USA Needs $100b to Catch China if Disconnected from Rare Earth Element Supply Chain (Daniel O’Connor Interviews Dr. Wei Meng)

Highlights

• A comprehensive study predicts the U.S. military could face a catastrophic 8-12 year capability decline if China cuts off rare earth exports.
• China controls 85-90% of global rare earth refining and potentially weaponizes resource control as a ‘non-kinetic strategic deterrence’ mechanism.
• The research estimates $100-200 billion needed to rebuild domestic rare earth and critical mineral supply chains to maintain U.S. military technological superiority.

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Recently Rare Earth Exchanges (REEx) reviewed a provocative new war-gaming study led by  Dr. Wei Meng (opens in a new tab), at  Dhurakij Pundit University (opens in a new tab) (Thailand) and the University of Western Australia. The professor outlines a simulated scenario in which a total rare earth export ban from China to the United States results in the structural degradation of U.S. military readiness and defense-industrial capacity over a 10-year period. Rare Earth Exchanges co-founder Daniel O’Connor (opens in a new tab) interacted with Dr. Meng for a comprehensive interview on this notable findings, including the need for up to $100 billion in capital needed for USA investment to ensure rare earth element supply chain resilience.

What follows is fist an executive summary of the interview followed by the online interview—we believe of significant importance to the U.S. government.   See the underlying study (opens in a new tab) that still needs peer review.

Executive Summary – Strategic Rare Earth Dependency & U.S. Vulnerability

Based on the interview, a comprehensive modeling study published in June 2025 underscores how deeply the United States depends on China for rare earth materials—critical to defense systems, AI warfare platforms, and high-tech manufacturing.

The research estimates that over 95% of U.S. military components requiring rare earths are tied to Chinese-controlled supply chains, from mining to refining and permanent magnet production. Reconstructing equivalent domestic capability would take at least $100 billion in rare earth-related investments alone and up to $200 billion when factoring in lithium, tungsten, gallium, and germanium infrastructure. These figures reflect not just financial costs but the structural and technological gaps that cannot be closed with capital alone.

The study warns that a full supply cutoff would trigger a cascading degradation across U.S. military systems, with an estimated strategic lag of 8–12 years. The timeline assumes no emergency mitigation measures, highlighting vulnerabilities in platforms like the F-35, Virginia-class submarines, and AI-enabled systems, which rely heavily on Chinese inputs. Most critically, the paper models a “non-kinetic strategic deterrence” framework: China could suppress U.S. military capability not through direct confrontation, but by systematically exploiting industrial asymmetries in rare earths, energy storage, and advanced sensing.

Without urgent industrial rebuilding, coordinated allied frameworks, and a shift from raw material replacement to functional autonomy, the U.S. risks a steep decline in strategic readiness between 2029 and 2033.

On the interview with Dr. Wei Meng and Daniel O’Connor.

Question 1: What is the basis of the Chinese model for the US estimate of $100 billion needed to catch up with China?

Structural Strategic Reasoning Based on Market Capitalization of Rare Earth Industry Chain

June 2025 data shows that the outstanding market capitalization of the core listed companies in China’s rare earth industry chain (e.g. Luoyang Molybdenum, Northern Rare Earths, China Rare Earths, Jinli Permanent Magnet, etc.) has reached approximately RMB 600 billion (approximately US$83 billion).This value not only reflects asset prices, but also maps China’s systematic capabilities built through more than 30 years of strategic deployment and technological accumulation, covering a complete ecological closed loop from resource control, technological research and development to industrial synergy.

In contrast, if the United States were to attempt to reconstruct equivalent capacity through capital investment, the initial construction costs of alternative systems would already exceed $200 billion: $60 billion for the reconstruction of rare-earth separation and refining, about $20 billion for gallium and germanium high-purity purification systems, $110 billion for lithium full-chain capacity, and about $10 billion for tungsten alloying system construction. Obviously, such huge capital requirements are not due to exchange rate differences, but stem from systemic faults and structural gaps in its current industrial system.

My research suggests three key logics underpinning that extrapolation path. First, capital expenditure does not equal industrial capacity. China’s rare earth assets are not speculative bubbles, but rather a national industrial structure constructed by long-term policy guidance, scientific research, and market synergy. In contrast, the United States is currently hundreds of billions of dollars of investment is at best only “catching up with the start-up costs”, cannot be quickly converted into global control. Secondly, the industry chain has “structural input incompressibility”. The United States does not have a mature rare earth smelting – alloy – magnet manufacturing system, even if the funds are in place, but also need to cross the technological break, approval barriers and engineering experience gap and other practical bottlenecks. Third, in terms of manpower allocation, China relies on research institutes and industrial collaboration network, has formed from the “laboratory to the factory” of the rapid transformation of capacity, while the United States is trapped in the “technological disruption” and “high-end manufacturing hollowing out. The United States is stuck in the quagmire of “technological breakthrough” and “hollowing out of high-end manufacturing”, which makes it difficult to achieve effective replacement during the strategic window.

