The US and China: Deep dependency amid increasing strategic competition

Today around 41% of US weapons and defence infrastructure is reliant on Chinese semiconductors, while 91% of Navy weapons incorporate critical minerals whose supply is reliant on Chinese industry. As America pivots to the Pacific, it faces the stark reality that its military superiority increasingly depends on China – the very country it is preparing to potentially confront.

In the early 1990s, the US saw its strategic situation transformed; the Warsaw Pact had imploded and the Soviet Union, the primary strategic rival of the US, had collapsed. The US was the dominant power globally, having the largest economy and demonstrating its superior military power as a US-led coalition defeated Iraq in Operation Desert Storm between January and February 1991. In the taxonomy of international relations, the bipolarity of the Cold War era (1945–1990) had been replaced by unipolar system with the US as the undisputed leading power.

Opinion among elite policy circles in the US saw all of this as a critical moment when everything changed; the key text espousing this view was Francis Fukuyama’s ‘The End of History and the Last Man’ (1992). It was his contention that the end of the Cold War and the emergence of the US as the major power in a unipolar world, marked the triumph of Western liberal democracy as the dominant political and economic system and that no plausible challenge could emerge to Western liberal democracy, hence ‘the end of history’.

With no plausible strategic competitor, the US, like the Europeans, could go on and enjoy a ‘holiday from history’ in the 1990s, starting to downsize their defence capabilities and their supporting national defence industries. That is not to suggest that the US did not face any strategic or foreign policy challenges in the 1990s, but none of them could be classed as being of major concern. The 1990s were therefore an era where the US was at the top of a unipolar international system and at the apogee of its strategic dominance.

Then on 11 September 2001 (9/11), terrorist attacks on the US homeland caused almost 3,000 deaths, triggering the George W. Bush Administration (2001 to 2009) to embark on ‘regime change wars’ in Afghanistan and Iraq as a part of a broader ‘war on terror’. US military involvement in Afghanistan, Iraq and across the wider Middle East would continue throughout the Bush Administration. With the US increasingly entangled in the Middle East, significant strategic challenges elsewhere did not receive the necessary attention. For example, a resurgent Russia and its 2008 invasion of Georgia failed to generate a robust US response. Elsewhere, Chinese economic and military power continued to grow, posing questions over Beijing’s strategic intentions.

Strategic shift

The Obama years (2009 to 2017) marked a shift in US strategic policy; furthermore, many in the Obama Administration foreign policy team would go on to hold important posts in the Biden Administration (2021 to 2025) and continue with Obama-era policies. Obama/Biden strategic policies still have significant impact on US defence capabilities and strategic perceptions.

The Obama Administration sought a ‘reset’ in relations with Russia, though this ended up being short-lived, effectively ending with Russia’s annexation of Crimea in 2014 and commencement of the Donbas War shortly thereafter. The most significant change in US foreign/strategic direction was in the Middle East, where the Obama Administration changed direction. This manifested in a number of different ways: firstly, the Obama policy was for a new balance of power in that region, relations with older client states such as Israel, Saudi Arabia and the majority of the Gulf States were frayed during the Obama Administration’s efforts to secure a lasting deal with Iran, in which the country would agree to give up on its nuclear ambitions in exchange for lifting of sanctions.

Another significant change was the US reaction to the ‘Arab Spring’ which started in Tunisia in December 2010 before spreading to Egypt, Libya, Syria, Yemen and beyond. There was little US reaction to the fall of the Mubarak regime in Egypt, a long-term US client. This was followed by the fall and death of Gaddafi in Libya, the start of the civil war in Syria, and the rise of the Islamic State, all of which led to a region in turmoil. The Obama plan for a new era in the Middle East proved difficult to deliver, added to which US forces remained engaged in Iraq and Afghanistan throughout the Obama years, despite a desire to end those commitments.

