Critical Minerals: “We need a finer understanding of China’s vulnerabilities” claims MASSOT

As the scramble for critical minerals reshapes global power dynamics, few voices offer a more nuanced lens than Pascale Massot, Associate Professor at the University of Ottawa and author of China’s Vulnerability Paradox (Oxford University Press, 2024). Speaking ahead of the ESSEC Institute for Geopolitics & Business event, “Securing Critical Minerals: Geopolitics, Economics, and Sustainability in a New Age of Resource Competition” (July 2), Massot explores how China’s dominance in processing—and its deep import dependencies—creates both geopolitical leverage and strategic fragilities. In this interview, she challenges simplistic narratives and calls for a more calibrated, multi-actor response to a rapidly securitizing global minerals landscape.

Pascale MASSOT

You describe China as both the largest consumer and a vulnerable actor in commodity markets. How does this contradiction influence Beijing’s global strategy for critical minerals today?

It has become increasingly commonplace to describe China as the dominant actor in global critical minerals supply chains. I think this assertion is at once an overstatement and an understatement. Let me explain. China has had a long history of import-dependence for many (most) of its commodity needs. This continues today. A study published in 2018 in the Proceedings of the National Academy of Sciences (PNAS) estimated that China depended on imports for over 50% of 19 out of 42 non-energy minerals analyzed. At the same time, China’s very real dominance in critical minerals processing and refining goes beyond the minerals themselves to include much broader ecosystems, from magnet manufacturing and EV supply chains, to overseas investment (see Indonesian nickel) and technology development (see copper smelting).

China dominates the midstream processing of rare earths and battery metals. Is this control a true geopolitical trump card—or a misunderstood point of fragility?

I really do think that on the issue of rare earths and rare earths magnets and associated technologies, China has found a true geopolitical trump card. Unlike previous attempts at export controls and regulations, the April 4th announcement has created rapid and intense levels of pain around the world, including in the U.S. and in Europe, hence the rapid succession of U.S.-China meetings that followed. As we cover in a recent Asia Society webinar with Paul Triolo and Lizzi C. Lee, both the US and China have found a way to shut down factories on the other side. This is a form of Mutually Assured Destruction. At the same time, this reality means that in the short and even mid-term, the U.S. and China will have to continue talking.

To what extent has China succeeded in weaponizing its commodity leverage, and where have its attempts backfired?

This is an important question. I don’t believe China has achieved perfect dominance in all aspects of commodity procurement. Therefore, we need a finer understanding of China’s areas of vulnerability. These include certain relationships with resource producing countries for instance, Canada comes to mind. Another aspect to keep in mind is broader reputational and trust costs of China’s decision to weaponize rare earths exports. Just like the U.S. is discovering in its own attempts to weaponize export controls of high technology products to China, China may soon discover that weaponizing trade will lead to second order effects and unintended consequences, including in Europe, which is very much impacted by the current rare earths’ magnet permitting backlogs.

As the U.S. and EU pursue de-risking, are we heading toward a bifurcated global minerals economy—or is interdependence too entrenched to break?

Given the level of China’s dominance in the mid-stream segments of critical minerals production (processing and refining), complete bifurcation is not possible in the short to medium term (and likely long-term as well). We also have to remember that if a recalibration of dependencies and resilience is a worthy objective, full decoupling and replication of China’s supply chains would run counter to the green shift objectives driving much of the focus on critical minerals today. We have to keep in mind multiple goals at once, and consider trade-offs. As the great report directed by Tim Rühlig discusses, Reverse Dependencies: Making Europe’s Digital Technological Strengths Indispensable to China, the EU will have to consider carefully the balance of autonomy and strategic entanglement it wants to pursue towards China in the context of global supply chains.

What role do commodity traders and non-state actors play in amplifying—or softening—state-driven competition over critical minerals?

This is an important question that is not sufficiently addressed in public debates to date. As I discuss in a recent piece in The Diplomat, we are facing a situation where, until very recently, the West approached critical minerals security from the perspective of open-market forces. This led to decades of internationalization, financialization, and global supply chain reconfiguration. China for its part, has approached the issue from a state-led perspective for decades, despite the important role played by private sector actors. We do not have a practice, certainly, in North America, of using mechanisms to work with, for instance, large commodity traders, to accomplish national resource security objectives. If price levels are not high enough, private enterprises will not be willing to invest. Therefore, discussions around securing demand levels, providing price floors, and long-term policy assurances are critical in the West to ensure private-sector buy-in.

How should business leaders assess exposure to China-related supply risks: as a geopolitical threat, a regulatory hazard, or an evolving strategic dependency?

All of the above and more, including as an opportunity, in some cases. Again, I believe that as long as we accept that full decoupling is not an attractive option, various stakeholders in the West will have to continue to compose with China as an important player in critical minerals supply chains. The way to approach this entanglement will vary depending on the actor involved and the broader strategic imperatives they are operating under. This will not be the same for a natural resource producer, a drone maker, an EV manufacturer or a government agency devising industrial or national security policy. I think each actor will have to determine an acceptable level of exposure, as well as develop positions of strength along the way, so that China’s positions of dominance are more evenly matched with positions of dominance from other locales, be they in the Global South or in the West. We should be looking at realistic ways to recalibrate our dependence and the overall global balance of strengths and vulnerabilities in critical minerals supply chains, to arrive at a more acceptable and resilient situation. At the same time, I also believe we have to work to contain the pace of securitization of minerals. In the long run, we need commitments towards stable and transparent markets, and towards maintaining open access for the majority of metals and minerals.

ABOUT PROF. PASCALE MASSOT

Pascale Massot is an Associate Professor at the School of Political Studies at the University of Ottawa. From February 2020 to February 2021, she served as Senior Advisor for Asia-Pacific to the Canadian Minister of Foreign Affairs. Between December 2015 and July 2017, she also worked as a Policy Advisor to the Minister of Foreign Affairs and as Senior Advisor to the Minister of International Trade of Canada. Her research focuses on the global political economy of China’s rise, China’s impact on global markets—including natural resource markets—the free market as a third pillar of the liberal world order, and the political economy of the Asia-Pacific region, with particular attention to China. She also studies Canada-China and Canada-Asia relations, as well as Canadian public opinion on Asia. She has conducted fieldwork in China, including as a visiting scholar at the Chinese Academy of Social Sciences in Beijing and as a visiting PhD researcher at the Center for the Study of International Political Economy at Peking University. Pascale Massot was awarded the 2014–2015 Cadieux-Léger Fellowship at Global Affairs Canada.

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