to software instruments. Now Xi Jinping has retaliation again, which imposes restrictions on rare earthminerals. What is India’s strategy to deal with the fallout? Chennai: Recently, US Vice President JD Vance confirmed what the world feared. He named the US -China competition in the development of artificial intelligence (AI) as a ‘arms race’. Policymakers in both countries believe that anyone who wins this breed will dominate the world. At the heart of this battle is computer power and it has given a fresh impetus to the team war that started between the US and China five years ago. In May 2020, during his first term as president of the US, Donald Trump fired the first Salvo. The US trading department added Chinese technical giant Huawei Technologies to the ‘Entity List’, a benchmark that prevented the business that prevents smartphones, telecommunications equipment and woolly computer services from manufacturing or developing access to advanced computer chips using US technology or software. The reason? The US feared that Huawei’s tempting prices, backed by Chinese government subsidy, would soon dominate the next generation of telecommunications networks, which ended the US group in the field. The move had a weakening impact on Huawei. The global expansion received a hit and the revenue crashed. “A corporate giant faced technological suffocation,” Chris Miller wrote in his book Chip War. According to him, this development reminded China of its weakness. “In almost every step of the process of producing semiconductors, China is staggeringly dependent on foreign technology, of which almost all of which are controlled by its geopolitical opponents – Taiwan, Japan, South Korea or the US,” he wrote. China has started investing billions of dollars to develop its own semiconductor technology to free itself from America’s chip choke, he added. But the US is not in the mood to make this effort easy for China. This has gradually tightened restrictions on China’s semiconductor sector. The ‘entity list’ has since grown to more than 140 Chinese businesses – factory units, semiconductor tools and even investment companies working in the sector. Restrictions have expanded from high -banded memory slides to semiconductor production equipment and software instruments. China, which considers US restrictions as an attempt to deny it the technological greatness it deserves, has retaliation again. It has begun to impose restrictions on the export of critical and rare earthminerals that are decisive for the production of weapons, semiconductors and electric vehicles. There are 17 rare earthminerals and China has absolute control over most of them (see chart). In October 2023, it introduced export permits for graphite needed to produce lithium ion batteries. In December that year, it banned the transfer of rare earthmineral withdrawal and separation technologies and technology from making magnets. China has mastered these technologies over the years. In the same month, it banned the export of antimone, gallium and germanium, except to introduce the stricter overview of graphite exports to the US. In response to Donald Trump, which imposes 10% rates on all Chinese products, the midst kingdom added five more critical minerals – Tungsten, Indium, Bismuth, Tellurium and Molybdenum on the export controls. This meant that companies need special export licenses to execute the minerals. On April 4, after Trump’s liberation day tariffs, China added seven more minerals and magnets to the export restriction list. There is no clarity on whether these restrictions have been suspended after the recent US and China trading conversations in Geneva. The US is now finding alternative sources for these minerals. Suddenly, until recently, economic resources that have been predominantly seen as commercial assets have acquired a new lead as strategic instruments. They are no longer controlled by the market – geopolitics have a greater opinion on it. A brief history demand for resources began to rise to the industrial revolution in 1760 which introduced the use of metals such as iron and steel. The rise of mechanized factory systems has increased production and thus the demand for resources. As demand has risen, countries like Great Britain, France and Belgium began to colonize the world in search of resources. Look at the full image a weaving shed in the UK in 1835. During the Industrial Revolution, the textile industry was the first to adopt modern production processes. ((Illustrator T. Allom, Graver J. Tingle, public domain, via Wikimedia Commons)) “Colonization was about the exploitation of natural resources,” says S. Gurumurthy, writer and a corporate adviser. The British Empire has met its demand for cotton, tea, leather, coal and iron ore from India for almost two centuries, he added. After World War II, resources were seen as market instruments. They were freely traded at a price. According to the World Trade Organization, world trade volumes grew by 4500%between 1950 and 2024. “It was also a period when countries used trade to increase co-dependence in the hope that it would increase peace and well-being,” said Dhruva Jaishankar, executive director of Observer Research Foundation-America. Europe bought gas from Russia in the hope that the latter would leave them alone. The US has built up a strong economic relationship with China on the assumption that the Asian people can integrate with the global economy, eliminate poverty and embrace democratic principles. Of course, resources trade was not completely free. Nations imposed restrictions. In the past 75 years, the US has been the largest culprit. As an exclusive superpower, it denied different countries’ technology and resources that it considered a double use – for both civil and military applications. As the US China rumble increases, the weapon is wasting more than technology for double use. China does not appear to use the dominance it has built in the global economy. The new normal China accounts for more than 30% of global manufacturing outputs. This is the highest concentration of manufacturing in one place, “Jaishankar said. The US had a similar share for a short time immediately after World War II when the protracted war destroyed many of the production facilities in mainland Europe and Japan.” China managed to achieve it without a war, “he said, and he has now tried to use his manufacturing power as a strategic lever.” —Dhruva Jaishankar It’s not just manufacturing. chain, “said an Indian government official who did not want to be identified. There is a conscious effort by China to make the world depend on it. At the same time, it reduces the dependence on the world. iPhones. Prolidented, sharpening, building up competition, hardening the supply chain and working out perceived vulnerabilities for foreign pressure. (Reuters) India plays as the US and China is fighting for supremacy, India must have a strategy to go with the fall. “The arms of such resources are the new normal,” says Ajay Srivastava, founder, Global Trade Research Initiative, a trade -oriented thinking tank. India must institute policy to reduce the impact of such decisions. India must identify and develop resources that the world would need and should use them as a bargain, which it added. Said, do not have all the resources in the country. We need to deal with countries that have these resources and import the mineral for processing in India. This will give us control of it, “he explained. Some people have questioned the electrification of vehicles in a big way. With India having the raw material to make batteries, the rise in electric vehicle lesson will move India’s energy dependence from West Asia to China. India has already set up a list of critical minerals and has taken steps to secure it. Partnership, a multi -nation initiative under the leadership of 40 countries. to suit its strengths. to drive green hydrogen efforts. is, is a long-term vision and a step-by-step approach to achieving it, “said Srivastava of GTRI. Catch all the business news, market news, news reports and latest news updates on live mint. Download the Mint News app to get daily market updates.