China's Weaponization of Rare Earths Pushes Taiwan to the Forefront of the Non-Red Supply Chain
On June 9, the Washington think tank Brookings Institution held an online panel discussion titled "New Frontiers Linking Trade and Economic Security in Asia." Kristy Tsun-Tzu Hsu, Director of the Taiwan ASEAN Studies Center at the Chung-Hua Institution for Economic Research, pointed out at the meeting that China is turning critical resources such as rare earths into "very useful weapons." If countries believe that a stable and secure supply of critical minerals is important, they should integrate technology, capital, manpower, and natural resources to cooperate with Taiwan to build a supply chain free from Chinese control.
Hsu specifically mentioned that Taiwan's Industrial Technology Research Institute (ITRI) has developed rare earth refining technologies, and the United States is aware of this, but further discussions among more countries on cooperation mechanisms are still lacking. Her assessment was straightforward: time is running out. China does not merely control a single mineral; it controls a batch of industrial choke points capable of strangling automobiles, electronics, defense, magnets, and high-end manufacturing.
Rare earths are not ordinary commodities. They are critical raw materials for modern defense industries, electric vehicles, semiconductor equipment, wind power, precision electronics, and high-performance magnetic materials. Beijing has long utilized markets, subsidies, the externalization of environmental costs, and industrial policies to turn mining, processing, separation, smelting, and magnetic materials into global dependencies. Once others have dismantled their industrial chains, lost skilled workers, and environmental reviews have become high-cost hurdles, the CCP translates its "market dominance" into a "strategic weapon." This playbook is not free-market competition; it is party-state industrial warfare.
Earlier this year, Taiwan's Minister of Economic Affairs Kung Ming-hsin stated that the Ministry of Economic Affairs is supporting ITRI in pursuing independent rare earth R&D and pilot line technology, with plans to build a pilot production line within three years as a foundation for enhancing Taiwan's self-reliance in critical materials. This means Taiwan's role in non-red supply chains is not limited to chip foundries, but could also extend to critical materials, magnetic materials, precision manufacturing, and export control coordination.
The same panel also addressed US-Taiwan trade and investment arrangements. Hsu analyzed that the investment cooperation memorandum and reciprocal trade agreement signed between Taiwan and the US this year focus on reducing US tariffs on certain traditional Taiwanese industries, machinery, and auto parts; Taiwan opening most of its market to US industrial and agricultural products; Taiwanese enterprises independently investing US$250 billion in the US; the Taiwanese government supporting financial institutions with credit guarantees to provide up to US$250 billion in corporate credit lines; and both sides aligning on export controls, national security investment reviews, and trade policy toward China.
These arrangements cannot exist without domestic controversy in Taiwan. Traditional industries may benefit from tariff reductions, while some sectors will worry about the pressure brought by market opening and investment commitments. Hsu also noted that the real debate will begin when the Taiwanese government submits the agreement to the Legislative Yuan for review. This is not merely a tariff negotiation; it is Taiwan repositioning itself in the US-China confrontation framework: Taiwan pays the costs of market access, investment, and policy coordination in exchange for security, supply chain positioning, and strategic value in the decoupling from China.
Brookings Senior Fellow Kari Heerman pointed out that the Trump administration demonstrated that the US could leverage its own market openness as leverage to extract commitments from other countries, some of which went beyond the scope of traditional trade liberalization into investment, procurement, economic security, and national security policy. Translated into realpolitik, this means the US market is becoming the admission ticket for allies to restructure supply chains.
The CCP is most adept at turning the world's dependence into its own bargaining chips. This is true for rare earths, solar energy, batteries, ports, telecommunications, critical raw materials, and low-cost production capacity alike—they all follow the same logic. First, use state power to crush market prices and wipe out local supplies in free countries, concentrating production capacity in China; once the world gets hooked, begin pulling the plug, choking off supplies, and imposing conditions.
The core of countering the weaponization of rare earths is not merely finding a few more mines. What is truly difficult is rebuilding an entire non-red ecosystem spanning raw materials, separation, smelting, materials, equipment, environmental protection, finance, and end procurement. Taiwan possesses technology and manufacturing capabilities but lacks natural resources and strategic depth; the US has markets and security frameworks, but rebuilding industrial chains takes time; Australia, Canada, Japan, and Europe each possess resources, technology, or capital. If these cannot be pieced together, the CCP will continue to sit by the valve of global industry playing innocent.
Beijing weaponizing rare earths demonstrates that the CCP has never viewed globalization as a reciprocal order, but rather as an instrument for infiltration, control, extortion, and strategic prepositioning. For the past several decades, the free world sought cheap gains and handed supply chains over to a Leninist party-state, only to realize now that it is not a factory, but a hostage warehouse. Taiwan has been pushed to the front line not because Taiwan wants to be a pawn, but because Taiwan was already situated right on the fault line of this industrial cold war.