Kathmandu— The relationship between the United States and China increasingly resembles a clash of titans, mirroring the giant monsters of classic films. While the U.S. possesses a technological edge in advanced semiconductors – essential for artificial intelligence – China controls the majority of the world’s critical minerals, particularly rare earth elements. This division of power has fueled trade tensions, military standoffs, and political maneuvering as both nations seek to secure their dominance, with global implications extending far beyond a simple bilateral competition.

A Temporary Thaw in Hostilities

During a meeting in Beijing in May, Presidents Trump and Xi Jinping reached an agreement for “constructive strategic stability.” This included delaying U.S. arms deliveries to Taiwan and allowing the sale of Nvidia computer chips to China, while China committed to purchasing $17 billion in agricultural goods and 200 Boeing aircraft annually through 2028. Despite the fanfare, few concrete bilateral deals were finalized; Trump failed to secure long-term access to critical minerals, and tech companies accompanying him did not gain enhanced market access. However, the meeting signaled a pause in escalating confrontation and an apparent abandonment of the U.S.’s previous goal of decoupling from the Chinese economy.

China’s Grip on Critical Minerals

Rare earth elements (REE), though not inherently scarce, are difficult to extract and process. The United States once led in REE production but outsourced operations due to environmental concerns and labor costs. Today, China controls over 60% of extraction and 90% of processing, holding more patents for advanced techniques and expanding access to mines globally through initiatives like the Belt and Road Initiative. Recent acquisitions, such as Shenghe Resources’ purchase of a Tanzanian REE deposit, demonstrate China's increasing control. The U.S. is attempting to revitalize domestic production at sites like Mountain Pass in California and Round Top in Texas, but faces challenges in competing with established Chinese operations.

The Semiconductor Battleground

Silicon Valley’s innovation, particularly Nvidia’s development of GPUs for AI applications, has given the U.S. a crucial technological advantage. However, over 90% of advanced semiconductor manufacturing relies on Taiwan, creating a vulnerability. The U.S. has imposed export controls on advanced chips to China and is investing in domestic production through the CHIPS Act, aiming to establish facilities in states like Arizona. Despite these efforts, China is rapidly developing its own chip sector, achieving breakthroughs with companies like DeepSeek and setting a goal to close the technology gap by 2030.

Global Implications of Resource Control

The competition for critical raw materials extends beyond REE, as China dominates production of magnesium, tungsten, graphite, silicon, and cobalt. This control allows China to potentially disrupt supply chains more easily than controlling access to vital waterways. While the U.S. seeks partnerships to diversify its sources, countries in the Global South often view China as a more reliable provider of capital and finance, creating further complexities in securing access to these essential resources.

The rivalry between the United States and China over critical minerals and semiconductor technology is likely to continue shaping global geopolitics for years to come. While both nations are investing heavily in bolstering their respective industries, the outcome remains uncertain.

(With inputs from CounterPunch)

Originally published on abcnews.com.np.