Therefore, the “$100 billion or more in reconstruction costs” proposed in the paper is not a guess, but is based on the results of modelling the investment structure of each link, assessing the maturity of the technology, and simulating the lag of the system. More importantly, the conclusion reveals a key strategic reality: systemic advantages cannot be replaced by short-term capital stacking, and the incompressibility of the industrial chain constitutes the real vulnerability of the United States in the strategic resource game.

Summary of market capitalization of major listed companies in China’s rare earth industry chain

Company Identification	Stock Code (computing)	Total Market Capitalization (RMB)	Main Business Areas
Luoyang Molybdenum	603993	$127.01 billion	Mining and processing of rare earths, molybdenum, copper, cobalt and other resources
Northern rare earths	600111	85,496 million	Rare earth extraction, separation and processing
China Rare Earth	000831	36,686 million	Production and trade of rare earth ores, rare earth oxides and other products
Jinli Permanent Magnet	688980	28.7 billion (approx.)	Manufacture of high-performance NdFeB permanent magnetic materials
Chinatungsten High-Tech	000657	About $10 billion (estimated)	Processing and sales of tungsten and rare earth materials
CMR	000831	Incorporated into China Rare Earth Group	Integration and development of rare earth resources
Zijin Mining	601899	About $300 billion (estimated)	Development of polymetallic mineral resources, including rare earth-related businesses

Total estimated market capitalization: approximately RMB 600 billion

Description and data sources

• Luoyang Molybdenum: total market capitalization of approximately RMB 127.001 billion.
• Northern Rare Earths: total market capitalization of approximately RMB 85.496 billion.
• China Rare Earths: total market capitalization of approximately RMB 36.686 billion.
• Jinli PM: market capitalization of approximately RMB28.7 billion (approximately HK$2.87 billion).
• Chinatungsten High-Tech: estimated market capitalization of approximately RMB 10 billion.
• Minmetals Rare Earths: it has been merged into China Rare Earth Group, the exact market capitalization is not separately disclosed.
• Zijin Mining: with a market capitalization of approximately RMB300 billion, part of its business involves rare earth resources.

The above companies cover all aspects of the rare earth industry chain, including resource mining, separation and purification, and magnetic material manufacturing. It should be noted that some companies, such as Zijin Mining, have a wide range of businesses, and their rare earth business only accounts for a part of their business, so the proportion of their rare earth business needs to be considered when estimating their total market capitalization.

Question 2: Time horizon validity

Your model predicts a lag time of 8 to 12 years for the U.S. military industry in the event of a total supply stoppage. What assumptions did you use in developing this timeframe, particularly with respect to inventory depletion rates and component life-cycle attrition? Does the model consider any emergency acceleration mechanisms (e.g., DPA spending, allied imports)?

2.1. Basis for modelling lag times of 8-12 years

The study has set a clear time period when constructing the “Strategic Resource Disconnection Three-Stage Path Model” and the “REG-CAP Four-Level Simulation Sandbox System”:

Time division structure

Point	Time	Description
Initial lag	Years 1-3	Initial signs of stock depletion and component outages; degradation of tactical system performance; failure of stock strategy support
Generation gap in technology	Years 4-6	Disruption in development/iterations of some platforms (e.g., F-35 Block 4, AI systems), creating a break in technology updates
Lagging deployment of systems	Years 7-10 (to 12)	Imbalanced deployment of system-wide platforms, creating “intergenerational lag in strategic capabilities” and “windows of capability imbalance”

2.2. Key modelling assumptions

The model explicitly lists the following key assumptions in Sections 3.2 & 4.2:

2.2.1 Stock depletion rate

For core platforms such as the F-35, an inventory buffer cycle of 3-6 months is assumed;

For nuclear submarine systems (e.g. Virginia class), set at 6-12 months;

For AI platforms (chips + reasoning modules) only 1-2 months, i.e., a “cliff decline”.

These assumptions are based on publicly available data from DoD, CSIS, USGS, etc., as well as the average annual maintenance replacement frequency and system dependency nodes of typical equipment.

2.2.2 Functional decay function and system response modelling

Degradation functions using exponential functions

where λi is the response sensitivity;

Multi-path composite attenuation mechanism to simulate the non-linear coupling between multi-resource → multi-platform → multi-function.