Arguably though, the critical change in strategic policy actioned by the Obama Administration was the so-called ‘Pacific Pivot’. The reasoning behind this move was explained by Obama in a speech to the Australian Parliament in November 2011, when he stated: “As the world’s fastest-growing region – and home to more than half the global economy – the Asia Pacific is critical to achieving my highest priority, and that’s creating jobs and opportunity for the American people. With most of the world’s nuclear power and some half of humanity, Asia will largely define whether the century ahead will be marked by conflict or cooperation, needless suffering or human progress.” He continued: “As President, I have, therefore, made a deliberate and strategic decision – as a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future, by upholding core principles and in close partnership with our allies and friends.”

 

This new focus on Asia would require change, with Obama stating: “I have directed my national security team to make our presence and mission in the Asia Pacific a top priority. As a result, reductions in US defense spending will not – I repeat, will not – come at the expense of the Asia Pacific. My guidance is clear. As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region. We will preserve our unique ability to project power and deter threats to peace.”

While the Obama Administration talked about ‘cooperation’ with China, it was clear that US policy makers were of the opinion that China had emerged/was emerging as the primary strategic competitor to the US. The problem was that strategic competition with China presented the US with a different set of challenges than it had faced previously; this was not going to be a Cold War 2.0 situation! Unlike the situation in the first Cold War, the US now faced a serious competitor in the economic sphere, as well as in the industrial and scientific spheres. Where the US was once the global industrial leader, in an era of globalisation this was no longer the case as manufacturing was outsourced overseas. Also, in the post-Cold War era, defence industrial capabilities had shrunk significantly, driven by falling defence budgets and industrial consolidation.

In the military context, the US found itself facing an increasingly peer-level competitor for the first time in more than two decades. Furthermore, this was happening while the US military was deeply enmeshed in the asymmetric conflicts of the regime change wars primarily in Afghanistan and Iraq. On top of that, the technological lead that the US military had enjoyed was being eroded by Chinese progress. All in all, China presented a highly complex conundrum for US defence planners to counter.

The ‘Pacific Pivot’ in US strategy would be continued during the first Trump Administration (2017–2021) and also in the Biden Administration (2021–2025). However, the intensity with which the threat calculus in the Asia Pacific region would be understood and acted upon would differ between the two successor administrations after Obama. Turning to the second Trump Administration, the Asia Pacific strategy continues, but it is important to note that while the US and China both acknowledge strategic competition, they both work actively to avoid confrontation at this point.

Vulnerabilities

There was a time when the US could count on superiority over potential competitors in critical strategic areas; these included economy, industry, technology and unfettered access to key raw materials. In recent years though, the US has had to come to terms with vulnerabilities emerging in these critical areas. It has also started to take steps to recognise these vulnerabilities and look for solutions.

In 2019, the US Department of Defense (DOD) awarded a USD 400 million five-year contract to deliver data and analysis on DOD spending, supply chain and acquisition issues to Govini, a specialist company is this area. This led to a report entitled ‘Numbers Matter: Defense Acquisition, US Production Capacity and Deterring China’. Key findings in the report were that between 2005 and 2020, the level of Chinese suppliers in US supply chains quadruped (from a little over 10,000 to over 40,000). Added to which was the fact that between 2014 and 2022, US dependence on China for electronics increased by 600%. The Govini report also stated: ‘US companies at the bottom of the supply chain pyramid often source these parts (electronics/semiconductors) from China in open market transactions.’ The end result of this was that major US defence primes have Chinese suppliers in their supply chain.

The report was able to establish that US weapon supply chains in areas such as datalinks, electronics, propulsion systems, seekers, software, structures, testing and fuzes and detonators, with hundreds of Chinese suppliers involved. According to the Govini report, some 41% of DOD weapons systems and infrastructure supply chains rely on Chinese semiconductors! It was established that US Navy F/A-18E/F combat aircraft have 5,000 Chinese semiconductors present, while Arleigh Burke class destroyers have almost 6,000. Other weapon systems with a significant Chinese semiconductor presence include the B-2 bomber and the Ohio class SSBN, as well as systems such as the Tomahawk, Patriot, AGM-158 JASSM, AGM-158C LRASM and the GBU-31 JDAM. The necessity for rapid action to cleanse the US defence supply chain and critical weapon systems from reliance on Chinese semiconductors is obvious.

