According to reports from US media, although the US and China recently reached a truce on tariff and rare earth controls, Beijing’s bargaining chips go far beyond rare earths. In lithium batteries, mature-process semiconductors, and pharmaceutical ingredients, China also holds an absolute advantage; these fields will be China’s leverage in trade negotiations.
The Wall Street Journal Chinese edition published an article on the 5th titled, “The Three Major Industries in Which the US Can Be Choked by China.” According to the report, in the field of lithium-ion batteries, the world’s top two battery manufacturers are both Chinese companies—CATL and BYD; even when the batteries are produced elsewhere, their core materials are highly dependent on China.
The report cites Benchmark Mineral Intelligence data showing that Chinese suppliers produce 79% of the world’s cathode materials and 92% of anode materials for batteries and control 63% of refined lithium, 80% of refined cobalt, and 98% of refined graphite supplies.
The report states that, to consolidate its control over lithium-ion battery supply, China has taken measures this year to reinforce its leading position in the sector, requiring certain lithium-ion battery technologies to obtain export permits before transfer overseas, and implementing export controls on some manufacturing equipment and key cathode and anode materials.
In the field of mature-process semiconductors, China currently accounts for about one-third of global mature chip production capacity; although manufacturing these chips is less difficult than advanced ones, they are vital for automobiles, consumer electronics, and defense sectors.
In addition, China controls key minerals such as gallium and germanium required for making chips and optoelectronic products. In 2024, China accounts for 99% of global gallium production and is also the world’s largest producer of germanium.
The third important industry is pharmaceuticals. The report points out that while US medications rarely show “Made in China” on their packaging, China dominates the supply of active pharmaceutical ingredients (APIs) and their precursor chemicals. For example, most acetaminophen and ibuprofen imported by the US come from China, which is also a major producer of raw materials for antibiotics.
The US imports many brand-name drugs from Europe, but its supply of generic medicines relies heavily on India, and a large proportion of the active ingredients in Indian generics come from China. In 2015, China made pharmaceutical and medical device production an industrial priority and recently announced it plans to support the development of innovative drugs and medical devices over the next five years.
The report notes that China has already demonstrated its ability to weaponize rare earths by tightening supplies of key minerals. However, China’s leverage isn’t limited to rare earths—their deterrent power has now extended to lithium-ion batteries, mature-process semiconductors, and pharmaceutical ingredients.