The Financial Times (February 16) reported that China is exploring whether it can hurt U.S. defense contractors by limiting supplies of rare-earth minerals that are critical to the industry. Industry executives said government officials had asked them how badly companies in the U.S. and Europe would be affected if China restricted rare-earth exports during a bilateral dispute. In turn, the Biden administration has begun a major review of U.S. manufacturing and defense vulnerabilities, including computer chips (now mostly manufactured in vulnerable Taiwan), rare-earths, and batteries. The review could lead to a U.S. government-led push for domestic production—or a turn toward allies that are themselves renegotiating their political and trade relationships with China, such as Australia.

(Comment: China has earlier used its rare earth exports as a weapon against Japan. China has approximately 90% of the world's refining capacity for rare earths and metals, which are used in everything from smartphones, hairdryers, missile guidance systems to fighter jets.)