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Published online by Cambridge University Press: 30 January 2025
‘De-risking’ is the latest buzzword in the China strategy of the United States and its allies. It means limiting dependence on and engagement with China in select strategic sectors. One of such sectors concerns critical minerals (CMs) which are essential for the ongoing green economic transition. To secure access to CMs and reduce reliance on China, the US and its allies have been developing networks for ally-shoring supply chains. A major problem with the ‘de-risking’ strategy in this regard is that it treats China as the risk and hence excludes China from the discussions and collaboration on global supply chain issues. In this paper, we argue that this strategy fails to consider China's strategies and policies regarding CMs. We therefore offer a detailed analysis of China's policies which shows that they have been primarily aimed at addressing internal challenges and policy priorities in China rather than dominating, weaponizing, or causing disruptions in global supply chains. To address supply chain risks most effectively, international collaborative frameworks should engage with, rather than exclude, China. Confrontational strategies with ‘China being the risk’ at the core might themselves be a risk by undermining rational policymaking and leading to disruptive policies.
Weihuan Zhou is Associate Professor and Co-Director of the China International Business and Economic Law (CIBEL) Centre, Faculty of Law and Justice, UNSW Sydney.
Victor Crochet practices international and European trade law at Van Bael & Bellis. He is also a PhD student at Cambridge University.
Haoxue Wang is Research Assistant at Faculty of Law and Justice, UNSW Sydney.
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101 H. Sanderson (2022) Volt Rush, The Winners and Losers in the Race to Go Green. UK: One World, Chapters 4 and 5.
102 J. Shankleman (2009) ‘Going Global: Chinese Oil and Mining Companies and the Governance of Resource Wealth’, Woodrow Wilson International Center for Scholars, www.wilsoncenter.org/sites/default/files/media/uploads/documents/Shankleman_Going%20Global.pdf.
103 KPMG and The University of Sydney, ‘Demystifying Chinese Investment in Australia’ (April 2023), https://assets.kpmg.com/content/dam/kpmg/au/pdf/2023/demystifying-chinese-investment-in-australia-report.pdf; E. Ellis (2021) ‘Chinese Advances in Chile’, Global Americans, https://theglobalamericans.org/2021/03/chinese-advances-in-chile/; J. Kessler (2023) ‘Amid Political Turmoil in Peru, China Attempts Business as Normal’, Politics & Current Affairs, https://thechinaproject.com/2023/02/14/amid-political-turmoil-in-peru-china-attempts-business-as-normal/; S. D. Negara and L. Suryadinata (2022) ‘Sino-Indonesian Relations: Getting Closer or Further Apart?’, Asialink, https://asialink.unimelb.edu.au/insights/sino-indonesian-relations-getting-closer-or-further-apart; A. Colville (2023) ‘Mining the Heart of Africa: China and the Democratic Republic of Congo’, Politics & Current Affairs, https://thechinaproject.com/2023/06/07/mining-the-heart-of-africa-china-and-the-democratic-republic-of-congo/.
104 Ministry of Commerce, ‘China–Australia FTA’ (23 May 2005), http://fta.mofcom.gov.cn/topic/enaustralia.shtml; Ministry of Commerce, ‘China–Chile FTA’ (November 2005), http://fta.mofcom.gov.cn/topic/china_chile_upgrade.shtml; Ministry of Commerce, ‘China–Peru FTA’ (28 April 2009), http://fta.mofcom.gov.cn/topic/enperu.shtml.
105 Ministry of Commerce, ‘China–ASEAN FTA’ (22 November 2015), http://fta.mofcom.gov.cn/topic/china_asean_upgrade.shtml; Ministry of Commerce, ‘Regional Comprehensive Economic Partnership’ (23 May 2005), http://fta.mofcom.gov.cn/topic/enperu_recp.shtml.
106 KPMG and The University of Sydney, supra n. 103; W. Zhou (2017) ‘Chinese Investment in Australia: A Critical Analysis of the China–Australia Free Trade Agreement’, Melbourne Journal of International Law 18(2), 407, 408–414.
107 The Treasury, ‘Foreign Investment in Australia – National Security’ (4 July 2023), https://foreigninvestment.gov.au/guidance/types-investments/national-security; The Treasury, ‘Foreign Investment in Australia – Mining’ (04 July 2023), https://foreigninvestment.gov.au/guidance/types-investments/mining.