2.3. is it included in the emergency response mechanism?(e.g. DPA or allied imports)

My research does not explicitly incorporate emergency acceleration mechanisms (DPA, Allied Assistance)

The paper states: “My study assumes that the U.S. does not have sufficient industry-level alternative paths in the short to medium term, and therefore does not model mitigating factors such as increased production in Canada, Australia, or technology transfers in order to highlight the sheer effect of structural deterrence.”

The design logic is based on the following judgements:

• Alternative path construction cycle is not compressible (rare earth separation line construction takes 5-7 years, AI chip return without local packaging capacity);
• DPA capital investment ≠ physical capacity upgrade;
• Allied supply is also constrained by the “Chinese concentration” of midstream smelting and magnet manufacturing (90 per cent of the world’s rare earth separation facilities are in China).That is to say, increased production is also a drop in the bucket, it is difficult to solve the problem of systemic shortages.

This is not to say that the United States does not have the ability to solve this problem, but a time lag problem. In this case, even if the United States to catch up with China, China will develop to another level, which is called the generation gap problem.

2.4. Summary answers

The 8-12 year lag time in the study is not an empirical assumption, but is calculated through system path dependency modelling + resource-equipment-capability node mapping, combined with the inventory cycle, life cycle response and functional degradation dynamics of each system.

The time frame reflects the following facts:

1. The first three years are the “initial deactivation period”, but operational capability can still be maintained;
2. Years 4-6 create a technological generation gap that creates a fault line in the deployment of new equipment;
3. Years 7-12 are a period of full degradation of system capabilities, with deployment imbalances and industrial reconfiguration failing to recover in tandem.

At the same time, the absence of an emergency relief mechanism is intended to portray the maximum non-kinetic deterrent effect of a strategic cut-off in an “unbuffered state”.

Question 3. Matrix of defence vulnerabilities

You point out that 95% of US defence system dependence on rare earths can be traced back to China. Can you provide the methodology for sourcing this data? Are these dependencies quantified at the component level (e.g., guidance systems, propulsion systems) or by programme (e.g., F-35, Virginia-class submarines)?

Factual dimension: China’s share of control of the global rare earth supply chain

Rare earth mineral production: China accounts for about 60-70% of global mining (source: USGS 2024).

Rare earth separation and smelting capacity: China holds about 85-90 per cent of the world’s rare earth refining and separation capacity.

Magnet manufacturing and downstream products: China controls more than 90% of the global rare earth permanent magnet manufacturing market.

U.S. Dependency

According to the United States Geological Survey (USGS) and Department of Defense (DoD) data, approximately 80 per cent of United States rare earth imports come directly from China, but some of these are “mixed oxides” or intermediate products; when combined with Chinese-controlled global processing nodes and indirect trade routes, overall reliance on the Chinese processing chain can approach 95 per cent. A number of US Department of Defense reports (e.g., the 2022 Defense Industrial Base Assessment) note that over 90% of rare earth components in high-performance weapon systems used by the US military can be traced back to the Chinese supply chain; a 2020 US congressional report states that “approximately 95% of defence-critical systems are affected by China’s rare earth In the 2020 US Congressional Report, it appears that “approximately 95 per cent of defence-critical systems are affected by Chinese rare earths”; this “95 per cent” is not just a reference to physical inputs, but to control of key nodes along the entire supply chain traceability path.

The thesis uses strategic modelling and risk sandbox simulation, emphasizing control and vulnerability reconstruction, not direct statistics of mineral quantities; the “95% dependence” in the model can be interpreted to mean that 95% of the modules in the U.S. military’s rare-earths-critical capability chain are unable to independently maintain a complete production chain in the event that China cuts off its supply; this figure is consistent with the existing policy level and the current situation. This figure is consistent with existing reports at the policy level. The ‘95% dependence’ in the current study refers to the fact that the vast majority of key rare earth components and their refining processes in the US defence system are directly or indirectly dependent on the raw materials, separating capacity and permanent magnet finished products supplied by China’s rare earth industry chain, reflecting the controllability of the supply chain, rather than the statistical significance of the proportion of raw material origins.

In my research, we point out that 95% of US defence systems’ supply dependence on rare earth materials can be traced back to China, a conclusion that stems from comprehensive modelling of multiple data cross-validation and system path mapping.

Specifically, the conclusion is based on component-level dependency path modelling, supplemented by structural material composition analysis of major US high-end weapons platforms (e.g., F-35 fighters, Virginia-class nuclear submarines, AI combat platforms, etc.).The research methodology synthesizes publicly available supply chain structure data for the period 2020-2024 from the US Department of Defense Industrial Base Reports (DoD Industrial Base Reports), the US Geological Survey (USGS), the RAND Corporation (RAND), and the Center for Strategic and International Studies (CSIS), and combines Chinese White Paper on Export Controls in the Rare Earth Industry, data from the China Rare Earth Industry Association, and scientific literature, the specific uses, ratios, sources, and pathways of rare earth materials in military systems were quantitatively modelled at multiple levels.

