The Economic Costs of China’s Self-Reliance Drive

Nicholas Borst CLM Issue 85 September 2025.pdf

Download PDF • 476KB

China’s drive for economic self-reliance stems from deep concerns that foreign nations could use technology and resources as leverage against it. For decades, the Communist Party has worked to develop homegrown technology and to foster indigenous industries, aiming to reduce China’s exposure to such external pressures. When Xi Jinping took office, these concepts were already firmly in place, and he dramatically accelerated self-reliance efforts as U.S.–China relations grew increasingly confrontational. Today, China is waging a “whole-of-nation” campaign to bolster self-sufficiency across multiple areas of the economy. However, these efforts come with significant economic tradeoffs, as they have sparked mounting backlash from the rest of the world. Ironically, China’s push for greater self-reliance risks provoking some of the very risks it seeks to avoid.

Economic self-reliance has long been a priority for the Chinese Communist Party. From the party’s perspective, the dangers of foreign economic dependence have been made abundantly clear during several key historical moments. During the Korean War, dozens of nations aligned with the United States enacted trade restrictions on China, including through a United Nations resolution calling for an embargo on strategic exports. After the Sino–Soviet split in the 1960s, China faced severe economic disruption when the Soviet Union abruptly cut aid and withdrew thousands of Soviet technical advisers working in China. In the aftermath of Tiananmen, the U.S. and its allies once again targeted China with sanctions and trade restrictions, some of which remain in effect today.

Spurred by these events, successive Chinese leaders set out to build an economy that could better withstand foreign pressures. Their strategy focused on expanding domestic capacity in strategic industries, securing key natural resources, and controlling cross-border capital flows. Promoting home-grown sources of technology has been a long-standing focus of China’s self-reliance initiatives. During the 1980s, 1990s, and 2000s Beijing rolled out several large-scale research programs to reduce foreign technological dependence. For example, the Medium and Long-Term Science and Technology Plan of 2006 sought to explicitly reduce the nation’s reliance on foreign technology.[1]

When Xi Jinping entered office in 2012, he was already a strong advocate of economic self-reliance. Early in his tenure he emphasized the need to master “core technologies” so that China could reduce the risks of relying on foreign countries that might revoke access in the future.[2] For Xi, industrial policy is a tool to drive domestic innovation and break these restrictions. One of his early economic plans, Made in China 2025, was explicit in its push for technology breakthroughs in critical areas and for reducing reliance on foreign suppliers. The plan set targets for reducing dependence on foreign suppliers for essential spare parts and key materials to less than 30 percent by 2025.[3] Amid a strong backlash from China’s trading partners, Beijing soon began to de-emphasize Made in China 2025 from its public pronouncements. However, the party’s desire to reduce its vulnerability to foreign economic pressures remained strong.

Thus, even before the outbreak of the U.S.–China trade war, the Chinese government was focused on economic self-reliance. When tensions between the two countries escalated in 2017, they reinforced Beijing’s resolve to reduce its vulnerability to foreign economic pressures.

Economic Conflict and the Securitization of China’s Economic Policy

Economic conflict with the United States would play out across three main fronts: trade, technology, and investment. On the trade front, negotiations launched by the Trump administration in 2017 quickly devolved into a full-blown trade war. The two sides reached a temporary détente with the Phase One Agreement in January 2020, but it unraveled after the outbreak of COVID-19 and China failed to meet its agreed-upon purchase targets for U.S. goods. President Biden retained most of the Trump-era tariffs and even raised some rates in key sectors. When President Trump returned to office in 2025, the U.S.–China trade conflict rapidly escalated once again. Following “Liberation Day” on April 2, 2025, both sides increased tariffs to above 100 percent, a level so high that they were tantamount to a mutual trade embargo (see Figure 1). Tariffs have since been reduced from those astronomical levels, but they remain remarkably high as negotiations between the two countries continue. 

