^{Photo: South China Morning Post}

The ongoing tensions between Washington and Beijing have reached a new flashpoint as U.S. Treasury Secretary Scott Bessent accused China of deliberately trying to slow global economic growth through its latest export restrictions on critical minerals. In a recent interview with the Financial Times, Bessent claimed that China’s actions are designed “to pull everyone else down with them” as the country struggles to recover from one of its most prolonged economic slowdowns in decades.

China’s Tight Grip on Critical Minerals

China, which dominates the global supply of rare earth elements—a group of 17 essential minerals used in everything from electric vehicles to advanced weapons—announced on October 9 that it would restrict exports of rare earth materials for military purposes. This marks the first time Beijing has explicitly targeted defense-related applications.

The U.S. and its allies rely heavily on Chinese exports for critical components such as neodymium magnets, which power systems in F-35 fighter jets, Tomahawk missiles, and smart bombs. Experts estimate that China currently controls over 60% of the global rare earths production and more than 85% of the processing capacity, giving it enormous leverage over global supply chains.

Bessent cautioned that these restrictions could not only hinder the U.S. defense sector but also destabilize industries across Europe and Asia. “If they want to slow down the global economy, they’ll be the ones to pay the steepest price,” he said.

The Global Fallout

The announcement comes just weeks before a planned meeting between President Donald Trump and Chinese President Xi Jinping, a summit that now appears uncertain. Trump, responding to Beijing’s move, announced a sweeping 100% tariff on all Chinese imports effective November 1, while also hinting he may cancel the meeting entirely if China does not reverse course.

Markets reacted sharply to the developments. On Tuesday morning, major U.S. indices opened lower, with the Dow Jones Industrial Average plunging more than 500 points in early trading. The S&P 500 and Nasdaq Composite both dropped around 1.8%, underscoring investor anxiety over a potential escalation into a full-scale trade confrontation.

China’s Economic Struggles

China’s economy has been under increasing strain throughout 2025, with industrial output and exports declining for several consecutive months. Official data shows that youth unemployment remains above 17%, and the property market continues to drag on growth despite multiple rounds of stimulus.

Bessent described China’s tactics as “a symptom of deeper economic distress,” suggesting that Beijing is attempting to “export its problems abroad” by tightening global supply chains. “They are in the middle of a recession—some would call it a depression—and they’re trying to export their way out of it,” he said. “But this strategy only isolates them further.”

Washington’s Response and the Road Ahead

In response, U.S. officials are reportedly accelerating efforts to secure alternative rare earth sources from countries like Australia, Canada, and Malaysia. The Pentagon has already invested over $800 million in domestic rare earth processing projects, while private sector partnerships are emerging to reduce dependency on China.

Analysts warn that if the tit-for-tat continues, it could have profound global repercussions. The World Bank estimates that a prolonged trade war over critical minerals could reduce global GDP growth by 0.5% in 2026, with emerging markets facing the harshest impacts.

Despite these warnings, both sides appear unwilling to back down. As one senior analyst at Capital Economics noted, “This isn’t just about trade—it’s about technological dominance and strategic control. Rare earths are the new oil.”

For now, all eyes remain on the White House and Zhongnanhai. The next move in this escalating geopolitical chess match could determine not only the fate of the world’s two largest economies but also the stability of global markets for years to come.