Global Lithium Supply China: Nexus Between Products & National Players

Highlights

• China dominates lithium battery trade across upstream, midstream, and downstream segments, with the EU and US increasingly dependent on international markets.
• Growing EV demand drives lithium’s centrality, while concentrated import sources create significant geopolitical and economic supply chain risks.
• Multi-layer network analysis highlights the need for supply chain diversification, strategic resource policies, and reduced dependency on single-source suppliers.

---

A recent study, authored by Yingjie Sheng, Jiayue Yang, Qiang Ji, and Xiaolei Sun from the Institutes of Science and Development, Chinese Academy of Sciences, and the School of Public Policy and Management at the University of Chinese Academy of Sciences, was published as a preprint on SSRN. This research explores the intricate relationships between products and countries within the global lithium battery supply chain through a multi-layer trade network. The authors hypothesize that analyzing trade dynamics across upstream, midstream, and downstream segments can reveal key vulnerabilities and influential players in this essential supply chain driven by the surge in electric vehicle (EV) adoption. The study emphasizes the growing dominance of lithium as a critical resource and the disproportionate reliance on a few key nations, particularly China, the U.S., and the EU, for production and trade.

The study identifies several insights, including those regarding trade network complexity. The lithium battery trade network is increasingly interconnected, with downstream battery trade involving more countries but relying on a few dominant players. Upstream and midstream trade networks are less dense and more vulnerable to disruption.

What’s behind lithium’s rising centrality?  Demand for lithium continues to grow, with significant trade flows driven by EV demand. In contrast, cobalt’s influence has declined, reflecting a shift toward cobalt-free battery technologies.

So, what nations are key players?  China is the leading player across all segments, dominating lithium imports and battery exports. The EU and the U.S. also hold key positions but exhibit declining export influence, increasing their dependency on international markets.

On the topic of supply risks, the authors cite concentrated import sources for materials like lithium and cathodes, making the supply chain susceptible to geopolitical and economic disruptions. Policies like Chile’s national lithium strategy or Indonesia’s nickel export bans amplify these risks.

The study relies on UN Comtrade trade data, which may have inconsistencies due to reporting variations. Additionally, the model assumes static geopolitical conditions and may not fully capture the dynamic impacts of global policy changes.

Plus, while comprehensive in its multi-layer network analysis, the study’s focus on trade relationships may underemphasize technological advancements, recycling efforts, or alternative resource developments that could mitigate risks. There is a slight bias toward highlighting China’s dominance, potentially overshadowing emerging players in the lithium battery supply chain.

This research underscores the critical role of supply chain diversification and resource policy in ensuring global lithium battery stability. It calls for strategic investments in raw material sourcing, recycling innovations, and reduced dependency on single-source suppliers to enhance resilience. The findings are timely, given the increasing global reliance on lithium batteries for renewable energy and EVs.