Highlights
- A new era of US-China rivalry is reshaping global trade through ‘selective decoupling’ in critical technology and mineral sectors.
- Multinational corporations are forced to rethink supply chains, prioritizing national resilience over cost-efficiency.
- The emerging ‘bloc-based’ economic order requires companies and countries to strategically align with either the US or China.
A recent peer-reviewed study (opens in a new tab) by Parhlad Singh Ahluwalia, Editor-in-Chief, Shodh Prakashan, and Sonika, Assistant Professor, Baba Mastnath University, explores the accelerating shift from globalization to strategic fragmentation amid rising US-China tensions—especially within global supply chains for critical minerals, semiconductors, and advanced technologies.
Hypothesis and Objective
The paper hypothesizes that while full economic decoupling between the US and China is impractical, selective decoupling driven by national security concerns is not only accelerating but redefining the rules of global commerce. The authors aim to evaluate how post-2018 trade, technology, and industrial policies have transformed global supply chain dynamics, pushing countries and corporations to choose between competing power blocs.
Key Findings
The study finds that a process known as “selective decoupling” is now actively reshaping global trade, particularly in critical sectors such as rare earth elements, semiconductors, and artificial intelligence technologies. This shift is largely driven by the United States’ emphasis on economic security and efforts to reduce its dependence on China. At the same time, China responds with its techno-nationalist policies to maintain dominance in these fields.
Traditionally, companies built global supply chains based on efficiency and low cost. But that’s no longer the case. Today, concerns about national resilience, economic sovereignty, and political alignment are becoming increasingly important, surpassing the importance of simply saving money or speeding up delivery. As a result, many multinational corporations are being forced to rethink their operations. Some are relocating factories, others are diversifying suppliers, and many are splitting their supply chains to meet conflicting regulations from the U.S. and China.
Unlike the original Cold War, which was rooted in ideological conflict between communism and capitalism, this new era of U.S.-China rivalry is shaped by competition over who leads in high-tech and economic influence. This makes it increasingly difficult for neutral countries to remain impartial. The researchers argue that we are witnessing the end of fully integrated global trade and the rise of a “bloc-based” economic order.
In this system, countries and companies may find themselves aligning with one major power over another—either the U.S. or China—resulting in more fragmented and politically divided trade networks around the world.
Limitations
While robust in its geopolitical and policy analysis, the paper lacks granular data on specific rare earth trade volumes, investment trends, or corporate relocation case studies, which would bolster its applied relevance for investors. Additionally, the research leans heavily on secondary sources and political science theory, without primary interviews or proprietary supply chain data.
Conclusion and Implications
For retail and institutional investors in the rare earth and critical minerals sectors, this study offers a stark warning: the era of cost-driven globalization is over. Strategic materials like neodymium, cobalt, and gallium are now treated as instruments of statecraft. Companies and governments must build redundant, regionalized supply chains, or risk being caught in the crossfire of the US-China strategic rivalry. Expect rising capital expenditure, regulatory complexity, and risk premiums on both ends of the critical mineral supply chain.
Full study available at: https://sijarah.com/55 (opens in a new tab)
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Source: Siddhanta’s International Journal of Advanced Research in Arts & Humanities, Vol. 2, Issue 6 (July–August 2025)
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