Source: Peterson Institute for International Economics.[4]

Conflicts over technology has been equally fierce. Beginning in 2018 with sanctions on ZTE and Huawei, two of China’s leading technology firms, the United States has targeted a broad array of Chinese companies to restrict their access to sensitive technologies. One prominent U.S. senator even declared that Washington should “strangle” Huawei.[5] According to one analysis, the U.S. government has sanctioned hundreds of Chinese entities in sectors related to aviation, space, aerospace, artificial intelligence, semiconductors, and quantum computing.[6] The semiconductor industry has been a particular focus, given its foundational role across many other technologies. Through far-reaching rules that bar the use of U.S. semiconductor tools and components in products worldwide, Washington has tried to slow down Beijing’s technological advance.

Finance is the third arena of economic conflict between China and the United States. Because global trade and finance are largely denominated in dollars, Washington can wield outsized influence over the international financial system. Foreign institutions that violate U.S. sanctions risk being cut off from dollar clearing, a penalty severe enough to cripple any globally active bank. Two Chinese banks, Bank of Kunlun and Bank of Dandong, have already faced such measures, and the same threat hangs over the wider Chinese financial sector. The United States has also moved to limit Chinese access to American investment and capital markets. An executive order in December 2020 barred U.S. investors from nearly sixty Chinese firms linked to the military. Later additions under President Biden expanded the list, and new outbound-investment rules discourage U.S. funding for sensitive Chinese technologies. The Trump administration’s America First Investment Policy, announced in 2025, signals even broader restrictions that could sharply curtail capital flows between the two countries.

Confronted with sweeping trade and investment curbs, bans on critical technology transfers, and attempts to hobble leading Chinese firms, Beijing faced severe external pressures as U.S.–China economic ties deteriorated. In many respects, Xi’s earlier fears about foreign economic dependence had come to pass. From 2020 onward, a stream of policies and speeches revealed the depth of official alarm. According to Xi, the international system was undergoing “changes unseen in a century” and could be best described as “chaos.”[7] China needed to “keep in mind worst-case scenarios and be prepared for more complex and graver situations.”[8]

For Xi, increasing domestic innovation and reducing foreign technological dependence was “vital to the survival and development of our nation.”[9] In 2020, Xi declared he would “make technological self-reliance a strategic pillar of national development.”[10] The party describes this goal as requiring a whole-of-nation effort to break through technological bottlenecks imposed by the United States and its allies. China will need “an integrated approach to security and development” that seeks to infuse national security imperatives into every aspect of economic policy to combat threats to China’s modernization.[11] Guided by this expansive view of security, Xi accelerated efforts to build an economy that is more self-reliant and less susceptible to foreign economic pressures.

The Party’s Toolkit for Economic Self-Reliance

In pursuit of greater self-reliance, Beijing has employed a wide range of industrial policies and state interventions to guide the economy away from foreign dependence. Rising tensions with the United States have led China to double down on these measures, often at the cost of growing economic trade-offs.

1.       Using industrial policy to promote domestic industries

For decades, China has sought to use industrial policy to foster domestic industries viewed as strategic. Chinese policymakers identified electric vehicles as an opportunity to leapfrog ahead and create a more self-reliant domestic auto industry. The Made in China 2025 Plan, identified new energy vehicles, including battery and plug-in hybrid vehicles, as a sector to “energetically promote break through development” and to seek the creation of “independent brands at internationally advanced levels.”[12]

To achieve this, the Chinese government has spent vast sums to support the domestic electric vehicle and battery industries. One report estimates that total government support for the electric vehicle industry between 2009 and 2023 was worth more than $230 billion, even excluding items such as support from government guidance funds and subsidized land for manufacturers. These subsidy policies have been targeted to disproportionately benefit domestic firms. For example, in 2016, Samsung and LG, South Korean firms that were leading electric battery makers at the time, were excluded for several years from the Chinese Ministry of Industry and Information Technology’s whitelist of batteries that were eligible for state subsidies.[13] Supported by the growth of electric vehicles, domestic brands quickly became the largest portion of the auto market.[14]

China’s effort to create a domestic electric vehicle industry has generated significant foreign backlash. In 2022, the United States passed the Inflation Reduction Act, which introduced new Foreign Entity of Concern restrictions effectively excluding electric vehicles with Chinese-made batteries from subsidies. The Biden administration also raised tariffs on Chinese EVs to 100 percent. In 2023, the European Union opened an anti-subsidy investigation that resulted in tariffs on some Chinese EVs reaching 45 percent.[15] Countries outside of the EU and the United States have also taken steps to limit Chinese electric vehicle imports, such as Turkey’s new 40 percent tariff on Chinese car imports.[16] These restrictions are occurring as China’s EV makers are leaning on exports to absorb severe overcapacity (see Figure 2). According to one estimate, Chinese EV manufacturers are on track to add capacity to produce eight million more EVs per year by 2026, far greater than the projected increase in domestic demand.[17]

Source: China General Administration of Customs.