In terms of methodology, the study firstly constructs a third-order mapping network of “resource node – equipment node – functional module”, and identifies the core components of each type of platform that rely on rare earth resources by using path dependency mapping and coupling weight matrix. Among them, the F-35 fighter jet is quantitatively analyzed as a typical high-dependence platform, with a single aircraft containing about 418 kg of rare earth materials, which is concentrated in key subsystems such as radar systems, electronic warfare modules, infrared thermal imaging, flight control transmission structures and high-performance permanent magnet motors, etc.; and the Virginia-class nuclear submarine uses about 4,173 kg of rare earth materials, including neodymium, dysprosium, samarium, and other magnetic properties in its propulsion system, hydrostatic control module, and navigation and navigation system, Dysprosium, Samarium and other magnetic alloy elements. In addition, the military chips, inference units and electromagnetic immunity packaging structures on which the AI unmanned combat platforms rely require large quantities of gallium, germanium and other rare-earth-related elements as the basic thermal conductivity and performance-enhancing materials. These data have been presented structurally in paper No. 1, and visualized and interpreted through path diagrams and radar charts.

It is important to note that the “95% dependence” used in my study is not a statistical indicator of the percentage of national materials, but is based on the Key System Path Tracing method, which traces the dependence paths of strategic rare earth resources on all key equipment in the defence system in terms of functional maintenance, system performance and platform deployment capability. Rather, it is based on the Key System Path Tracing method, which traces the strategic rare earth resource dependence paths of all key equipment in the defence system in terms of functional maintenance, system performance and platform deployment capability. Rare earths are defined in the study as strategic elements that are irreplaceable, non-redundant, and cannot be replaced by processes in the short term, so even if some platforms do not have a high proportion of rare earths, they will be considered as “system level dependency nodes” if they are located in the key chain of control, sensing, or guidance.

The “95% dependency” data source in my study is based on a comprehensive cross-modeling of publicly available industry data, tactical system components, rare earth supply maps, and platform component path analysis, with dependencies mapped both at the micro-component level (e.g., radar modules, propulsion units, laser systems) and the macro-platform level (e.g., the entire F-35, the Virginia-class nuclear submarine).(e.g., F-35, Virginia-class nuclear submarine, AI combat system chain).This suggests that the supply chain security of the U.S. military-industrial system is highly coupled with China’s rare-earth exports at the structural level, and that this irreplaceability is the key logical basis for my study’s proposal of “resource supply cut-off as a mechanism of non-kinetic strategic suppression”.

Primary Data Sources for U.S. Dependence on China’s Rare Earths

1. United States Geological Survey (USGS) and Government Accountability Office (GAO) Reports

According to the U.S. Geological Survey (USGS) and the Government Accountability Office (GAO), the U.S. relies on imports for more than 95 percent of the rare earths it consumes between 2019 and 2022, with about 72 percent coming directly from China.([gao.gov][1])

“According to USGS estimates, the U.S. market – including the Department of Defence and its industrial base – relies heavily on imports of rare earths, particularly from China.”

–Report on Critical Materials: actions needed to implement requirements, GAO-24-107176, 2024 ([gao.gov][2])

2. Ministry of Defence supply chain assessment

China is the only country in the world with processing capabilities at all stages of the NdFeB permanent magnet supply chain, the US Department of Defence assessment states.

“The DoD report states that China is the only country in the world with processing capabilities at all stages of the NdFeB permanent magnet supply chain.”

–Critical Materials: Actions Needed to Implement Requirements report, GAO-24-107176, 2024 ([gao.gov][2])

3. Congressional Research Service (CRS) Reports

According to the Congressional Research Service, China produces about 90-95% of the world’s rare earth oxides and is the world’s leading producer of two of the strongest permanent magnets (samarium cobalt and neodymium iron boron).([everycrsreport.com][3])

“Some estimates suggest that China now produces about 90-95 per cent of the world’s rare earth oxides and is the world’s leading producer of the world’s two strongest permanent magnets (samarium cobalt and neodymium iron boron).”

Rare Earth Elements in National Defence report, CRS, 2013 ([congress.gov][4])

The statement in the paper that “about 80 per cent of United States rare-earth imports come directly from China, and with China-controlled global processing nodes and indirect trade paths, overall dependence on the Chinese processing chain can approach 95 per cent” is well founded. These figures underline the high dependence of the United States on China in the rare earth supply chain, especially in the defence and high-tech sectors. It is recommended that the above authoritative sources be cited in the paper to enhance the credibility and authority of the argument.

