CHINA’S EXPLOITATION OF ADVANCED BATTERY MARKET PRESENTS CLEAR AND PRESENT DANGER TO U.S. NATIONAL SECURITY — NEW FDD REPORT

WASHINGTON, D.C., July 22, 2025 — China’s dominance of the advanced battery supply chain that is critical to U.S. national security underscores how Beijing exploits Western capitalism to harm industries and supply chains throughout the global economy, according to a new Foundation for Defense of Democracies report.

The report, “Unplugging Beijing: A Playbook to Reclaim America’s Advanced Battery Supply Chain,” details the scale and scope of China’s non-market practices in the battery supply chain — dumping, price manipulation, intellectual property theft, monopolies, and forced technology transfers — and what the United States can do to break China’s stranglehold on the battery supply chain, build the components and mine the minerals that go into advanced batteries, and fight back against China’s market manipulation.

“While most nations respect a basic set of rules that promotes fair competition, Beijing leverages a wide range of non-market practices to dominate supply chains, create resource dependencies, undermine foreign rivals, concentrate economic power, and destabilize emerging economies,” write Elaine Dezenski and Joshua Birenbaum of FDD’s Center on Economic and Financial Power. “This strategy is fundamentally parasitic, relying on the readiness of others to play by the rules even as China breaks them.”

The report focuses on the supply chain for one critical technology — advanced batteries — to illustrate the nature of Beijing’s misconduct and identify ways to overcome it. Dezenski and Birenbaum say it is a template for addressing America’s economic security vulnerabilities more broadly, especially regarding supply chains.

“Batteries will be the bullets of the future given their increasingly essential role in military and consumer technology,” says Dezenski. “The battery supply chain is at the heart of many types of emerging technologies, from mobility — electric vehicles and scooters, for example — to energy grid resilience, drones, and laptops. Batteries are the lifeblood that undergirds many of the products upon which Americans rely.”

The production of batteries depends on several critical minerals — lithium, cobalt, nickel, copper, manganese, and graphite — whose extraction and processing are mainly under Chinese control, the report finds. The Trump administration moved quickly to implement policies that encourage U.S. production of these minerals, “but there is a need for countermeasures up and down the supply chain, jointly implemented with free-market partners,” the authors write.

Among the report’s key findings:

• China exploits the advanced battery market at all stages of production, achieving systemic advantages to dangerously corner the market. Even though Western scientists pioneered the lithium-ion technology that animates advanced batteries, Chinese battery makers lead the industry, while Beijing’s control of the supply chain enables it to sharply limit foreign competition.
• China’s non-market manipulations include price manipulation, subsidies, export dumping, intellectual property theft, knowledge transfers, monopolies, and aggressive vertical integration. The impact goes beyond immediate financial losses for affected companies, disrupting the incentive structure of a competitive market.
• America can — and should — use its trade power to force the creation of a better system, starting with more secure, reliable, and fair supply chains for advanced batteries and the critical minerals that underlie them. That means investing in transparency for the benefit of free and market-based countries and supporting the private sector’s natural appetite for innovation with government support for scaling and project de-risking.
• China’s dominance of the advanced battery supply chain represents a clear and present danger to the security of America’s military supply chains, the resilience of U.S. core industries, and the efficient functioning of market economies around the globe. Fortunately, America has abundant tools to address these risks to its national security that are imposed by China.
• It is time for new guardrails, muscular statecraft, and a unified international response to China’s non-market manipulation.

To compete with China, the United States must invest in cleaner, more efficient, and higher-performing manufacturing processes. The authors propose increased academic research in battery science in exchange for low-cost licensing to U.S. companies, full cost recovery for research and development in the tax code, and publicly owned modular testing facilities to reduce innovation barriers for smaller firms.

While tough negotiations will be necessary to ensure China changes its behavior, the authors write that the United States should bolster its national security by taking six sets of actions now to strengthen its advanced battery and critical mineral supply chain resilience and reduce dependencies:

• Step up extraction of critical minerals by incentivizing private investment, streamlining permitting and regulations, and establishing a critical minerals stockpile.
• Counter China’s processing chokehold by developing non-Chinese processing techniques and supporting U.S. and allied processing capacity.
• Innovate and scale battery technology by fostering private sector collaboration, expanding federal support for innovation, prioritizing safe and clean processes, and leveraging research consortiums.
• Stabilize prices for key battery minerals and materials.
• Promote transparency to blunt China’s parasitic practices, including by protecting the United States-Mexico-Canada Agreement (USMCA) against China and combating forced labor.
• Work closely with allies and partners to include ally-shoring critical mineral supply chains, investing in emerging market allies, and prioritizing the Western Hemisphere.

“America can — and should — use its trade power to force the creation of a better system, starting with more secure, reliable, and fair supply chains for advanced batteries and the critical minerals that underlie them,” the authors conclude. “That means investing in transparency for the benefit of free and market-based countries and supporting the private sector’s natural appetite for innovation with public assistance for scaling and project de-risking.”

FDD is a nonpartisan research institute focusing on national security and foreign policy.

To schedule an interview with the authors, contact FDD media relations at [email protected].

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FDD’s Center on Economic and Financial Power promotes strategies and policies to bolster an effective economic security framework that deters America’s adversaries and protects U.S. national security objectives.