2.      Fostering domestic sources of key technologies

The party has actively intervened in the Chinese economy to help establish domestic sources of strategic technologies. The means China uses to establish domestic sources of critical technologies range from relatively mundane to exceptional. One way to spur domestic innovation is through government support to domestic firms in target industries. This support can come through direct financial subsidies, below market credit, access to cheap land, and other mechanisms. Chinese firms also benefit from public procurement orders that favor domestic firms over foreign competition. Additionally, China has also sought to gain access to foreign trade in more controversial ways, such as technology-transfer requirements for foreign firms and programs to recruit foreign experts to work in China and to share their expertise.

Semiconductors and advanced communications technologies have long been at the forefront of China’s technology efforts due to their economic and national security importance. One firm that has been at the leading edge of China’s efforts to gain access to critical technologies is Huawei. Though Huawei claims to be a private company, it has been tightly embraced by the Chinese government for many decades. The company has received significant support through subsidies, cheap credit, large state contracts, and protection from foreign competition. One estimate puts the amount of subsidies as high as $75 billion through 2019.[18] Huawei has also faced numerous allegations of economic espionage and intellectual property theft.

By the mid-2010s, Huawei had succeeded in becoming the world’s largest telecom-equipment maker and China’s national champion in establishing domestic sources of cutting-edge communications technologies, such as 5G. Huawei was also important to China’s efforts to develop domestically produced semiconductors through its chip design subsidiary HiSilicon. Huawei’s success has helped support the creation of a domestic chip production ecosystem in China.

However, Huawei’s close links to the Chinese state have generated a fierce backlash in overseas markets. In 2017, the U.S. began imposing restrictions on Huawei, prohibiting the federal government from using its telecom equipment. In 2019, Huawei was added to the Commerce Department’s Entity List, banning American firms from selling equipment to the company without a special waiver. In 2020, the U.S. State Department launched the Clean Networks Initiative to convince other nations to exclude Chinese companies, notably Huawei, from their domestic networks. Several European countries have followed in America’s footsteps regarding Huawei. In 2020, the United Kingdom banned Huawei equipment from its new 5G network.[19] Estonia, Denmark, France, Italy, Latvia, Lithuania, Portugal, Romania, and Sweden have also taken steps to restrict Huawei.[20] The German Interior Ministry has proposed forcing telecom operators to stop using Chinese telecom equipment.[21] Even in countries that have historically been more open to China, such as Malaysia, Huawei has faced pushback and contract cancellations.[22]

These foreign restrictions have severely disrupted the company’s operations, forcing it to sell subsidiaries and restructure its business lines. Huawei’s international ambitions have been severely crimped. As evidence, after years of rapid growth the company’s overseas revenue plummeted in 2019 and had yet to recover by 2024 (see Figure 3). 

Source: Company Annual Reports.

3.      Reducing Vulnerability to Foreign Financial Pressure

Xi Jinping and the party have long held becoming a global financial power that is resilient to foreign pressure as a goal for China. Xi has called for transforming China into a “financial superpower.”[23] According to Xi Jinping, China must build a financial system with “an independent, controllable, secure, and efficient financial infrastructure system” that operates autonomously and is “free from control and intervention by external forces.”[24] This means controlling inflows and outflows of capital so that China has a buffer against global financial instability.