1. “Critical Materials Are In High Demand. What is DOD Doing to … – GAO (opens in a new tab)“
2. “[PDF] Critical Materials: Action Needed to Implement Requirements That … (opens in a new tab)“
3. “Rare Earth Elements in National Defense – Every CRS Report (opens in a new tab)“
4. “Trade Dispute with China and Rare Earth Elements | Congress.gov (opens in a new tab)“

4. Modelling scope and blind spots: Why are allied responses not modelled?

As I explained in Section 1.2 and Chapter 2, the study uses “one-way supply cut-off” as a hypothetical scenario in order to construct a model of strategic repression under the “minimum mitigation mechanism”, emphasizing the destructive window of the asymmetric game. Response measures such as production increases and recalls by Canada and Australia are not included in order to strengthen the identifiability and quantifiability of the “non-kinetic deterrent effect”. Introducing these variables may delay the window of generation gap formation, but it will not fundamentally reverse the structural paradox of “degradation of warfighting power – incompressible industrial reconfiguration”.

In the strategic sandbox model constructed by my institute, we explicitly adopted “one-way supply cut-off” as the underlying scenario, i.e., China’s imposition of a comprehensive, sustained, and uninterruptible ban on U.S. exports of rare earths and other key resources, regardless of the possible mitigation, substitution, and remediation mechanisms that could be adopted by the U.S. and its allies.

This modelling choice is not to ignore the complexity of the variables in reality, but rather the theoretical requirement of a “minimum mitigation condition” in strategic simulation, which aims to accurately identify the maximum tactical and strategic windows of suppression that can be triggered by the act of controlling resources in a non-kinetic confrontation architecture. The objective is to accurately identify the maximum tactical and strategic suppression effect window that can be triggered by resource control behaviour in a non-kinetic adversary architecture.

Specifically, as the thesis has clearly pointed out in Section 1.2 and Chapter 2, the core objective of the model is not to reproduce all the real game factors in the multinational game, but to highlight China’s institutional superiority at the strategic resource level through structural variable modelling. Therefore, we focus our modelling on the unidirectional strike path of “irreplaceable, non-resupplyable, and non-short-term reparable”, aiming at restoring the real tempo and evolutionary trajectory of the US military-industrial system in terms of degradation of functions, interruption of deployment, and fault lines in capabilities under the condition of purely cut-off supply.

At the same time, at the methodological level, such as the introduction of Canada, Australia and other rare earth allies to increase production capacity, rare earth recycling technology, stockpile release programme and other compensation mechanisms, although it can to a certain extent slow down the rate of degradation of the system, change the formation of the intergenerational gap in the time point, but it is difficult to fundamentally reverse the “decline in war power – capacity reconstruction incompressible” This structural contradiction. This is because:

1. The alternative resources itself is highly dependent on China in the smelting, separation, magnetic material manufacturing and other midstream links, even if the raw materials can be mined in other countries, but the mid-end processing link is still subject to China’s technological monopoly;
2. Although the recycling path is theoretically feasible, the scale of recycling is limited, the economic cost is high, the technology maturity is insufficient, and most of the old products are in bulk, which is not timely for war preparation;
3. The cycle of industrial reconstruction is incompressible. As my research shows, the United States to rebuild the rare earth chain with industrial scale, at least need to invest $100 billion, take 5-10 years, and face environmental regulations, talent shortages and supply chain coupling and other systemic barriers;
4. Policy response and industrial incentives in reality, there is a “system lag”, even if the allies are willing to link up, it is difficult to form a joint effort to make up for the technological gap within the window of strategic rhythm.

Therefore, in order to highlight the strategic suppression effect formed by the “resource-capability” path dependence in the asymmetric game, my study chooses to exclude the “responsive variables” from the main model intentionally, so as to ensure that the deterrent ability, capability evolution curve and tempo window of the supply cut-off strategy itself have the greatest recognition and visibility.

The window of the supply cut-off strategy itself has the highest degree of recognition and quantification. This approach helps to clearly reveal how rare-earth export control evolves into an institutionalized, predictable and visualized non-kinetic strategic weapon system from the level of theoretical modelling, thus providing the underlying paradigm for future policy formulation and gaming exercises.

5. AI dependency and gallium/germanium disruption

You have estimated the loss of AI war platforms to be as high as $100 billion due to shortages of gallium and germanium. Can you explain the technological pathways responsible for these losses? Is this estimate based on unit-level hardware failures, chip performance degradation, or R&D stagnation?