 

Recently Govini has released another report that contains more bad news for the DOD and the US strategic situation. This new report is entitled: ‘From Rock to Rocket: Critical Minerals and the Trade War for National Security’. The introduction to the report makes clear why this is a critical issue: “From raw minerals to advanced weapon systems – from rock to rocket – there lies a reality: America’s military superiority increasingly depends on China. China recently tightened its grip on critical minerals essential to defense and commercial technologies by expanding its export controls to include tungsten, tellurium, and other vital materials. This action builds upon earlier restrictions introduced in 2024, targeting gallium, germanium, and antimony.”

The Govini report lists five critical minerals, namely tungsten, tellurium, gallium, germanium and antimony. Moreover, the report states that: “More than 80,000 parts across 1,900 weapon systems incorporate the five critical minerals, meaning that nearly 78% of all DoD weapon systems are potentially affected.” It is stated that 91% of US Navy weapon systems rely on parts using these minerals – for the US Marine Corps, it is 61.7%.

Rare Earths

This brings us to another category of critical minerals where the US finds itself dependent on foreign suppliers; this category is known as Rare Earth Elements (REE). There are 17 different REEs which have applications in such areas as aerospace components, medical systems and devices, fuel cells, specialty glass and lenses, semiconductors, coatings for rare earth magnets, lasers, electric motors, nuclear batteries and superconductors. The problem for the US is that China was responsible for 69.2% of REE production in 2024, is said to account for 99% of REE processing and is credited with having almost 50% of global REE reserves.

In the REE sector, China essentially has a monopoly position. In April 2025, China instituted export restrictions via an export licensing regime for REEs and REE magnets. The elements in question are scandium, yttrium, samarium, gadolinium, terbium, dysprosium and lutetium. How important are REEs to US defence programmes? According to the Center for Strategic and International Studies (CSIS) in Washington DC, an F-35 combat aircraft uses 408 kg of REEs, while an Arleigh Burke class destroyer requires 2,359 kg of REE.

 

In a report by the US Government Accountability Office (GAO) to Congress, published in July 2025 entitled ‘Defense Industrial Base – Actions Needed to Address Risks Posed by Dependence on Foreign Suppliers,’ it was stated that: “The F-35 prime contractor, Lockheed Martin, identified prohibited Chinese magnets in the F-35 supply chain and notified DOD in 2023 and 2024. DOD subsequently paused manufacturing for several months to identify alternative suppliers.” Until notified by Lockheed, DOD was unaware of the presence of Chinese magnets. Finding a new source of supply proved difficult and after determining that the magnets posed no security risk, they continued to be used on the F-35 until alternative arrangements could be made.

The GAO report also illustrated other areas where reliance on foreign supplies is being mitigated: “DOD has started building domestic battery production capabilities and stockpiling certain types of lithium batteries to reduce reliance on foreign sources that are located primarily in China. Lithium is a critical material used in the production of batteries and supports many applications and weapon systems, including radios, ground combat vehicles, and aerial refuelling drones.” China is the dominant force in the battery domain, as battery manufacture in the US relies on Chinese-produced materials such as nickel, manganese and cobalt. The GAO report further notes that finding other sources for these minerals is often expensive or just not possible.

The report also referenced the fact that critical chemicals used in 155 mm artillery ammunition came from China and other foreign countries, with the DOD now establishing domestic sources of supply for these chemicals as 155 mm ammunition production is being ramped up. In the biotechnology sector, the US is reliant on foreign manufacturers, including China, for bio manufacturing. Reliance on foreign materials and manufacturers is only part of the problems with the US defence industrial base; the GAO report noted that “the US has lost large titanium casting capability.” This is just one example of lack of investment and ageing equipment across the defence industrial base.

There are currently so many other areas of concern within the whole defence ecosystem in the US with the US Navy for example suffering with a major maintenance, repair and overhaul backlog. All of the US services have experience with reaching recruitment targets in recent years, although that situation appears to be changing and numbers are recovering. Ammunition stockpiles were denuded in support of various clients, with Ukraine a major destination. Recovery efforts are now underway to rectify this issue, particularly with 155 mm ammunition. Another critical area finally receiving attention is missile stockpiles and production rates; for example, the US Navy found itself burning through the various types of Standard missile at an unsustainable rate as production numbers were so low. It does not take much imagination to realise how quickly their missile arsenal would be depleted if they were confronting a peer-level adversary! Urgent action is obviously needed to increase missile production and acquisition across the US military.