An important component of a self-reliant financial system is the ability to limit foreign countries, especially the United States, from exerting financial pressures on China. China tightly regulates its currency, allowing it to trade only within a prescribed range. Both the central bank and the state-owned banks are involved in helping maintain the party’s desired exchange rate. This control also requires restricting the access of foreigners to onshore capital markets, limiting offshore debt, and maintaining foreign ownership limits to prevent foreign creditors from controlling too much of the country’s financial assets. Another major focus is to reduce China’s vulnerability to financial sanctions.[25] To achieve this, China has built alternatives to the existing financial infrastructures controlled by the United States and its allies. China’s Cross-Border Interbank Payments System (CIPS), launched in 2015, provides China with an alternative to the SWIFT network, the global payments network that is under the control of the U.S. and its allies. During times of conflict, countries such as Iran and Russia have been removed from the SWIFT network, damaging their ability to engage in international commerce.

China’s efforts to create a self-reliant financial system come with economic costs. The clearest example of this is the lack of progress in renminbi internationalization, a long-standing goal of Beijing. Despite China being the world’s second-largest economy and the world’s largest exporter, the renminbi has not emerged as a contender to either the dollar or the euro. According to data from SWIFT, the renminbi accounts for less than 5 percent of global transactions (see Figure 4).[26] The renminbi also has a low weight in foreign exchange reserves held by other countries. According to data from the People’s Bank of China, the renminbi only accounts for 2.14 percent of global foreign exchange reserves.[27] The balance of offshore renminbi deposits has not grown significantly since 2015, when the People’s Bank of China began to promote its growth. Capital controls, foreign ownership limits for financial assets, and state-owned payment systems have all undermined the attractiveness of the renminbi as an international currency.

 Source: SWIFT.

4.      Consolidating Supplies of Critical Resources

Chinese leaders have long been concerned about insufficient domestic supplies of critical resources. In the name of self-reliance, China has attempted to consolidate its control over these resources to ensure domestic supplies remain uninterrupted. Control over these supplies can also be used as a strategic weapon by the party against foreign adversaries. Rare earth elements are an example of such a resource. China possesses abundant supplies of these seventeen metallic elements, which are essential for a wide range of consumer and military electronic components. Deng Xiaoping is quoted as saying that “the Middle East has oil, China has rare earths.”[28] While rare earth minerals are not as rare as their name would imply, they are difficult to mine and process in a cost-effective manner. China has managed to corner the global rare earth industry, accounting for the largest share of rare earth mining and processing (see Figure 5). Within the domestic rare earth industry, government industrial plans have consolidated production in a small number of firms.[29] 

Source: The International Energy Agency.[30]

In 2021, China merged three state-owned enterprises – Minmetals Rare Earth, Chinalco Rare Earth, and China Southern Rare Earth Group – to create China Rare Earth Group. Operating as an SOE controlled by the central government, this new entity controls around 70 percent of China’s rare earth production.[31] State media has referred to the new company as a “super aircraft carrier” that is poised to strengthen China’s position in the global industry.[32] In 2024, China announced new regulations for tracing rare earth products, and it unveiled new rules requiring companies involved in the mining, processing, and exporting of rare earths to report their activities to the government or face potentially severe penalties.[33] China has used its control over rare earths and other critical minerals to exert its geostrategic influence. In 2010, China reportedly limited the export of rare earths to Japan as punishment for clashes between the Japanese coast guard and Chinese fishermen in disputed waters. In 2023, China banned the export of technology to extract and separate rare earth minerals. In the same year, it announced new export controls for several critical minerals. In 2025, China created a new export licensing regime for rare earths. This caused a sharp curtailment in global supplies, leading to outcries from global industries reliant on such products.

These efforts have sparked a backlash from many worldwide countries that feared that China’s near-monopoly would be used as a tool for geostrategic influence. In 2022, the United States used the Defense Production Act to increase the mining, processing, and recycling of critical minerals in the country.[34] The U.S. Defense Department is seeking to create a rare earth supply chain for national defense end uses that is entirely domestic.[35] The United States, European Union, Japan, India, South Korea, the United Kingdom, and several other nations established the Minerals Security Partnership to develop new minerals supply chains among themselves in order to lessen China’s grip on the industry.[36] The Pentagon recently announced a large investment in American rare earths production as part of a process to reduce American dependence on Chinese rare earths.[37] China’s stranglehold on the rare earth industry may result in a decoupling of the rest of the world from Chinese supplies.