In the strategic sandbox model constructed by my institute, gallium (Ga) and germanium (Ge) are regarded as strategic minor metal elements that support the core performance of AI warfighting platforms, and the systemic degradation effect triggered by their disruption is classified as a “high sensitivity pathway”. The model predicts that the U.S. military will face a cumulative capability loss of more than $100 billion in the AI warfighting platform domain if gallium/germanium exports are completely disrupted. This loss estimate does not originate from a single node, but rather from an integrated system collapse under the coupling of multiple paths, which is mainly manifested in the following three technical levels:

5.1 Unit-Level Hardware Failure Paths (Device-Level Failure)

Gallium and germanium are widely used in high-performance semiconductor devices, including GaAs (gallium arsenide) microwave communication chips, GaN power amplifiers, Ge infrared sensors, and high-frequency modulators, etc. The computational acceleration chips, inference modules, and smart radar antennas used in a large number of AI military platforms all rely on gallium/germanium as the material base. Once the supply of raw materials is cut off, it will first cause the failure of the key chip packaging capability, which is manifested in the new chip cannot be manufactured, the existing device packaging interruption, tactical module maintenance stagnation, which triggers the hardware level of “functional disconnect” or “thermal runaway”.

5.2 Platform Degradation Paths

Gallium and germanium are key elements in building modules for optoelectronic communication, data conversion, and thermal stability control of AI training arrays in AI platforms. Germanium devices are widely used in AI optical interconnects, high-speed data buses, and infrared recognition units; gallium is used throughout AI perception chips, signal gain circuits, and target recognition radar core components. The interruption of raw materials will cause the AI platform to experience serious perception delays, reasoning failures, and rising recognition errors, severely restricting its tactical performance in joint operations, information fusion, and autonomous gaming, resulting in a decline of more than 40% in the overall performance index.

5.3 R & D and deployment of the entire stagnant path (Pipeline-Level Disruption)

The core of the AI military system is not the active terminal, but the continuous iterative optimization and cross-generation deployment. once the supplyof Ga/Ge is cut off, it will not only affect the current tacticalplatform, but will also directly interrupt the next-generation design and validation chain of the AI chip, resulting in the systematic research and development shutdown of the upstream and downstream industrial chain (EDA design, silicon validation, power testing, and batch preparation).Because military AI systems need to undergo rigorous packaging testing and extreme environment verification, the supply will lead to the entire ability to iterate path breaks, the formation of the “technology lost area” from the laboratory model to the deployment of the actual combat.

5.4 Estimation Logic and Loss Measurement

The simulation data presented in Sections 4.3 and 7.1 of the paper indicate that the degradation cycle of AI battlefield platforms alone after a gallium/germanium supply cut-off is 1.5-2 years, with an average annual loss of more than $10 billion, which is the highest single-unit loss of any military equipment category. This estimate is based on the “system response degradation model + multi-path coupling propagation mechanism”, considering the chip package failure rate, component replacement delay factor, platform decommissioning advance rate and R&D stagnation loss cost, and arrives at the cumulative tactical window and strategic capability degradation window of AI combat platforms in the supply disruption state.

The high dependence of AI military platforms on gallium and germanium makes them the most vulnerable and costly disablement nodes under resource supply disruptions. The loss estimation in my study is not only based on the functional failure at the hardware level, but also emphasizes that at the system level, the supply disruption will trigger a chained collapse path of diminishing capability – deployment disruption – strategic time window loss, which is also the “non-kinetic paralysis” in the rare earth strategic deterrence mechanism. This is also the key embodiment of “non-kinetic paralysis” in the strategic deterrence mechanism of rare earths.

Question 6: China’s “three-dimensional repression strategy”

Can you elaborate on the concept of “non-kinetic strategic deterrence” and how rare earth restrictions fit into China’s broader geopolitical tools (e.g., cyber, trade, energy)?

In my research, Non-Kinetic Strategic Deterrence is defined as a systematic mechanism that does not rely on direct military strikes or physical violence, but rather on the control of systems, structures, resources, and tempo to achieve the effect of suppressing and weakening the adversary’s operational capabilities, deployment tempo, and strategic choice space, the systematic mechanism of suppressing and weakening the opponent’s operational capability, deployment tempo, and strategic choice space. Its core logic lies in the following: by controlling the key elements of opponents that are “irreplaceable, not quickly replenishable, and not externally adjustable”, create a compound strike chain of “capability degradation – decision-making lag – deployment imbalance”, to achieve the construction of strategic victory in the absence of war.