For more than 80 years, the US Navy has been the largest and arguably the most capable naval force on the planet, yet now it finds itself in a situation where its supremacy is being challenged by a peer-level competitor in the form of the People’s Liberation Army Navy (PLAN). Indeed, it is thought that PLAN has now surpassed the USN in numbers of combat vessels, although a like-versus-like comparison could probably yield a different result. The trend lines are clear. PLAN is on course to surpass the US Navy and will field advanced modern vessels in large numbers year-on-year.  Put simply, China is out-producing the US in advanced naval construction, a situation that the US has never faced before in the modern era. Naval power is fundamental to power projection in the Asia Pacific, and if the US is to project power it needs more advanced naval combatants and it needs them rapidly if it is going to compete.

 

Active responses

As the US is responding to challenges in the Pacific, it is actioning new basing options in the region under the Agile Combat Employment (ACE) programme, in response to the missile threat against existing major bases such as Guam. Tinian, one of the Northern Mariana Islands, one of the most westward US territories, was captured from the Japanese in July/August 1944, at which point construction of an enormous airbase began for B-29 bomber operations against the Japanese mainland. In fact, the atomic bomb missions against Hiroshima and Nagasaki were flown from Tinian. Post-1945, Tinian West Field eventually became the airport for the island, while the large North Field complex was abandoned. More recently, the US Marine Corps (USMC) have been using facilities on the island.

In 2023, funding was appropriated to improve facilities at Tinian West Field/Tinian airport for military use. Then in 2024, Fluor Corporation was awarded a USD 407 million contract to rebuild/refurbish the former Tinian North Field airbase, with significant work completed in 2024 and into 2025. Elsewhere, refurbishment works on former bases have been undertaken at Peleliu in the Palau Islands and at Yap Island in Micronesia. Rather than US assets all being concentrated on Guam, they can be spread across four locations complicating hostile targeting and increasing survivability.

If there is one US service that has embraced the challenge of the ‘Pacific Pivot’, it is the USMC. Back in 2014, as their involvement in asymmetric conflicts wound down, USMC leadership attempted to define the future threats the US would face and what roles this would require the Marines to undertake. In 2019, ‘Force Design 2030’ was released; this would provide the doctrinal basis for the future of the Marines. Part of the doctrine was ‘Expeditionary Advanced Base Operations (EABO)’. Here the Marines establish temporary bases in austere locations and field their weapons and sensors and engage hostile naval units in a sea denial mission. The EABOs could be established along an island chain blocking enemy access to a disputed operational area.

New weapon systems central to the Force Design 2030 include the Navy Marine Expeditionary Ship Interdiction System (NMESIS), this utilises the Naval Strike Missile (NSM) in a coastal defence application. Air defence options include the Medium-Range Intercept Capability (MRIC) to confront air threats, cruise missiles and UAVs, with the effector here being the Rafael Iron Dome missile. Other air defence options are the JLTV-mounted Marine Air Defence Integrated System (MADIS) and the Light-MADIS mounted on the Ultra-Light Tactical Vehicle; these systems use missiles, guns and electronic means to confront and defeat UAV threats primarily. All of these weapon systems are supported by a range of sensor options, UAVs and USV systems, light armour, Marine Air and a range of Marine-specific amphibious vessels.

 

The rapidity with which new bases are being established in the Pacific is impressive, as is the ongoing transformation of the Marines to play a pivotal role in confronting threats in the Pacific area. However, there is no avoiding the fact that the US must seek to reduce dependence on foreign suppliers for critical minerals, especially REEs. It has to gain control of its semiconductor supply chain via onshore manufacture wherever possible. Finally, it has to modernise its defence industrial base and build weapon and munitions stockpiles that will realistically reflect utilisation rates against a peer competitor.

David Saw