In summary, China’s extensive self-reliance efforts across industrial policy, technology, finance, and critical resources have generated a variety of negative impacts for Chinese companies and industries.

Navigating the Economic Costs of Self-Reliance

China’s renewed focus on economic self-reliance is primarily driven by its competition with the United States. American policymakers have taken forceful steps to curb Chinese exports, restrict capital flows, and limit China’s access to strategic technologies. From Beijing’s perspective, self-reliance is imperative to lessen U.S. pressures, prompting Xi Jinping to expand these policies despite their mounting economic toll.

The push for self-reliance has created large direct and hidden costs for the Chinese economy. The growing scope and scale of industrial policy in China are putting pressures on the already strained government balance sheets and depressing corporate profitability. One estimate puts Chinese spending on industrial policies, including direct subsidies, tax incentives, cheap land, below market lending, and other forms of support at nearly $250 billion in 2019.[38] This amount far surpassed spending by advanced economies in both relative and absolute terms, reaching almost three times the amount spent by the United States. The ability of Beijing and local governments, many of which are highly indebted, to continue spending on industrial policy at this level is uncertain. The IMF estimates that Chinese government debt, using a broad measure, nearly doubled between 2019 and 2024.[39]

In some sectors, the waste of resources has been colossal. Subsidies to the semiconductor industry reached 10 percent of firm revenues in 2023, more than double the OECD average.[40] Following Beijing’s guidance, state investment funds and banks have poured hundreds of billions of renminbi into the sector. Yet the semiconductor industry has been riven by corruption and wasted investments. Tsinghua Unigroup, a Chinese semiconductor firm, went bankrupt after receiving tens of billions of renminbi in loans and investments from the China Development Bank and state funds. Both the head of Tsinghua Unigroup and the head of the Integrated Circuit Fund, which invested heavily in the company, were arrested and investigated for corruption in 2022. Despite years of pouring resources into the sector, China remains dependent on foreign firms for leading-edge chip technology.

Beyond the direct costs of industrial policy, self-reliance initiatives undermine the open global economy on which China’s growth model depends. Large-scale efforts to dominate the emerging industries have triggered a backlash from trading partners. Ambitions to create a financial system immune to foreign pressures have stifled the growth of the renminbi as an international currency. Initiatives to create national champions in strategic technologies have led Chinese companies to be excluded from critical global markets. Efforts to control the production of key resources have driven other countries to decouple from Chinese suppliers. If self-reliance is pushed too far, China may find itself cut off from the global markets it needs for growth and the key foreign resources upon which it depends for economic development. Thus, China’s efforts to achieve self-reliance might create the scenario that the party wishes to avoid.

Is there an alternative path whereby Beijing can achieve greater self-reliance without further undermining its economy? Introduced in 2020, China’s Dual Circulation Strategy (国内国际双循环) seeks to balance between increasing self-reliance while maintaining integration in the global economy. Dual Circulation calls for China to develop its own internal market as the major driver of growth while maintaining trade and investment links with the world.[41] By unlocking domestic demand, China can establish a resilient source of economic growth that acts as a buffer against external volatility and foreign pressures. In turn, access to China’s large domestic market can be used as a source of leverage when negotiating with foreign countries for technology and resources.

Thus far, there is little evidence that Dual Circulation will be successful because it is unlikely to stoke domestic demand. Economic policy remains tilted toward supply rather than demand. Household consumption in China remains extraordinarily low relative to GDP. Beijing seemingly is unable to break free from its long-standing obsession with investment and exports. Recent policy pronouncements focus on promoting high-tech manufacturing rather than undertaking the structural reforms that would allow consumption to emerge as a sustainable driver of economic growth.

Although Beijing remains reluctant to embrace consumption‑driven growth, doing so would advance its goal of reducing foreign dependence. By shifting toward an economy powered by household spending, China could achieve greater self‑reliance through domestic demand. A consumption‑oriented model would also lessen the need for intensive industrial planning and state intervention. Together, these shifts could help defuse tensions with the rest of the world and ease Beijing’s fears that its development might be held hostage to foreign economic pressures. Yet for now, China’s concept of self‑reliance remains focused on the supply side, leaning toward ever‑expanding industrial policies and deeper state involvement in the economy.