In Chapters 2, 5, and 6, my research further suggests that China has already possessed a “non-kinetic, cross-dimensional, and structural deterrence platform” based on the export control of rare earths, and that, with this as the core, it is gradually constructing a multiaxial linkage of a “three-dimensional suppression strategy”. A “three-dimensional suppression strategy” is gradually being built around this. This strategic system consists of the following four pillars:

6.1 Resource Dominance Axis: Export Controls on Rare Earths and Key Strategic Materials

Rare earth elements (e.g., neodymium, dysprosium, samarium, terbium), semiconductor metals (e.g., gallium, germanium), and high-energy materials (e.g., tungsten, lithium) constitute the core structural dependencies of the U.S. military’s combat system.

China has “institutionalized” these resources through the construction of export tools such as the “blacklist mechanism”, “classification licensing system” and “technology transfer locking mechanism”. Weaponization” of these resources has resulted in a form of suppression that paralyses industries and disrupts the military tempo without the need for a head-on conflict. The simulation model of my research shows that once the 10-year zero supply strategy of rare earths is implemented, the U.S. military will enter a serious deployment capability lag period in the 4th-8th year, and then lose the technological dominance in the key strategic window.

6.2. Energy regulation axis: lithium, photovoltaic and new energy strategic levers

China occupies more than 60% of the global lithium battery, energy storage system and new energy equipment chain (e.g. Ningde Times, BYD, etc.).Through the lithium resources, rare earth oxides and battery materials exports to implement synchronized control, China can be in the future energy military fusion situation on the United States to form the energy scheduling tempo of the institutional disruption capacity, especially in the special energy reserve system, unmanned platform energy module has the potential for strategic destruction.

6.3 Science and technology sealing and control axis: rare earth technology, AI devices, lasers and sensing systems export intervention

Rare earths are not only raw materials, but also embedded in key high-tech devices such as AI chips, laser modules, infrared detection, and guidance systems. The “resource-equipment-capability” three-stage model proposed by my research suggests that if the export and licensing channels of rare-earth-derived technologies are frozen, it will trigger a disruption in the R&D and deployment of new platforms, resulting in a systemic military-industrial science and technology disruption. On this basis, China could also intervene with key outputs of AI training chips, optical modules and high-frequency communications equipment to strengthen system-level paralysis capabilities.

6.4 Information and Networking Axis: Cognitive Warfare – Supply Chain Warfare – Platform Competition

Under the framework of non-kinetic strategies, information warfare and economic warfare can be synergized with rare earth policies. For example, China can control the rare earth supply time node, strengthen the guidance and suppression of the global industrial chain sentiment (such as the release of policy, public opinion linkage), in the global capital market to create a “sense of structural uncertainty”; at the same time, with the help of the “One Belt, One Road” Rare Earth Alliance. At the same time, through the “Belt and Road” rare earth alliance to build cooperation mechanisms with Central Africa and Central Asia, substantially dismantle the G7 Group’s attempts to integrate the supply chain, so that the U.S. allies to form a “collective anxiety of resource reconstruction”, and indirectly form a cognitive and policy hysteresis effect.

6.5 Integrated features and strategic significance of the “three-dimensional suppression” model

Overall, rare earth export control is not an isolated policy action, but a core trigger mechanism embedded in China’s “three-dimensional suppression strategy”. This strategy is characterized by the following features:

1. Multiple axes of action: the four axes of resources, energy, technology, and information work in tandem to suppress the export of rare earths;
2. Institutionalized control: the “sense of strategic temperature control” is enhanced through adjustable export mechanisms and blacklisting. 3;
3. Low-cost, high-pressure: real deployment delays and capability imbalances can be generated without military conflict;
4. Systematic expectation shaping guiding adversaries’ strategic judgements through policy windows, creating “staggered responses”.

Therefore, “non-kinetic strategic deterrence” is a structural deterrence transformation mechanism in which China elevatesresource leverage to institutional power, and export control tostrategic suppression, the essence of which lies in transforming the advantage of rare earths from “raw material bargaining power” to “raw material bargaining power”, and then transforming the advantage of rare earths from “raw material bargaining power” to “raw material bargaining power”. Its essence lies in transforming the rare earth advantage from “raw material bargaining power” to “system control power” and “strategic time-sequence interference power”, and constructing a multi-dimensional and integrated non-contact suppression strategy platform through the synergistic linkage with energy, trade, networks and other policy tools.

Question 7. Policy application and next steps

What would be your key recommendations to the United States and its allied governments to prevent simulation scenarios? Do you believe that the United States is working hard to avoid such a strategic decline, or are the opportunities disappearing?

