In a « Le Monde » article about tensions between Berlin and Beijing, the journalist writes: “The paradigm shift in international trade, where the strategic dominance of resources and raw materials, sensitive technologies and markets has replaced the rules of free trade, has deteriorated the position of German companies.”1
This raises a question: did strategic domination of raw materials and sensitive technologies actually replace free trade? Or is it rather that Western countries have lost the technological dominance that once allowed them to control access to raw materials extracted in developing countries and to practise so‑called « free trade » on favourable terms?
How the old system worked (1990s–2010s)
After the Cold War, the dominant Western storyline was simple: open markets, WTO rules, global supply chains.
German, United States, Japanese and other European firms kept the high‑value parts of industry — patents, system design, precision machinery, advanced chemistry, automobiles — and offshored labour‑intensive manufacturing to lower‑wage locations. Access to raw materials from the rest of the world was treated as a given. Energy or inputs from politically delicate suppliers (Russian gas for German industry, rare minerals from China, etc.) were considered manageable risks rather than national‑security threats.
German industry in particular built a model on two pillars: (1) cheap imported inputs and energy, and (2) exporting high‑end manufactured goods (especially cars and machinery) at scale to fast‑growing markets such as China. When the European Union or Germany talked about « free trade », they largely meant the smooth functioning of this model.
In that world, the West could afford to sound liberal because, in practice, it controlled most of the bottlenecks that mattered: finance, technology licensing, industrial standards. If a country in the Global South produced cobalt, lithium or rare earths, Western — and later Chinese — firms typically controlled the refining, tooling and equipment needed to turn those ores into high‑margin industrial inputs. The “rules‑based order” rested on those hierarchies.2
The 2020s turning point
In the 2020s, critical raw materials have become open leverage. China processes and refines a huge share of rare earth elements, battery-grade graphite and metals like gallium and germanium that are indispensable for chips, electric-vehicle motors, wind turbines, radar and other dual-use technologies (military and civilian). Beijing is introducing licensing requirements, quotas or outright bans on some of these exports, and restricting shipments of certain minerals and related know-how to rivals. This is explicitly framed as national security, and it hits Germany hard because German industry depends overwhelmingly on Chinese rare earths and permanent magnets — in some cases above 90 percent dependence for specific inputs.3
At the same time, advanced technology — including things that look civilian, like batteries, EV platforms, chipmaking tools and industrial robotics — is now framed as a strategic asset rather than a normal tradable good. The United States and its allies have long restricted the transfer of high-end technology, not only in missiles or nuclear systems but also in aerospace, computing, telecommunications and advanced manufacturing.4 What is new is that this ‘security’ logic has spilled out of specialised export controls and patent walls and now targets entire civilian industries.
In this perspective, Western countries restrict China’s access to high‑end semiconductor tools and chips, arguing that advanced computing capacity is a national‑security asset. China answers by squeezing minerals and processed inputs that those same chips, batteries and green technologies require. Inside Europe, Brussels launches an anti‑subsidy investigation into Chinese electric vehicles in 2023 and openly signals a willingness to use tariffs or other defensive trade instruments to shield European carmakers. That is a sharp departure from decades of preaching open trade.5
Meanwhile, new watchwords appear in Berlin and Brussels: « economic security », « de‑risking », « strategic autonomy ». The European Commission’s Critical Raw Materials Act set quantitative 2030 targets for domestic extraction, processing and recycling of strategic inputs (rare earths, lithium, cobalt, etc.), and for diversification away from any single supplier. The message is clear: never again be so dependent on one country — first Russia for gas, now China for magnets, batteries and key components. Governments are now openly reorganising trade around control of materials, technologies and entire value chains. That is a real break with the rhetoric of the 1990s.6
German companies feel especially exposed
Germany is not just an unlucky bystander in this story. Its industry deliberately optimised for cheap Russian pipeline gas and for access to Chinese demand, because that combination maximised competitiveness and profits for two decades. Berlin assumed both flows — energy in, exports out — would remain available and politically neutral. After Russia’s invasion of Ukraine in 2022 and amid the current contest with China, German policymakers themselves now describe this dependency as a strategic vulnerability rather than a harmless efficiency play.
German manufacturing (autos, wind, electronics, machine tools) depends heavily on Chinese rare earths, permanent magnets, battery components and other critical inputs. At the same time, German carmakers sell a huge share of their high‑margin vehicles in China and rely on joint ventures there. This leaves them trapped between Brussels’ new defensive trade posture and Beijing’s capacity to retaliate. Germany has moved from “we export sophisticated technology and import cheap inputs” to “we depend on a systemic rival for both inputs and sales — and that rival can cut us off”.
A balance‑of‑power shift
The West’s comfortable version of « free trade » rested on the assumption that it — not China — would control the commanding heights of technology, finance and standards, and that critical inputs would keep flowing freely from abroad. That assumption no longer holds, especially in batteries, electric vehicles, wind components and key upstream minerals — areas in which China is not just an indispensable provider but, above all, a systemic rival.
As that asymmetry eroded, Western governments (including Germany and the European Union) shifted toward industrial policy, resource nationalism, export controls, tariffs and « de‑risking ». They are trying to rebuild strategic leverage — domestically or with trusted partners — instead of relying on multilateral free‑trade rules.
It is therefore inaccurate to say simply that « free trade was replaced by strategic domination ». What changed first was the balance of power. Because China can now weaponise both minerals and segments of mid‑ and high‑tech manufacturing, Europe and the United States now talk about raw materials and advanced technologies as security assets, not neutral goods — and that logic is no longer limited to aerospace, telecoms or high-performance computing. Brussels now applies ‘economic security’ language to electric vehicles, wind turbines, batteries, permanent magnets and critical minerals. The shift is not that the West suddenly discovered technology is strategic; it always treated frontier industries as strategic. The shift is that it is now trying to secure the entire value chain — from extraction to refining to final market — in sectors that Germany used to call ordinary export business. For the EU, and especially for Berlin’s old model (cheap Russian energy in, premium industrial exports to China out), that is very close to a break with its previous free-trade posture.
Notes
1 “Tensions accrues sur le commerce et Taïwan entre Berlin et Pékin”, Le Monde, 26 Oct 2025.
2 On Germany’s model of cheap Russian pipeline gas and Chinese demand for German cars and machinery, see debates in Germany’s Ministry for Economic Affairs and Climate Action after the 2022 Russian invasion of Ukraine, including public remarks by Robert Habeck and Olaf Scholz in 2022–2023 about overreliance on both Russian gas and the Chinese market.
3 China’s July 2023 export licensing rules on gallium and germanium, and its dominant position in rare‑earth refining and magnet production, were justified domestically as national security measures and exposed European (especially German) dependence on Chinese inputs for electric vehicles, wind turbines and advanced electronics.
4 On Western export‑control regimes: the Coordinating Committee for Multilateral Export Controls (CoCom, 1949–1994) and the Wassenaar Arrangement (established 1996) governed transfers of dual‑use goods and technologies among participating states.
5 In October 2023 the European Commission opened an anti‑subsidy investigation into imports of battery electric vehicles from China and stated it was prepared to apply countervailing duties to protect the EU car industry, signalling a more protectionist stance than the EU’s traditional free‑trade posture.
6 The European Commission’s 2023 Critical Raw Materials Act proposal, together with the European Economic Security Strategy (June 2023), set 2030 targets for extracting, processing and recycling critical inputs inside the EU and called for “de‑risking” supply chains — reducing single‑country dependence rather than trusting global markets to stay benign.