About the Contributor

Nicholas Borst, CFA, is Vice President and Director of China Research at Seafarer Capital Partners. Prior to joining Seafarer, Nicholas was a Senior Analyst at the Federal Reserve Bank of San Francisco covering financial and economic developments in Greater China. Previously, he was China Program Manager and a Research Associate at the Peterson Institute for International Economics. Nicholas was a 2021–2023 Public Intellectuals Program Fellow at the National Committee on U.S.–China Relations. He is the author of The Bird and the Cage: China's Economic Contradictions (Palgrave Macmillan, 2025).

The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect Seafarer’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.

As of June 30, 2025, one or more of Seafarer’s client accounts owned shares in Samsung Electronics, Co., Ltd. Seafarer’s client accounts did not own shares in the other securities referenced in this commentary. View the portfolio holdings of Seafarer’s client accounts at www.seafarerfunds.com/historical-data.

Notes

[1] “国家中长期科学和技术发展规划纲要(2006‑2020年)” (Outline of the National Medium- and Long-Term Program for Science and Technology Development [2006–2020]), 中华人民共和国中央人民政府(Central People’s Government of the People’s Republic of China), 2006, https://www.gov.cn/gongbao/content/2006/content_240244.htm. 

[2] “Core Technology Depends on One’s Own Efforts: President Xi,” People’s Daily, April 19, 2018, http://en.people.cn/n3/2018/0419/c90000-9451186.html.

[3] “国务院关于印发[中国制造2025]的通” (Notice of the State Council on Issuing “Made in China 2025”), 中华人民共和国中央人民政府 (Central People’s Government of the People’s Republic of China), May 19, 2015, https://www.gov.cn/zhengce/zhengceku/2015-05/19/content_9784.htm.

[4] Chad Brown, “US–China Trade War Tariffs: An Up-to-Date Chart,” Peterson Institute for International Economics, April 6, 2023, https://www.piie.com/research/piie-charts/2019/uschina-trade-war-tariffs-date-chart.

[5] Ana Swanson, “U.S. Delivers Another Blow to Huawei With New Tech Restrictions,” The New York Times, March 15, 2020, https://www.nytimes.com/2020/05/15/business/economy/commerce-department-huawei.html.

[6] Martin Chorzempa, Mary Lovely, and Yuting (Christine) Wan, “The Rise of US Economic Sanctions on China: Analysis of a New PIIE Dataset,” Peterson Institute for International Economics, December 2024, https://www.piie.com/publications/policy-briefs/2024/rise-us-economic-sanctions-china-analysis-new-piie-dataset.

[7] Jinping Xi, “Understanding the New Development Stage, Applying the New Development Philosophy, and Creating a New Development Dynamic,” Qiushi, July 8, 2021, http://en.qstheory.cn/2021-07/08/c_641137.htm.

[8] Ibid.

[9] Ibid.  

[10] Chris Buckley and Steven Lee Myers, “China’s Leaders Vow Tech ‘Self-Reliance,’ Military Power and Economic Recovery,” The New York Times, October 29, 2020, https://www.nytimes.com/2020/10/29/world/asia/china-five-year-plan-communist-party.html.

[11] “Outline of the 14th Five-Year Plan (2021–2025) for National Economic and Social Development and Vision 2035 of the People’s Republic of China,” People’s Government of Fujian Province, August 9, 2021, https://www.fujian.gov.cn/english/news/202108/t20210809_5665713.htm#C53.

[12] “国务院关于印发[中国制造2025] 的通知” (Notice of the State Council on Issuing “Made in China 2025”), 中华人民共和国中央人民政府 (Central People’s Government of the People’s Republic of China), May 19, 2015, https://www.gov.cn/zhengce/zhengceku/2015-05/19/content_9784.htm.

[13] In-Soo Nam, “Samsung SDI, LG Chem Face Setback in China on Electric-Car Batteries,” The Wall Street Journal, June 21, 2016, https://www.wsj.com/articles/samsung-sdi-lg-chem-facesetback-in-china-on-electric-car-batteries-1466496080.

