This two-part analysis is dedicated to my valued reader, Marion W.
Her perceptive and far-reaching question about how Russia and China are responding to the West’s strategic division of labour provided the decisive impetus for these two articles. I am pleased to take up her suggestion to “[…] address the subject and explore it in a Part 10.”
by Michael Hollister
Exclusive published at Michael Hollister on August 21, 2026
5.390 words * about 28 minutes readingtime
You can find an overview of Parts 1 through 9 of the series “The War Prepared in Advance” here:
INTRO – The Prepared War – 9 Parts
Part 10 read here:
The Countermove – How Russia Intends to Break the Encirclement – Part 10
Briefing Format of the In-Depth Analysis – 10 minutes readingtime:
The Countermove: China’s Quiet Answer – Part 11
The week’s most important geopolitical developments – independently assessed.
One Line in a Customs Regulation
On October 09, 2025, China’s Ministry of Commerce published a package of export-control regulations that Western reporting interpreted primarily as a response to U.S. tariffs. The explanatory notes contained a sentence that generated fewer headlines than the tariff threats but carries more weight. Reuters rendered it this way: Foreign military end users would not receive licenses for rare earths; applications related to advanced semiconductors would be reviewed only on a case-by-case basis.
No military hardware, no maneuver, no list of addresses. An administrative act. Yet this one sentence describes more precisely than any nuclear threat what Beijing holds against the Western order. Whoever controls the magnets embedded in guided missiles, radar systems, and fighter-jet engines controls the speed at which Europe can arm itself.
Part 1 of this investigation ended with a finding. While Russia issues loud threats, publishes address lists, and conducts nuclear exercises, the sharpest countermeasure against European rearmament operates somewhere else entirely-quietly, through civilian channels, without a single shot being fired. And it was never Russian. It is Chinese. This second part delivers on that finding.
The starting point remains the same. Between November 2025 and January 2026, the United States laid out a division of labor in its National Security Strategy and National Defense Strategy: Europe assumes responsibility for the conventional containment of Russia so that America can free its forces for the Indo-Pacific and its own hemisphere. For Russia, that was the starting point of the countermove. For China, it is the same document read from the other side. If the United States intends to shift its attention from Europe to Asia, Beijing is the true target of that shift.
The question driving this part is therefore this: What has China been doing since it recognized this direction-now, demonstrably, and through the 2029 or 2030 horizon Western planners repeatedly cite? And is it acting in coordination with Russia, or are two powers moving in parallel against the same opponent without a common plan?
Two Sides of the Same Coin
To understand China’s actions, one must know about a conversation that was never supposed to become public. On July 02, 2025, Chinese Foreign Minister Wang Yi and EU foreign-policy chief Kaja Kallas met in Brussels for a strategic dialogue. The meeting lasted four hours. Two days later, the South China Morning Post reported what Wang had said, according to several people familiar with the conversation: China could not afford a Russian defeat in Ukraine because the United States would then direct its full strategic attention toward Beijing.
The candor surprised the European side. CNN, citing a knowledgeable official, reported that Wang’s private remarks suggested Beijing might prefer a prolonged war in Ukraine that distracted Washington from its rivalry with China. What is striking is the range of subjects that, according to CNN, this single meeting covered: cybersecurity, rare earths, trade imbalances, Taiwan, and the Middle East. The instrument and the motive sat at the same table. For Kallas, the former Estonian prime minister, it was her first major diplomatic engagement in her new role; the South China Morning Post wrote that Wang had delivered several “history lessons” to her over four hours. The conversation was described as tense and candid at the same time.
Here, due caution is not ornamental but obligatory. This is a report about a private conversation, not a verbatim quotation. And Beijing publicly says the opposite. Foreign Ministry spokesperson Mao Ning called China’s position on Ukraine “objective and consistent,” grounded in calls for negotiations and a ceasefire. At the same meeting, Wang rejected the accusation that China was materially supporting Russia-had it done so, he argued in substance, the conflict would have ended long ago. Both statements stand side by side, and this article does not decide between them. The finding to retain is this: An interpretation was voiced in Brussels that contradicts Beijing’s official neutrality, and the European side understood it that way.
What Wang reportedly articulated is the exact mirror image of the American National Defense Strategy. The Pentagon wants to free forces from Europe and redirect them against China. Beijing wants to prevent precisely that. In both cases, Russia is not an end in itself but a variable in the calculation over the Pacific. It is the same coin viewed from opposite sides.