In the three-layered simulation system of “Strategy Sandbox – Resource Supply Disruption – Capability Degradation” constructed by my research institute, the strategic capability degradation triggered by the disruption of rare-earth exports is not a sudden risk event that can be reversed in the short term, but a strategic degradation process that is embedded, structural, and highly path-dependent. Instead, it is an embedded, structural and path-dependent process of strategic degradation. Therefore, the prevention of the “8-12 years of systematic lag in U.S. military capabilities” presented in the simulation scenarios does not rely solely on tactical remedies or ad hoc procurements, but requires systematic and forward-looking adjustments and deployments by the U.S. and its allies at the strategic level. Based on the results of my study on the mechanism of the suppression window and the identification of structural bottlenecks, we make the following five strategic recommendations to the United States and its allies:

7.1 Strategic transformation from “resource substitution” to “functional autonomy”.

Current U.S. policy still favors “material substitution” or “increased production in other countries” as the main countermeasure to rare earth supply cut-offs, such as increasing the supply of raw rare earths in cooperation with Australia and Canada, or mitigating the problem through tactical-level material recovery. However, my research clearly indicates that it is not the break in the mineral source itself that really leads to the degradation of the strategic capacity, but rather the hollowing out of midstream technology and the disorganization of industrial support. Therefore, it is recommended that the strategic focus be shifted from “supply replacement” to “functional autonomous reconstruction”, i.e., the establishment of an industrial backbone network centered on rare-earth separation, alloys, and magnet manufacturing.

7.2 Construct a “resilience-embedded” defence industrial policy mechanism.

Research simulation shows that, even if the short-term access to limited imports to supplement, its equipment renewal, platform deployment, combat tempo in the impact is extremely limited. Therefore, the United States needs to establish a new type of defence industry policy framework based on the mechanism of “strategic redundancy-multi-path substitution-industry chain synergy”, in order to enhance its own supply chain pressure resistance. Especially in the areas of AI chips, infrared sensors, magnetic suspension propulsion and other highly dependent areas, it is necessary to set up “industry chain resilience red line indicators” and incorporate them into the defence procurement standards.

7.3 Promote the policy construction of the “resource-capability bivariate strategy model”.

My research emphasizes that it is not the quantity of rare-earth supply cut-offs that makes them a mechanism of suppression, but rather the breaks in capability paths that they trigger. Therefore, I suggest that the Pentagon and relevant allied governments should no longer regard resource policy as just a part of energy and economic affairs, but should plan it in conjunction with the capability model, troop deployment tempo, and the life cycle of weapon platforms, so as totruly construct an integrated defence strategy system that is “coupled with the dual variables of resources and capabilities”.

7.4 Exchanging time for space, and restarting the three-stage strategy window of “early warning, deployment, and reconstruction”.

According to the research output model, the U.S. still has a “critical hedging window” of about 3 to 4 years, which can be used to mitigate the intergenerational technological fault and system deployment delays occurring in the 5th to 8th years. Therefore, it is recommended that a national “Strategic Materials Capability Reconstruction Timeline” be developed as soon as possible, including bill support, talent introduction, engineering design standards reconstruction, and environmental compliance streamlining processes, in order to strive for structural inputs for rhythmic recovery.

7.5 Build a “Strategic Resources Mutual Guarantee Alliance Mechanism” with allied countries.

At present, although Australia, Canada, the European Union, Japan, and other countries have a resource base and technical reserves, they lack a coordinated mechanism. It is recommended that the United States take the lead in establishing a “strategic resources mutual protection mechanism” to share information on key material reserves, technological capabilities, talent synergies, and deployment rhythms, so as to achieve flexible adjustment in the event of structural disruptions in the global supply chain, rather than falling into a “global self-help type of isolated island competition”.

My research is cautiously pessimistic about whether the United States is trying to avoid the strategic downturn that the modelled scenarios suggest. Although the U.S. government has issued policy documents such as the National Strategy for Critical Minerals and the National Defence Supply Chain Repatriation Strategy, and initiated support programs for rare earth companies such as MP Materials, there is still a significant gap between the actual intensity of inputs, the tempo of policies, and the efficiency of the system’s response to the structural capacity gap. Especially in the context of the incompressible cycle of industrial reconstruction, the serious problem of talent disruption, and the lack of cross-sectoral coordination, the U.S.’s current efforts are more akin to tactical adjustments than strategic reconstruction.

In short, if it does not complete the strategic transformation of system construction and defence industry in the next 2-3 years, the United States will encounter a system-level strategic lag period between 2029 and 2033, characterized by resource suppression, and its dominant position in AI warfighting deployment, joint air-sea capability output and high-precision operational control will be weakened. As a result, the window of opportunity, while not completely gone, is rapidly narrowing.

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