[14] Victoria Waldersee and Joseph White, “Volkswagen is Reeling in China. Can EVs Help It Grow in the US?” Reuters, July 23, 2024, https://www.reuters.com/business/autos-transportation/volkswagen-is-reeling-china-can-evs-help-it-grow-us-2024-07-23/.

[15] “EU Anti-subsidy Probe into Electric Vehicle Imports From China,” European Parliament, October 4, 2023, https://www.europarl.europa.eu/RegData/etudes/ATAG/2023/754553/EPRS_ATA(2023)754553_EN.pdf. 

[16] “Turkey Imposes 40% Tariff on Vehicle Imports from China,” Reuters, June 8, 2024, https://www.reuters.com/business/autos-transportation/turkey-impose-40-additional-tariff-vehicle-imports-china-2024-06-08/.

[17] Trina Chen, “China’s Capacity–Imbalances, Inflections, and Beyond Cycles,” Goldman Sachs, August 6, 2024, https://marquee.gs.com/content/research/en/reports/2024/08/06/aa42eca4-3376-4919-bebd-498eee1bfaa9.html.

[18] Chuin-Wei Yap, “State Support Helped Fuel Huawei’s Global Rise,” The Wall Street Journal, December 25, 2019, https://www.wsj.com/articles/state-support-helped-fuel-huaweis-globalrise-11577280736.

[19] Adam Satariano, Stephen Castle, and David Sanger, “U.K. Bars Huawei for 5G as Tech Battle Between China and the West Escalates,” The New York Times, July 14, 2020, https://www.nytimes.com/2020/07/14/business/huawei-uk-5g.html.

[20] “European Countries Who Put Curbs on Huawei 5G Equipment,” Reuters, September 29, 2023, https://telecom.economictimes.indiatimes.com/news/telecom-equipment/european-countries-who-put-curbs-on-huawei-5g-equipment/104048918.

[21] Sarah Marsh, Andreas Rinke, and Hakan Ersen, “German Proposal for Huawei Curbs Triggers Telecom Operator Backlash,” Reuters, September 20, 2023, https://www.reuters.com/business/media-telecom/german-interior-ministry-wants-force5g-operators-slash-huawei-use-official-2023-09-19/.

[22] Ethan Cramer-Flood and Briana Boland, “CCP Inc. in Malaysia: How State Capitalism Supports and Constrains China’s Tech Giants,” Center for Strategic and International Studies, December 2022, https://csis-website-prod.s3.amazonaws.com/s3fs-public/publication/221216_Cramer-Flood_CCPInc_Malaysia.pdf.

[23] “Xi Stresses Boosting High-Quality Development of China’s Financial Sector,” Xinhua, January 16, 2024, https://english.news.cn/20240116/06fa0ce297f14cc49034aef158d3aaad/c.html.

[24] “建立健全自主可控安全 高效的金融基础设施体” (Establishment of a Sound, Autonomous, Controllable, Safe and Efficient Financial Infrastructure System), Qiushi, January 30, 2024, http://www.qstheory.cn/qshyjx/2024-01/30/c_1130069350.htm.

[25] Zoe Zongyuan Liu, “China’s Attempts to Reduce Its Strategic Vulnerabilities to Financial Sanctions,” China Leadership Monitor, no. 79, February 29, 2024, https://www.prcleader.org/post/china-s-attempts-to-reduce-its-strategic-vulnerabilities-to-financial-sanctions 

[26] “RMB Tracker June 20: Monthly Reporting and Statistics on Renminbi (Rmb) Progress Towards Becoming an International Currency,” Swift, June 2025, https://www.swift.com/swift-resource/252431/download. It is important to note that SWIFT may not capture all international RMB transactions. One estimate suggests that 80 percent of CIPS transactions utilize SWIFT messaging. See Raymond Yeung and Khoon Goh, “Petroyuan Will Not Bring About a Regime Shift Soon,” ANZ Research–China Insight, April 6, 2022, https://publications.anz.com/SingletrackCMS__DownloadDocument?uid=99702b34-f49e-4c62-b4d0-ba0205338c02&docRef=93a282d8-de67-44f8-b963-db3b007724ab&jobRef=4f3962b9-4951-459c-928e-c6684e498a5a 

[27] “人民币国际化报告2024” (2024 RMB Internationalization Report), People’s Bank of China, September 30, 2024, http://www.pbc.gov.cn/huobizhengceersi/214481/3871621/5472873/2024093019071294397.pdf.

