Direct military intervention from China into the war on Ukraine, with Chinese troops and airmen appearing at the front line, would be highly escalatory and highly unlikely.
Equipping Russia with weapons and equipment is much more likely – if indeed it hasn’t already happened – and considering the West is supplying armaments to Ukraine, a joust with western technologies would be an interesting development to follow.
But if Chinese weapons underperform in the heat of battle, this may have implications for the current situation with Taiwan and the US, as a poor outcome on the Ukraine front could give the West more confidence over the tensions in the South China Sea. And the use of Chinese weapons in Ukraine would also be a feast for Western technical intelligence to capture.
Creating economic disruption
A much more likely development for China is to put in place export controls on critical minerals for Western powers supplying arms to Ukraine. This is a significant lever which China has used before during its fishing dispute with Japan in 2010 when hi-tech industrial production in Japan was affected by shortages of China-sourced critical minerals. Once normal supplies were resumed, Japan started to stockpile critical mineral reserves.
In October 2020, the Chinese Communist Party (CCP) passed a new statute enabling – when necessary – restriction of critical mineral supplies to third party nations intending to use them for defence and security applications, adding a ‘versatile weapon to Beijing’s arsenal’ in its trade competition with the US.
That legal control has been applied to Lockheed Martin production of Taiwan-bound F-35s and it applies not only to critical minerals mined on the Chinese mainland, but also to Chinese-controlled enterprises within international supply chains, of which there are many.
Responding to any such restrictions by opening up new mines and setting up new supply chains can take more than a decade, so the countries involved may need to start stockpiling critical materials as Japan has been doing since 2010.
Commodity markets also need to be ready for some interesting price wobbles – a persistent problem in critical minerals extractives investment as is overcoming environmental, social, and governance (ESG) challenges in this new game of global supplies.
In addition, those markets include the London Metal Exchange, now owned by Hong Kong Exchanges & Clearing whose biggest shareholder is the Hong Kong government which is struggling to operate with complete independence from Beijing.
Splitting the West’s consensus
By extending the thinking on China’s potential to throttle global critical mineral supply chains and the ensuing latency of extraction from new mining resources, progress to the Paris Agreement 2050 goals on climate change will inevitably be affected.
Given there are no supply chain assurance mechanisms, such as distributed ledger technologies, in place within global mining supply chains, a key issue to overcome would be how the West assures China that critical mineral supplies are not destined for military applications.
But if China’s default position becomes a total refusal to supply client nations unless end-to-end assurances can be achieved to prove non-military use, the West’s aspirations regarding the Paris 2050 goals will certainly be put in jeopardy, or even made unachievable.