108 J. Kehoe et al. (2021) ‘Treasurer Blacklists China Investments’, Financial Review, www.afr.com/politics/federal/treasurer-imposes-informal-ban-on-china-investments-20210112-p56thm; K. Needham (2023) ‘Australia Blocks Chinese Investment in Rare Earth Firm Citing National Interest’, Reuters, www.reuters.com/article/australia-china-rareearths-idUSKBN2V209R.
109 Ministry of Commerce, ‘China–Peru FTA’, Chapter 10 – Investment, supra note 104, http://fta.mofcom.gov.cn/bilu/annex/bilu_xdwb_10_en.pdf.
110 Ibid., ‘Section B: Peru's Schedule of Specific Commitments’, http://fta.mofcom.gov.cn/bilu/annex/bilu_fujian6_02_en.pdf.
111 F. Pickmann and M. Chirinos (2022) ‘Dentons Global Mining Guide: Peru’, Dentons, www.dentons.com/en/insights/newsletters/2022/january/17/dentons-global-mining-guide/dentons-global-mining-guide-2022/peru.
112 Ministry of Commerce, ‘China–Chile FTA’, Annex 8-A: Schedules of Specific Commitments, Part II: Schedule of Chile, supra n. 4, http://fta.mofcom.gov.cn/chile/xieyi/fujian8_A_02_en.pdf.
113 Ministry of Commerce, ‘China–Chile FTA’, supra n. 4, http://fta.mofcom.gov.cn/chile/xieyi/freetradexieding2.pdf, articles 112–113.
114 Ministerio de Relaciones Exteriores, ‘Chile and China hold Fourth Strategic Dialogue on Economic Cooperation and Coordination with focus on mining, infrastructure, energy, innovation and technology’ (4 January 2023), www.minrel.gob.cl/news/chile-and-china-hold-fourth-strategic-dialogue-on-economic-cooperation.
115 Ministry of Commerce, ‘China–ASEAN FTA’, supra n. 105, http://fta.mofcom.gov.cn/inforimages/200908/20090817113007764.pdf.
117 Ministry of Commerce, ‘Regional Comprehensive Economic Partnership’, supra n. 105, article 10.6.
118 Ibid., article 10.17.
119 See e.g. WTO, ‘Investment Facilitation for development’, www.wto.org/english/tratop_e/invfac_public_e/invfac_e.htm.
120 Note that RCEP entered into force for Indonesia only on 2 January 2023, and an assessment of its actual effect on Chinese investment in Indonesia requires more data and evidence. See Association of Southeast Asian Nations, ‘RCEP Agreement enters into force for Indonesia’ (04 January 2023), https://asean.org/rcep-agreement-enters-into-force-for-indonesia/.
121 Belt and Road Portal, ‘List of Countries that have Entered in Cooperation Agreements with China to Jointly Build the Belt and Road’ (26 June 2023), www.yidaiyilu.gov.cn/p/77298.html.
122 H. Wang (2021) ‘The Belt and Road Initiative Agreements: Characteristics, Rationale, and Challenges’, World Trade Review 20(3), 282.
123 Belt and Road Portal, ‘Weekly Report of Projects’, www.yidaiyilu.gov.cn/list/w/xmzb?page=10; OECD, ‘China's Belt and Road Initiative in the Global Trade, Investment and Finance Landscape’ (2018), www.oecd.org/finance/Chinas-Belt-and-Road-Initiative-in-the-global-trade-investment-and-finance-landscape.pdf; C.N. Wang (2023) ‘China Belt and Road Initiative (BRI) Investment Report 2022’, Green Finance & Development Center, https://greenfdc.org/china-belt-and-road-initiative-bri-investment-report-2022/.
124 J. McBride et al. (2023) ‘China's Massive Belt and Road Initiative’, Council on Foreign Relations, www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative; C.N. Wang (2023) ‘China Belt and Road Initiative (BRI) Investment Report 2023 H1’, Green Finance & Development Center, https://greenfdc.org/china-belt-and-road-initiative-bri-investment-report-2023-h1/; Belt and Road Portal, ‘China and Algeria Sign a Three-Year Cooperation Plan in Critical Fields (2022–2024)’ (8 December 2022), www.yidaiyilu.gov.cn/p/295291.html.
125 L. Leruth et al. (2022) ‘Green Energy Depends on Critical Minerals. Who Controls the Supply Chains?’, PIIE, www.piie.com/sites/default/files/documents/wp22-12.pdf, 8–17.
