Survey after survey shows that Americans (especially young consumers) are more likely to purchase products when their sourcing is more transparent. This trend means sourcing can influence purchasing decisions at the supermarket, but often the derivation of the products they actually use every day is not considered – e.g. their cars, their phones, the home appliances that help feed their families and protect their homes.
Many Americans don’t consider the materials required to make the products they use every day. The raw materials used to power cell phones, cars, home appliances and more have complex origin stories that most people don’t realize.
Americans are well aware that China is responsible for producing many of their consumer staples, but beyond their manufacturing impact, what is less known is that China has been implementing strategies to monopolize raw materials production for decades. These are the materials needed to fuel the modern world. For example: China started monopolizing the raw materials markets needed for the electric vehicles long before we even started seeing EVs on our roadways.
To combat America’s over-reliance on Chinese materials, the United States recently issued its most stringent crackdown on China’s semiconductor market. The goal was to limit China’s ability to develop artificial intelligence (AI) for modern military applications and to adopt regulatory reforms that strengthen the enforcement of previous controls.
This effort did not go unanswered as China’s Ministry of Commerce immediately responded, imposing export bans on several critical materials used in semiconductor and defense technology manufacturing to the United States. This ban included the shipments of rare earth materials such as gallium, germanium and antimony to our country.
In addition to the bans, China even ramped up their efforts to monopolize graphite (where China already owns 98% of the global market), as they called for stricter export controls of this "wonder material” used to build semiconductors, electric vehicle (EV) batteries, advanced electronics and solar panels. Importantly, graphite is an important input for the EV industry as the average EV requires 136 pounds of graphite. The bottom line is without graphite, there will be no EV industry and China’s decision’s impact cannot be understated: it is a major threat to national security and consumer utility in America.
What makes this situation particularly pressing is the immediate implementation of these controls, which leaves U.S. companies that rely on sourcing graphite from China with little to no time to stockpile materials, thereby exposing them to potential supply chain disruptions. With domestic automotive manufacturing jobs reaching a 34 year high in June 2024, in part due to the growth of the EV industry, this development threatens a significant number of American jobs.
Amidst this development, American automakers are facing a price war with China as they struggle to produce affordable raw materials and spare parts at low costs. This challenge has been exacerbated by restrictions on graphite supply from China, a key resource previously offered at competitive prices.
China’s ability to provide low-cost graphite allowed U.S. automakers to maintain competitive pricing. However, with the supply now restricted, American manufacturers find it increasingly difficult to keep production costs down, putting them at a significant disadvantage.
If the U.S. continues to lose its competitive edge, it could lead to industrial bankruptcies or a slowdown, severely impacting the economy and resulting in widespread job losses. Iconic American car brands like Ford and GM are particularly vulnerable to these challenges.
This situation should be a wake-up call for American policymakers and industry leaders. While this move may have caught some by surprise, it represents the latest evidence that the U.S. must rapidly develop alternative supply chains for strategic materials instead of being held hostage by China.
Progress has been made with acts like the Inflation Reduction Act, but we need to move faster. Congress should consider additional measures to accelerate the development of domestic critical material production including graphite. This effort can be achieved by:
America doesn’t need to succumb to China’s sly moves to continue monopolizing their raw material world domination. There are emerging companies that are scaling and getting the job done to support the U.S. Significant progress has been made as certain companies are commercializing operations and have already established production capacity. The trick is that nobody really knows about them, because they had been operating quietly in stealth mode.
Now with significant operational advancements, these emerging players are ready to join the fray to seize these opportunities in an evolving supply chain. They are just not all headquartered in America.
It’s time for America to wake up and reach out to these new players. Not all countries need to be enemies, America has its friends. We are here and well-prepared to support a diversified and resilient global supply chain to meet the demand for raw materials outside of China.
Aiden Lee Ping Wei is the CEO of Graphjet Technology, a pioneering producer of graphite and graphene from agricultural waste. With a decade of experience in engineering, energy, and corporate finance, he has led major engineering projects in China, Hong Kong and Malaysia.