The central thesis of this part follows from that-and it is deliberately restrained. It cannot be demonstrated that China is acting with the declared intent to sabotage European rearmament. What can be demonstrated is a documented alignment of interests: As long as Russia does not lose and the United States remains tied down in Europe, China gains time and room in the Pacific. Intent remains open. The effects of the instruments examined below do not.
The Weapon Already Drawn
The sharpest of these instruments is no secret. It lies in plain sight in the official bulletins of China’s Ministry of Commerce, and its effects can be quantified.
Begin with dependence. According to the European Parliamentary Research Service, the EU obtains all of its heavy rare earths and 85 percent of its light rare earths from China, along with 98 percent of its rare-earth magnets. China controls roughly 60 percent of global extraction and about 90 percent of refining. This is not an ordinary trade relationship, but a bottleneck through which nearly all European high technology must pass-from wind turbines and electric motors to the magnets used in guidance systems and fighter-jet engines.
China has built a control framework on top of this dependence in two waves. In April 2025, the Ministry of Commerce introduced licensing requirements for seven rare earths and the associated magnets-this first wave was never suspended and remains in force. In October 2025 came the second and far more severe wave: five additional elements and, for the first time, extraterritorial reach. Under this rule, even a product manufactured outside China requires a Chinese license if it contains as little as 0.1 percent Chinese-origin material or was made using Chinese processing technology. It is the mirror image of the Foreign Direct Product Rule Washington has used for years to control the global semiconductor trade. China has thus built its own long-arm jurisdiction.
On November 07, 2025, Beijing suspended this second wave until November 10, 2026, as part of an understanding with Washington following a meeting between Xi Jinping and Donald Trump. But the architecture remained in place and was further consolidated between the two waves. On March 31, 2026, the State Council adopted Regulation No. 834 on industrial and supply-chain security-China’s first standalone framework for supply-chain security, combining export controls, countermeasures, and investment screening under a national-security mandate. In June 2026, the Ministry of Commerce created a reporting mechanism for unlicensed exports, circumvention through third countries, and technology transfers. The instrument is not being dismantled. It is being sharpened while suspended.
The sentence that matters appears in the explanation of the October wave: Foreign military end users will receive no licenses; semiconductor applications will be reviewed only case by case. The asymmetry is now explicit. Civilian trade is the default; military and high-technology use is subject to Beijing’s discretion. CSIS has listed the systems affected: Elements such as samarium, terbium, and dysprosium are used in the magnets inside guidance and targeting systems, radar installations, and fighter-jet and submarine engines-from the F-35 stealth fighter and Virginia-class submarines to the Tomahawk cruise missile. At the same time, according to CSIS, China is expanding its own munitions production five to six times faster than the United States. This is where the framework strikes at the heart of the division of labor described in Part 1. Joris Teer of the EU Institute for Security Studies, the Union’s security-policy think tank, put it unequivocally to the press: Without the flow of critical minerals, there is no rearmament; everything depends on it. In November 2025, Teer said, China was pulling the ground out from under Europe’s rearmament efforts just as the Kremlin was intensifying its aggression.
The International Energy Agency quantified the scale on July 16, 2026. If China’s controls were fully implemented, $6.5 trillion in downstream production worldwide would be at risk each year. The G7 responded in June 2026 by setting a target that no single country should supply more than 60 percent of its rare-earth imports; China’s Foreign Ministry then called on the group to stop disrupting international trade. This is a documented brake on the precise conventional European buildup that Western strategy presupposes.
The counterargument belongs here, and it carries weight. Not everyone regards Europe as helpless. The Berlin-based think tank MERICS argues that although the controls pose a problem for Europe’s defense industry, Brussels has the legal and financial frameworks to solve it-for example, through recycling quotas in defense contracts or a price-guarantee model based on the U.S. government’s stake in the mining company MP Materials. The EU has begun to respond through the Critical Raw Materials Act, the RESourceEU initiative announced in October 2025, and new raw-material partnerships in Malawi, South Africa, and Brazil; Norway’s Fen Complex contains Europe’s largest known rare-earth deposit. The frequently cited 98 percent figure also refers to magnets, not to every stage of the material chain. The finding nevertheless remains: These alternatives will take years, while the Chinese framework is operating now.
The Weapon in Reserve
Alongside the weapon already drawn, Beijing holds a second one in reserve, aimed not at individual magnets but at Europe’s industrial substance as a whole.
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