126 Ibid.
127 J. Nyabiage (2023) ‘China and Congo Agree to Regular Checks on Mining Deals’, China Diplomacy, www.scmp.com/news/china/diplomacy/article/3222042/china-and-congo-agree-regular-checks-mining-deals; M. Arkyasa (2023) ‘China's Dominance in Indonesian Nickel Mining Challenges the West’, Indonesia Business Post, https://indonesiabusinesspost.com/risks-opportunities/chinas-dominance-in-indonesian-nickel-mining-challenges-the-west/.
128 Global Times, ‘Chile's Lithium Nationalization Plan May have Negative Impact on China's Supply’ (24 April 2023), www.globaltimes.cn/page/202304/1289705.shtml; Z. Hansrod (2023) ‘Long Road for DRC as it Renegotiates Minerals Deal with China’, RFI, www.rfi.fr/en/africa/20230812-long-road-for-drc-as-it-renegotiates-minerals-deal-with-china; A. Sood (2023) ‘Indonesia Cracks Down on Illegal Nickel Exports to China as Experts Urge Price Protection for Miners’, This Week in Asia, www.scmp.com/week-asia/economics/article/3226817/indonesia-cracks-down-illegal-nickel-exports-china-experts-urge-price-protection-miners; Government of Zimbabwe, ‘Base Minerals Export Control (Unbeneficiated Base Mineral Ores) Order 2023 (Zimbabwe)’ (2023), www.veritaszim.net/sites/veritas_d/files/SI%202023-005%20Base%20Minerals%20Export%20Control%20%28Unbeneficiated%20Base%20Mineral%20Ores%29%20Order%2C%202023.pdf.
129 WTO, ‘Indonesia – Measures Relating to Raw Materials’ (8 December 2022), www.wto.org/english/tratop_e/dispu_e/cases_e/ds592_e.htm.
130 European Commission, ‘Commission Implementing Regulation (EU) 2021/2012’ (17 November 2021), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021R2012&from=EN; European Commission, ‘Commission Implementing Regulation (EU) 2022/433’ (15 March 2022), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R0433&from=EN; European Commission, ‘Commission Implementing Regulation (EU) 2020/1408’ (6 October 2020), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R1408&from=EN. For more details, see V. Crochet (2022) ‘Trade Defence Instruments: A New Tool for the European Union's Extractivism’, European Journal of International Law 33(2), 381.
131 European Commission, ‘Commission Implementing Regulation (EU) 2022/433’, supra n. 130.
132 Ministry of Commerce, ‘Response to the Suggestions (No. 7858) of the People's Congress’ (19 November 2021), www.mofcom.gov.cn/zfxxgk/article/gkml/202111/20211103219245.shtml#:~:text=%E7%9B%AE%E5%89%8D%E6%88%91%E5%9B%BD%E5%AF%B9%E8%BF%9B%E5%8F%A3%E8%83%BD%E6%BA%90,%E8%BF%9B%E5%8F%A3%E5%85%B3%E7%A8%8E%E5%9D%87%E4%B8%BA%E9%9B%B6%E3%80%82.
133 China Power, ‘How Will the Belt and Road Initiative Advance China's Interests?’, https://chinapower.csis.org/china-belt-and-road-initiative/.
134 China–Australia FTA, supra n. 104, chapter 2; China–Peru FTA, supra n. 104, chapter 2; China–ASEAN FTA, supra n. 105, article 8; RCEP, article 2.16.
135 WTO, ‘Accession of the People's Republic of China WT/L/432’ (23 November 2001), article 11.3 and annex 6.
136 Ministry of Finance, ‘Table of Provisional Import Tariff Rates in 2023’ (2023), www.gov.cn/zhengce/zhengceku/2022 12/29/5734125/files/031aee21d6ae4106adeabc0636625db2.pdf.
137 WTO, ‘China – Measures Related to the Exportation of Various Raw Materials’ (28 January 2013), www.wto.org/english/tratop_e/dispu_e/cases_e/ds394_e.htm; WTO, ‘China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum’ (20 May 2015), www.wto.org/english/tratop_e/dispu_e/cases_e/ds431_e.htm.
138 WTO, ‘China – Export Duties on Certain Raw Materials’ (08 November 2016), www.wto.org/english/tratop_e/dispu_e/cases_e/ds508_e.htm; WTO, ‘China – Duties and other Measures concerning the Exportation of Certain Raw Materials’ (23 November 2016), www.wto.org/english/tratop_e/dispu_e/cases_e/ds509_e.htm.
139 These raw materials were antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum and tin. See United States Trade Representative, ‘2018 Report to Congress on China's WTO Compliance’ (February 2019), https://ustr.gov/sites/default/files/2018-USTR-Report-to-Congress-on-China%27s-WTO-Compliance.pdf, 35.
