China's Quiet Battlefield: RUSI Sees Grey-Zone Warfare-Rare Earth Exchanges Sees the Great Powers Era 2.0

Highlights

• RUSI analyst Dr. Sari Arho Havrén argues China uses export licensing, maritime pressure, and cyber operations as grey-zone coercion tools below the threshold of armed conflict.
• Rare Earth Exchanges' Great Powers Era 2.0 framework expands on RUSI's view, positioning rare earths as foundational industrial infrastructure across defense, AI, robotics, and advanced manufacturing.
• China's leverage in critical minerals was built over decades through coordinated investment in mining, separation, refining, alloys, and magnet manufacturing—export controls amplify an advantage already in place.
• The real competitive battlefield is midstream control: whoever masters separation, refining, metals, and magnets will shape the next generation of economic and geopolitical power.

---

The Royal United Services Institute (opens in a new tab) (RUSI)—the United Kingdom's oldest defense and security think tank, founded in 1831 by the Duke of Wellington—has published a compelling assessment arguing that China increasingly employs "grey-zone" coercion through economic pressure, export licensing, maritime operations, cyber activities, and information campaigns to achieve strategic objectives without triggering conventional war. The analysis, authored by Dr. Sari Arho Havrén, (opens in a new tab) a RUSI Associate Fellow specializing in China, security, and Indo-Pacific affairs, offers an important framework for understanding Beijing's evolving statecraft.

Dr. Sari Arho Havrén

Source: RUSI

Rare Earth Exchanges® finds significant overlap between Havrén's analysis and our Great Powers Era 2.0 thesis. Where RUSI emphasizes security strategy, Great Powers Era 2.0 broadens the aperture: today's great-power competition is being fought simultaneously across industrial policy, capital markets, technology, critical minerals, manufacturing, trade, finance, and information. Rare earths are not simply one instrument among many—they are foundational infrastructure in this emerging era of strategic competition.

China's "War Without War" Includes Rare Earths—But the Real Battlefield Is Industrial

Most investors still think rare earths are commodities. Increasingly, governments do not.

In a timely new commentary, Dr. Sari Arho Havrén argues that Beijing has woven critical minerals into a broader strategy of "grey-zone" competition, combining export licensing, economic leverage, maritime pressure, cyber operations, and information campaigns to reshape geopolitical realities without crossing the threshold into open conflict. Coming from RUSI—a globally respected institution whose research frequently informs policymakers across Europe and NATO—the paper deserves careful attention.

Beyond Export Controls Lies an Industrial Strategy

RUSI correctly identifies rare earth export controls as one element of China's expanding geopolitical toolkit. The report argues that temporary, reversible licensing restrictions can generate enough uncertainty to influence government and corporate behavior without provoking a full-scale trade confrontation. That observation is consistent with recent disruptions experienced by magnet manufacturers and industrial supply chains across Europe and North America.

Yet Rare Earth Exchanges believes the larger story extends beyond export controls.

China's leverage was not created by licensing requirements. It was built patiently over decades through coordinated investment in mining, separation, refining, metals, alloys, permanent magnet manufacturing, engineering talent, and downstream industrial ecosystems. Export controls amplify an advantage that already exists; they did not create it.

Where Great Powers Era 2.0 Expands the Discussion

RUSI's analysis largely aligns with the Rare Earth Exchanges® Great Powers Era 2.0 framework, but the two perspectives are not identical. RUSI principally examines how Beijing employs economic and maritime tools below the threshold of armed conflict. Great Powers Era 2.0 argues that these tools are manifestations of a broader transformation in international competition. The defining contests of this century are increasingly economic, industrial, technological, financial, informational, and resource-based. Military power remains essential, but industrial capability increasingly determines strategic endurance.

From this perspective, rare earths are not merely a geopolitical lever—they are strategic infrastructure supporting defense systems, artificial intelligence, robotics, electric mobility, aerospace, quantum technologies, and advanced manufacturing.

Where Analysis Meets Interpretation

The paper is strongest when documenting China's expanding use of economic statecraft and the strategic importance of supply-chain resilience. However, several conclusions—including that export controls are deliberately calibrated to discourage permanent diversification—remain informed analytical judgments rather than publicly verifiable facts. Alternative explanations, including domestic industrial policy, resource conservation, and national security considerations, receive comparatively less attention.

Rare Earth Exchanges® Take

Dr. Havrén's analysis should encourage investors to think beyond quarterly commodity prices.

The defining competition is no longer simply who owns mineral deposits. It is who controls the midstream—separation, refining, metals, alloys, magnets—and ultimately the advanced industries that consume them. That reality sits at the heart of Great Powers Era 2.0. Nations that master these industrial ecosystems will shape the next generation of economic and geopolitical influence. China recognized this years ago. Much of the West is only now beginning to respond.

Register today: REEx Marketplace™ (opens in a new tab)