As the world watched APEC approach, a silent economic coup reshaped the global supply chain, shifting the future of AI, defence, and clean energy away from Beijing’s grasp.
By Dominic Wardall | Edited by Carlos Taylhardat |
While much of the world scrolled through TikTok, Washington and its Pacific allies executed what some analysts now call the most sophisticated economic manoeuvre in modern history. Within seventy-two hours, Malaysia and Thailand signed mineral and processing agreements that began to chip away at China’s near-monopoly over rare-earth refining — the metals behind every fighter jet, smartphone, and AI data centre on Earth.
Context: How China’s rare-earth edge became leverage
For decades, China processed about 80% of the world’s rare earths, including neodymium, the element that makes F-35s fly and EVs hum. On October 22, U.S. President Donald Trump announced a 100 percent tariff threat on roughly $300 billion in Chinese exports. Beijing warned of retaliation: a chokehold on global rare-earth supply. What followed stunned markets and diplomats alike.
“This isn’t trade negotiation. It’s tribute collection.”
Narrative One — Washington’s play
From Washington’s perspective, this was not a war fought with missiles or troops, but with contracts, tariffs, and influence. In just three days, the United States reshaped the map of who controls some of the world’s most critical minerals.
On October 24, Malaysia signed an agreement that opened the door for American firms to help finance and develop its rare-earth resources and refineries. On October 25, Thailand followed with a companion deal focused on processing and logistics. By October 26, the White House unveiled what it called the Indo-Pacific Rare Earth Framework, a regional alliance designed to reduce dependence on China and secure the materials that power fighter jets, smartphones, and AI servers.
Behind the public announcements were billions in private and public investments. A US$8.5 billion (≈A$13 billion) processing expansion centred on Australia, new extraction rights in Cambodia, and U.S. partnerships across Southeast Asia gave the plan immediate scale. Trump’s team called it “supply-chain freedom”: the ability to build high-tech products without relying on Chinese metals. Critics, however, saw something more aggressive — an economic empire built through trade policy rather than conquest.
The strategy appears to be working. U.S.–China trade has dropped from about $758 billion in 2018 to roughly $580 billion in 2024, while trade between the United States and ASEAN nations has climbed by around 20%. Factories, contracts, and supply routes are quietly shifting away from Beijing’s orbit toward capitals that signed on with Washington.
What looked like chaos on social media — sudden tariff threats, late-night posts, blunt rhetoric — now seems part of a pattern. Every “trade war” headline masked a careful move to relocate production, rebuild alliances, and weaken China’s technological control. In Wardall’s words, “Each tweet was a chess move, not a tantrum, a calculated bid to dismantle Chinese sovereignty over the future of technology.”
Narrative Two — Beijing’s counter-view
From Beijing’s vantage point, the new U.S.-led rare-earth alliance looks less like cooperation and more like pressure wielded as policy. On October 12, the Ministry of Commerce of the People’s Republic of China (MOFCOM) defended new measures imposing tighter export controls on rare-earth elements, calling them legitimate efforts to protect national security.
A spokesman said: “The U.S. actions have severely harmed China’s interests … we are resolutely opposed to them.” In Beijing’s telling, Washington’s use of tariffs and supply-chain deals is not about partnership at all, but about limiting China’s role in global technology.
Chinese officials argue they are playing by the rules. “China’s export controls are not export bans … all applications of compliant export for civil use can get approval,” one statement insisted. At the same time, Beijing warns that foreign firms must now seek permission when using materials or technology tied to Chinese sources — a reminder that access to the world’s largest manufacturing base comes with conditions.
For China’s planners, the logic is simple: if U.S. firms and allies relocate supply chains away from China, Beijing risks losing more than just trade. It risks losing long-term leverage in high-tech, defence, and advanced manufacturing. As one Chinese economist put it on state television: “America cannot mine without Asia … and Asia cannot grow without China.”
