The United States has a lot to give — and a lot to gain.
The United States has a lot to give — and a lot to gain.
R ussia’s growing friendship with China is bad news for the U.S. and its allies. The West must secure its critical supply chains to combat this potentially dangerous relationship.
Dissatisfied with the U.S.-led world order, Russia and China are teaming up to challenge Western hegemony — starting with a response to the West’s support of Ukraine. Shortly after China’s top diplomat told a close Putin ally that Beijing’s relationship with Moscow was “rock solid,” the Wall Street Journal reported that the Biden administration has intelligence showing that China is seriously considering giving lethal aid to Russia for use in Ukraine, in addition to the nonlethal aid it has already been providing.
China and Russia are emboldened by their newfound alliance, and the West should expect this kind of behavior to continue. In light of Europe’s troubled attempts to wean itself off Russian natural gas, it’s clear that the economies of the West have been too dependent on China and Russia for key products and resources. Our rivals are more likely to remain on their current path if the price of challenging them remains too high for us to pay, as they’ll be banking on our fears of economic pain to keep us quiet.
To correct this imbalance, the United States and its allies must seek independence from these aggressors through “friendshoring” — the process of relocating supply chains to allied countries. By doing so, allies can capitalize on each other’s export strengths to fill the gaps that a potential halt of Chinese or Russian supplies would leave. Friendshoring would lessen the risk of a conflict by taking away China’s and Russia’s export leverage, and it would go a long way toward ensuring supply-chain stability for our most vital goods in case trade relations further deteriorate.
The United States has a lot to give: Natural gas and crude oil are among its top exports, and they are sorely needed by allies in Europe. But the U.S. is still reliant on imports from China, not least as a source of 48 percent of its lithium-ion batteries in the first nine months of 2022 and 79 percent of its rare earth metals — both of which are essential components of crucial military and civilian hardware, from electric vehicles to stealth fighter jets.
China also has a stranglehold on clean-energy technology, as it controls 80 percent of all critical solar-panel manufacturing and is on track to produce over 95 percent of the world’s polysilicon and wafers — key parts of the solar-panel-production process — in the near future. An aggressive friendshoring strategy could reduce China’s leverage by breaking its monopoly on batteries, critical minerals, solar panels, and more.
Friendshoring has already helped our allies in Europe. The U.S. stepped up to fill some of the void left by a decline in Russian gas exports to Europe. U.S. LNG (liquefied natural gas) exporters increased shipments to the EU by more than 137 percent in the first eleven months of 2022 compared with the same period in 2021, supplying more than half of Europe’s imported LNG. There is some competition, however: Qatar, which recently signed a $60 billion 27-year LNG deal with China, supplied 16 percent of the EU’s LNG in the first ten months of 2022, cementing its place as the EU’s second-largest supplier behind the U.S.
Due to a fortuitously warm autumn and winter, European demand for natural gas for heating was lower in 2022–23 than it can be expected to be going forward. The U.S. should prepare to increase LNG exports to Europe in case Russian gas exports decline further but must keep in mind that this is a temporary solution. While the U.S. is on track to double its LNG export capacity by 2027, American LNG remains pricey, and the EU will likely begin reducing its reliance on it in favor of homegrown energy.
Russia dominates uranium exports too. In 2021, 14 percent of the United States’ uranium and 28 percent of its enrichment services were provided by Russia. In 2020, EU utilities imported 20 percent of their uranium and 26 percent of their enrichment services from Russia. Russia is also the only commercial producer of High-Assay, Low-Enriched Uranium (HALEU), which is the exclusive fuel source of advanced small modular reactors, such as TerraPower’s Natrium reactor, that are currently under production.
The U.S. and Australia could fill this gap for themselves and their allies. The U.S. is capable of producing far more uranium than it does now, and proposals such as Senator John Barrasso’s about creating a strategic uranium reserve could further incentivize domestic production. However, Native American and environmental groups have successfully opposed domestic uranium mines on their lands in the past because of poor regulation that has caused serious health problems for Navajo communities, and they remain adamantly opposed to new domestic mining despite the fact that it’s far safer now.
Though Australia ranks first in total uranium deposits and contains 35 percent of the world’s total supply, it ranks only fourth in total production. If we convince our Australian allies to boost uranium production while simultaneously increasing our own, we could further loosen Russia’s grip on uranium.
The world remains dependent on our rivals for energy and critical minerals. China accounts for 85 percent of rare-earth-metals processing, 60 percent of the world’s lithium-refining, and three-quarters of lithium-ion-battery production. Just as we can prime our energy exports to benefit our allies, we can collaborate with our allies to counter our adversaries: U.S.–Australian collaboration in rare-earth mining has already led to China’s global market share of these critical minerals dropping from 80 percent to 60 percent.
We can aid our allies by increasing energy exports to fill gaps in their supply chains, and we can fill our own shortfalls of critical minerals through public–private collaboration at home and strategic partnerships abroad. Reducing the vulnerability of our allies would discourage China and Russia from further adventurism. These actions would mitigate the risk of all-out conflict while ensuring economic and national security for ourselves and our allies.