China’s restrictions on raw materials could strangle the U.S. defense industry, according to a former U.S. official.
Nazak Nikakhtar, former assistant secretary for industry and analysis at the Department of Commerce, told Newsweek that the U.S.’ over-reliance on China for superabrasives is concerning and Beijing could further restrict its access.
“China has already been deliberately limiting the United States’ access over the course of the past two years. Prices of superabrasive materials have approximately doubled due to China’s export restrictions to date. And there are rumors in China of the Chinese government directing companies to cut off our access even further,” Nikakhtar said.
China has taken a set of actions to choke the U.S.’ access to rare earth minerals and other related materials by imposing trade restrictions, including on technology for processing rare earth minerals. In December, China’s Ministry of Commerce announced restrictions on the list of technologies that can be transferred overseas. The technologies included equipment used in the processing of rare earth elements and magnets, Newsweek had reported previously.
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The U.S. is entirely dependent on China for superabrasive materials, which are crucial elements of some defense equipment.
“The U.S. is 100% import-dependent on the PRC [People’s Republic of China] for superabrasives, as is every other country in the world,” Nikakhtar and Paul Devamithran wrote in a recent opinion piece for C4ISRNET, a website focusing on defense, security and technology.
Superabrasives are a set of rare materials comprising industrial diamonds and related products that stand as the hardest materials known on the planet.
They are pivotal in the manufacturing processes for a vast array of global products, encompassing those essential to U.S. and allied national security interests. Their applications are wide-ranging, from the production of semiconductors, high-capacity batteries and renewable energy systems, to use in essential equipment in the automotive, mining, aerospace and defense sectors.
They play a pivotal role in semiconductor and defense manufacturing, and when supplies are disrupted it can severely impact the economy.
The U.S. Department of Energy describes critical materials on its website as: “Any non-fuel mineral, element, substance, or material that the Secretary of Energy determines: (i) has a high risk of supply chain disruption; and (ii) serves an essential function in one or more energy technologies, including technologies that produce, transmit, store, and conserve energy.”
Nikakhtar believes China can halt supplies of rare earth minerals to the U.S. without hurting their own economy.
“China would strategically cut off a nation’s access to exert pressure on it. From an economic standpoint, it makes sense for China to restrict access as well,” Nikakhtar said. “If the U.S. is unable to produce chips, for example, due to China restricting exports of gallium and germanium, then China would be in a position to sell more chips to the United States.”
Nikakhtar and Devamithran argue that despite significant investment in increasing U.S. self-reliance in domestic semiconductor and battery manufacturing, Washington is vulnerable to supply chain disruption, the key to which is in Beijing’s hands.
“The result: despite billions of ongoing and planned investments of U.S. tax-payer dollars in domestic semiconductor FABs and EV battery manufacturing, underreported dependencies on the PRC for upstream materials such as gallium, germanium, graphite, rare earths, and superabrasives mean U.S. chip and battery manufacturers remain as vulnerable as ever,” wrote Nikakhtar and Devamithran in their opinion piece for C4ISRNET.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.