In Southeast Asia, the response is mixed. Some governments welcome the investment Washington brings, but others worry about being drawn into a larger power game. In Malaysia, opposition parties question how environmental safeguards will be enforced. In Thailand, labour leaders are pressing for stronger wage and safety guarantees. For these countries, the choice can feel binary: do deeper business with the U.S. and access its markets, or remain tied into China’s supply-chain ecosystem — but risk American pressure.
Narrative Three — The silent story on the ground
In the hills of Perak and the forests of Mondulkiri, far from summit halls, ore lies beneath farms and villages. In Malaysia’s Perak state, plans for rare-earth mining in one of the country’s most environmentally sensitive forests have triggered alarm among local communities and NGOs.
With every signed memorandum, diggers arrive before regulation does. Environmental assessments are approved, but questions persist. Tailings ponds filled with waste from mining and processing carry the risk of chemicals and heavy metals leaking into rivers. Experts warn of consequences for drinking water, fisheries, and farmland that millions depend on.
“They call it strategic autonomy,” a Cambodian geologist said, “but for us it’s survival.” In Cambodia’s border regions, as mining pushes deeper into fragile landscapes, the local cost is mounting: deforestation, disruption to Indigenous life, and threats to livelihoods built on clean water and forest products.
The 72-hour rare-earth checkmate may have redrawn global power lines, but its human footprint will last generations. Empire, in any age, leaves residue in soil, in lungs, and in the silence of those whose stories rarely make the communiqué.
Key Takeaways
- Between October 24–26, 2025, Malaysia and Thailand joined a U.S.-led rare-earth framework aimed at chipping away at China’s long-standing control of around 80% of global rare-earth processing.
- U.S.–China trade has fallen by roughly $180 billion since 2018, while ASEAN trade with America has risen about 20%, signalling a gradual re-routing of supply chains.
- Trump’s tariff threats, often framed as trade wars, have been used as leverage to reroute global supply chains and weaken China’s technological grip.
- Beijing calls the rare-earth framework economic coercion, while ASEAN nations walk a tightrope between U.S. promises and Chinese leverage.
- Environmental and labour impacts across Southeast Asia remain poorly reported compared with the diplomatic headlines.
Questions This Article Answers
What triggered the new U.S.–ASEAN rare-earth framework?
The immediate trigger was Trump’s threat of 100 percent tariffs on hundreds of billions of dollars in Chinese exports, and Beijing’s warning that it could respond by tightening control over rare-earth supplies. To pre-empt that risk, Washington moved quickly to lock in new mining and processing agreements with Malaysia, Thailand, Australia, and other partners.
How does the deal weaken China’s technological dominance?
China still dominates rare-earth processing, but shifting new projects and refining capacity to allied countries reduces Beijing’s ability to use export controls as a weapon. Over time, a wider network of mines, refineries, and contracts across Australia and Southeast Asia gives U.S. and partner firms more options for sourcing the metals that underpin advanced weapons systems, electric vehicles, and AI data centres.
Why are Southeast Asian nations crucial to the plan?
Countries like Malaysia, Thailand, and Cambodia sit on untapped deposits of critical minerals and already host some of the few processing facilities outside China. Their geographic position on key shipping lanes also makes them natural hubs for refining, logistics, and component manufacturing. Without Southeast Asia, Washington’s attempt to diversify away from China would be far slower and more expensive.
What risks do local communities face from rare-earth mining?
Rare-earth extraction and processing produce toxic waste that can contaminate rivers and soil if mishandled. Communities in places like Perak and Mondulkiri face the risk of deforestation, polluted water, and loss of traditional livelihoods. Many fear that oversight, labour protections, and clean-up plans are lagging behind the rush of investment.
Does this mark the end of economic globalization?
Rather than ending globalization, the rare-earth saga suggests it is being reorganized into rival blocs. Trade still flows, but increasingly through political filters: who controls the mines, which countries host the refineries, and which alliances shape the rules. The question is not whether economies will stay connected, but whose rules and whose risk they are built around.