[28] Grace Hearty and Mayaz Alam, “Rare Earths: Next Element in the Trade War?” Center for Strategic and International Studies, May 27, 2022, https://www.csis.org/analysis/rare-earths-nextelement-trade-war.

[29] Wayne Morrison and Rachel Tang, “China’s Rare Earth Industry and Export Regime: Economic and Trade Implications for the United States,” Congressional Research Service, April 30, 2012, https://sgp.fas.org/crs/row/R42510.pdf.

[30]  Critical Minerals Data Explorer, IEA, May 21, 2025,  https://www.iea.org/data-and-statistics/data-tools/critical-minerals-data-explorer 

[31] Sun Yu and Tom Mitchell, “China Merges 3 Rare Earths Miners to Strengthen Dominance of Sector,” Financial Times, December 23, 2021, https://www.ft.com/content/4dc538e8-c53e-41df82e3-b70a1c5bae0c.

[32] “China’s Rare Earth ‘Super Aircraft Carrier’ Sailing to the World,’” Xinhua, January 7, 2022, http://www.news.cn/energy/20220107/c91f9663f7884ac4871024fce402cf1d/c.html.

[33] “中国稀土‘超级航母’驶向全球” (China Tightens Grip on Rare Earths to Ensure “Industrial Security”), Caixin Global, July 1, 2024, https://www.caixinglobal.com/2024-07-01/china-tightens-grip-on-rare-earths-to-ensure-industrial-security-102211895.html.

[34] Rodrigo Castillo and Caitlin Purdy, “China’s Role in Supplying Critical Minerals for the Global Energy Transition: What Could the Future Hold?” Brookings Institution, July 2022, https://www.brookings.edu/wp-content/uploads/2022/08/LTRC_ChinaSupplyChain.pdf.

[35] C. Todd Lopez, “DOD Looks to Establish 'Mine-to-Magnet' Supply Chain for Rare Earth Materials,” U.S. Department of Defense, https://www.defense.gov/News/News-Stories/Article/Article/3700059/dod-looks-to-establish-mine-to-magnet-supply-chain-for-rare-earth-materials/.

[36] “Minerals Security Partnership,” U.S. Department of State, March 27, 2024, https://www.state.gov/minerals-security-partnership.

[37] Jon Emont, “Pentagon to Take Stake in Rare-Earth Company, Challenging China’s Control,” The Wall Street Journal, July 10, 2025, https://www.wsj.com/business/mp-materials-enters-multibillion-dollar-partnership-with-defense-dept-c8f9f806.

[38] Gerard DiPippo, Ilaria Mazzocco, Scott Kennedy, and Matthew P. Goodman, “Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective,” Center for Strategic and international Studies, May 23, 2022, https://www.csis.org/analysis/red-ink-estimating-chinese-industrial-policy-spending-comparative-perspective.

[39] Based on the IMF’s augmented debt measurement which includes general budgetary debt, local government financing vehicle debt, and government funds. See “People’s Republic of China: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the People’s Republic of China,” IMF, August 2, 2024, https://www.imf.org/en/Publications/CR/Issues/2024/08/01/Peoples-Republic-of-China-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-552803.

[40] “Policy Brief: Recent Trends in Semiconductor Subsidies,” OECD, April 4, 2025, https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/04/recent-trends-in-semiconductor-subsidies_dcbb85af/5e91af33-en.pdf. 

[41] 刘鹤(Liu He), “ 加快构建以国内大循环为主体、国内国际双循环相互促进的新发展格局” (Accelerate the Establishment of the New Development Paradigm with Domestic Circulation as the Mainstay, Mutually Reinforcing Domestic and International Circulation),  中华人民共和国中央人民政府 (Central People’s Government of the People’s Republic of China), November 11, 2020,  https://www.gov.cn/guowuyuan/2020-11/25/content_5563986.htm.

Photo credit: HUAWEI, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons; Usertoop, CC0, via Wikimedia Commons