Bill Emmott, in his book ‘The Fate of the West’, cited how America’s collapse almost certainly triggers the collapse of Western civilisation. At the time of writing, however, the book concludes by asserting that America will be able to reassert its dominance, citing US alliances (Nato, Five Eyes) and the power of innovation as drivers of change.
China, it appeared at that time, genuinely lagged, having only Pakistan as an all-weather ally, and was far behind the US in technological and financial innovation.
All this has changed with the coming of the AI age. China had wisely anticipated this new age and had prepared for this transition decades ago. As a result, Beijing now processes almost 90 per cent of the world’s rare earth elements (REE), controlling nearly three-quarters of global cobalt refining. China also leads global lithium production chains. Securing strategic agreements from Latin America’s ‘Lithium Triangle’ to cobalt mines in the Democratic Republic of Congo, China has positioned itself securely ahead in a geopolitical race reminiscent of OPEC’s dominance over oil markets. As Deng Xiaoping reportedly remarked during his southern tour in 1992, “The Middle East has oil; China has rare earths”.
As the old-world order is being eclipsed by an era dominated by solar energy, electric vehicles, artificial intelligence and data centres, America’s traditional advantages seem a thing of the past. China controls the world’s mineral arteries, including rare earths, cobalt, lithium and graphite, that now power the digital age. In contrast, the US, once the forerunner of both financial and technological innovation, finds itself dependent on the very supply chains it once outsourced.
That leverage has now become the core of a new cold war. China’s latest restrictions on rare earth exports mark a near-unprecedented escalation in the US-China trade conflict. The new rule, issued by Beijing’s Commerce Ministry, requires global companies to obtain export permits if their products contain even 0.1 per cent of rare earth materials sourced from China. This single line of regulation could freeze entire semiconductor supply chains. Trump responded with threats of 100 per cent tariffs on Chinese goods, then scrambled to de-escalate as markets plunged. US Treasury Secretary Scott Bessent found himself simultaneously threatening countermeasures while reassuring panicked investors.
The news immediately reignited the trade war with China, sharply dropping global stocks and cryptocurrencies. President Trump’s administration, already under pressure from rising inflation and an election-year economy, now faces a Beijing that holds material leverage over its AI ambitions. Companies such as Nvidia and AMD depend on processed rare earth compounds that flow, directly or indirectly, through Chinese refining networks. Yet this confidence masks deeper vulnerabilities: equipment makers like ASML face delays, and indirect dependencies through tool chains remain exposed. The lifeblood of the American AI industry, from data centres to defence systems, rests on supply chains Beijing can throttle at will.
China’s move is a strategic attempt to reassert its dominance on the global political and economic stage. By weaponising access to minerals like gallium, germanium and neodymium, Beijing has inverted decades of US trade strategy. Beijing has now added holmium, erbium, thulium, europium and ytterbium to its export control list. The same globalisation that once helped American firms cut costs has now handed China control over the building blocks of modern technology. What oil was to the previous century, rare earths are to the twenty-first – a resource that defines the new age.
Beijing’s response to Washington’s threats is apparently part of a greater strategy. Rather than outright confrontation, it has chosen controlled ambiguity, neither reversing its export rule nor fully enforcing it. The Chinese Commerce Ministry’s statement that “compliant export for civil use can get approval” signals flexibility on paper while preserving leverage in practice. By framing the measure as a security regulation, Beijing has avoided accusations of economic coercion while ensuring that approval remains subject to political discretion.
The restrictions, set to take effect on December 1, provide a narrow window for negotiation, keeping markets tense but hopeful. China has also avoided targeting Taiwan’s chip production directly, since the five newly restricted elements reportedly differ from those used in TSMC’s wafer processes. This suggests Beijing is flexing its muscle with precision rather than aggression. At the same time, Washington is weighing responses such as tighter audits on Chinese stocks or new investment curbs, measures that appear peripheral when Beijing can disrupt entire industries with a single export rule.
Amid this great power rivalry, however, lies a quieter, more complex opportunity for Pakistan. The country’s geography, once defined by its borders, may soon be defined by its bedrock. The Reko Diq project in Balochistan, one of the world’s largest undeveloped copper-gold deposits, now sits at the intersection of competing global strategies. Its revival under Barrick Gold, backed by US and Canadian investment, signals Washington’s renewed interest in the region’s mineral corridors. At the same time, China continues to deepen its footprint through CPEC, extending its logistical reach from Gwadar to the western frontiers of Balochistan.
This dual engagement places Pakistan in a uniquely strategic position. The current crisis amplifies Pakistan’s value as both superpowers recognise their mineral supply chain vulnerabilities. For Beijing, Pakistan remains a corridor to the Arabian Sea, a critical artery for trade and potential mineral transport. For Washington, it represents a potential foothold in a resource zone increasingly vital to its efforts to reduce Chinese dependence. Managing this balance will require more than diplomacy; it will demand strategic nonalignment built on economic logic.
Pakistan’s policymakers should recognise that minerals are becoming the new instruments of statecraft. Rather than seeing Reko Diq purely as an extraction project, Islamabad must frame it as an industrial ecosystem, building local refining capacity, attracting neutral partners such as Japan and South Korea and positioning itself as a processing hub for critical materials. The objective, however, should be to sell access and not control. In an era when raw materials shape geopolitical leverage, Pakistan’s minerals can become either a tool of autonomy or a trap of dependency.
For the US, this confrontation with China marks another moment when a rival challenges its superpower status. History suggests that when cornered, America innovates. For decades, the US had relied on imported oil, much of it from Saudi Arabia, after domestic production peaked in the 1970s. When Riyadh flooded global oil markets in 2014 to crush America’s rising shale producers, prices collapsed from over $100 a barrel to below $40, a 75 per cent plunge meant to bankrupt the upstarts.
Instead, the shock sparked a technological revolution. American firms mastered hydraulic fracturing and horizontal drilling, unlocking oil trapped in shale rock that was once deemed inaccessible. They used sensors, data analytics and real-time mapping to extract more from every well while cutting costs nearly in half. Within a few years, the US had overtaken Saudi Arabia as the world’s largest oil and gas producer, transforming a price war into an energy renaissance and a lesson in how adversity breeds innovation.
That same capacity for reinvention may now define Washington’s next move. Efforts to rebuild domestic refining, invest in mineral recycling, and reshore semiconductor fabrication are already underway under the CHIPS and Science Act. The current crisis reveals that these efforts arrived late to the game. If America can channel its historical strength, its entrepreneurial agility, and technological daring, it can turn dependency into opportunity once more.
Bill Emmott’s confidence in the West rested on this very idea: that open societies, though chaotic and divided, ultimately renew themselves through innovation. This new cold war will test whether the pillars of Western civilisation, such as free trade, multilateral cooperation and democratic governance, can still endure in an age defined by data, minerals and machine intelligence. Recent events suggest the test has begun, and America is struggling to find its footing.
For Pakistan, this might be a defining moment. It must understand that the world’s new power struggle comes with crypto, metals and machines rather than armies or currencies. The countries that will endure are those that can adapt, balance and innovate. As America once proved in its shale revolution, survival belongs to those who reinvent resources, not those who merely control them.
The writer is an economist and an educationist.