140 Customs Tariff Committee of the State Council, ‘Customs Tariff of Import and Export Commodities of the People's Republic of China in 2019’ (2019), www.gov.cn/xinwen/2018-12/31/5353742/files/388a1dcfed64453983cf95f3af874b41.pdf, 1127–1131; Customs Tariff Committee of the State Council, ‘Customs Tariff of Import and Export Commodities of the People's Republic of China in 2020’ (2020), http://gss.mof.gov.cn/gzdt/zhengcefabu/201912/P020191230547817604455.pdf, 1179–1183; Customs Tariff Committee of the State Council, ‘Customs Tariff of Import and Export Commodities of the People's Republic of China in 2021’ (2021) http://czj.cq.gov.cn/zwgk_268/cszc/202012/P020201231694960873112.pdf, 1245–1249; Customs Tariff Committee of the State Council, ‘Customs Tariff of Import and Export Commodities of the People's Republic of China in 2022’ (2022), www.gov.cn/xinwen/2021-12/31/5665850/files/2b07cb12bbb94c2eb14d3525596ab9fb.pdf, 1428–1432; Customs Tariff Committee of the State Council, ‘Customs Tariff of Import and Export Commodities of the People's Republic of China in 2023’ (2023), www.gov.cn/zhengce/zhengceku/2023-01/02/5734605/files/eafdb87c9c654702a5cd7f5f11dca10f.pdf, 1472–1476.
141 WTO, ‘China's Accession Protocol’, supra n. 135.
142 Ministry of Commerce, ‘2019 Export Licencing Management Commodities Catalogue’ (29 December 2019), www.gov.cn/zhengce/zhengceku/2018-12/31/content_5436895.htm, items 414–420, 456; Ministry of Commerce, ‘2020 Export Licencing Management Commodities Catalogue’ (31 December 2019), www.mofcom.gov.cn/article/b/e/201912/20191202927141.shtml, 18–20; Ministry of Commerce, ‘2021 Export Licencing Management Commodities Catalogue’ (31 December 2020), https://law.esnai.com/upload_files/19/20211520473908162.pdf, 18–20; Ministry of Commerce, ‘2022 Export Licencing Management Commodities Catalogue’ (31 December 2021), www.mofcom.gov.cn/article/zcfb/zcdwmy/202112/20211203233746.shtml, 19–20; Ministry of Commerce, ‘2023 Export Licencing Management Commodities Catalogue’ (30 December 2022), www.mofcom.gov.cn/article/zcfb/zcblgg/202212/20221203376706.shtml, 19–20.
143 W. Zhou et al. (2023) ‘Trade vs. Security: Recent Developments of Global Trade Rules and China's Policy and Regulatory Responses from Defensive to Proactive’, World Trade Review 22(2), 193.
144 A. Liang and N. Marsh (2023) ‘Gallium and germanium: What China's new move i. microchip war means for world’, BBC News, www.bbc.com/news/business-66118831; Reuters, ‘China to Restrict Exports of Chipmaking Materials as US Mulls New Curbs’ (4 July 2023), www.reuters.com/markets/commodities/china-restrict-exports-chipmaking-materials-us-mulls-new-curbs-2023-07-04/.
145 Renmin, ‘From 01 August, China will Implement Export Controls on Gallium and Germanium Related items – a Necessary Measures to Maintain National Security’ (12 July 2023), www.news.cn/politics/2023-07/12/c_1129744648.htm.
146 V. Cha (2023) ‘Examining China's Coercive Economic Tactics’, Center for Strategic & International Studies, www.csis.org/analysis/examining-chinas-coercive-economic-tactics.
147 Q. Zhou and S. Brooke (2022) ‘China Merges Three Rare Earths State-Owned Entities to Increase Pricing Power and Efficiency’, China Briefing, www.china-briefing.com/news/china-merges-three-rare-earths-state-owned-entities-to-increase-pricing-power-and-efficiency/; B. Sultan (2023), ‘Vertical Integration of Chinese Companies on Rare Earth Minerals Production as Strategic Supremacy’, Modern Diplomacy, https://moderndiplomacy.eu/2023/11/30/vertical-integration-of-chinese-companies-on-rare-earth-minerals-production-as-strategic-supremacy/.
148 The White House, supra n. 6.
149 European Council, ‘European Council Conclusions on China’ (30 June 2023), www.consilium.europa.eu/en/press/press-releases/2023/06/30/european-council-conclusions-on-china-30-june-2023/.
150 The Federal Government, ‘Strategy on China’, www.auswaertiges-amt.de/blob/2608580/49d50fecc479304c3da2e2079c55e106/china-strategie-en-data.pdf, 34.
151 A. Demarais (2023) ‘What Does ‘De-Risking’ Actually Mean?’, FP, https://foreignpolicy.com/2023/08/23/derisking-us-china-biden-decoupling-technology-supply-chains-semiconductors-chips-ira-trade/; The White House, ‘Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern’ (09 August 2023), www.whitehouse.gov/briefing-room/presidential-actions/2023/08/09/executive-order-on-addressing-united-states-investments-in-certain-national-security-technologies-and-products-in-countries-of-concern/.
152 Some of these arrangements are listed in Section 1.
153 See Prime Minister of Australia, ‘Australia – Japan Partnership Concerning Critical Minerals’ (22 October 2022), www.pm.gov.au/sites/default/files/media/JAPAN-AUSTRALIA_MOU_221022.pdf; Department of Industry, Science and Resources, ‘Joint Statement of Intent between Australia and the United Kingdom on Collaboration on Critical Minerals’ (4 April 2023), www.industry.gov.au/publications/joint-statement-intent-between-australia-and-united-kingdom-collaboration-critical-minerals; Government of Canada, ‘MOU between Canada and South Korea on Cooperation in Critical Mineral Supply Chains, the Clean Energy Transition and Energy Security’ (16 May 2023), www.international.gc.ca/country_news-pays_nouvelles/2023-05-16-korea-coree.aspx?lang=eng; The White House, ‘United States – Australia Statement of Intent: Climate, Critical Minerals, and the Clean Energy Transformation’ (20 May 2023), www.whitehouse.gov/briefing-room/statements-releases/2023/05/20/australia-united-states-statement-of-intent-climate-critical-minerals-and-the-clean-energy-transformation/.
154 US Department of Commerce, ‘US Department of Commerce Publishes Text of Landmark Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement’ (07 September 2023), www.commerce.gov/news/press-releases/2023/09/us-department-commerce-publishes-text-landmark-indo-pacific-economic.
155 European Commission, ‘Memorandum of Understanding between the European Union and Ukraine on a Strategic Partnership on Raw Materials’ (2021), https://ec.europa.eu/docsroom/documents/46300/attachments/1/translations/en/renditions/native; European Commission, ‘Memorandum of Understanding on a Partnership on Sustainable Raw Materials Value Chains and Renewable Hydrogen between the European Union represented by the European Commission and the Republic of Namibia’ (2022), https://single-market-economy.ec.europa.eu/system/files/2022-11/MoU-Namibia-batteries-hydrogen.pdf; European Commission, ‘Memorandum of Understanding between the Republic of Kazakhstan and the European Union on a Strategic Partnership on Sustainable Raw Materials, Batteries and Renewable Hydrogen Value Chains’ (2022), https://single-market-economy.ec.europa.eu/news/strategic-partnership-between-european-union-and-kazakhstan-sustainable-raw-materials-batteries-and-2022-11-08_en
156 Office of the United States Trade Representative, ‘United States and Japan Sign Critical Minerals Agreement’ (28 March 2023), https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/march/united-states-and-japan-sign-critical-minerals-agreement.
157 European Commission, ‘EU Moves Forward with Critical Minerals Agreement Negotiations with the US’ (14 June 2023), https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3214.
158 European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulation (EU) 2019/1020, COM(2023)160 final’ (March 2023), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023PC0160.
159 Crochet and Zhou, supra n. 12; C.P. Bown (2023) ‘Industrial Policy for Electric Vehicle Supply Chains and the US-EU Fight over the Inflation Reduction Act’, PIIE Working Papers, www.piie.com/publications/working-papers/industrial-policy-electric-vehicle-supply-chains-and-us-eu-fight-over.
160 H. Yeo et al. (2023) ‘Strengthening Regional Supply Chain Resiliency Through the Indo-Pacific Economic Framework (IPEF)’, Asia Society Policy Institute, https://asiasociety.org/sites/default/files/2023-05/ASPI_RegSupplyChain_issuepaper_finalize.pdf, 5.
161 E. Benson et al. (2023) ‘Securing Semiconductor Supply Chains in the Indo-Pacific Economic Framework for Prosperity’, CSIS, https://csis-website-prod.s3.amazonaws.com/s3fs-public/2023-05/230530_Benson_SemiconductorSupplyChains.pdf?VersionId=SIbU7F4LQk82X5EHIx1Ffjr7j.3nbfiu.