Gasgoo Munich-When "power batteries" and "great power rivalry" are mentioned in the same breath, a tempting analogy surfaces: If rare earths can serve as a strategic lever for China on the global stage, why not power batteries? With advanced technology, a complete supply chain, and world-leading output and sales, surely they could play the same role.
The answer is likely far more complex than it seems. In a recent article, Dong Yang cut straight to the heart of the issue: power batteries are not rare earths. He is the chairman of the China Automotive Power Battery Industry Innovation Alliance. He is also co-chairman of the China Automotive Chip Industry Innovation Strategic Alliance and vice chairman of China EV 100. That distinction goes beyond industrial attributes; it fundamentally shapes how Beijing should craft an international strategy for a sector poised to become a pillar industry worth 10 trillion yuan.
Image Source: CATL
Manufacturing Supremacy vs. Resource Dominance: A Fundamental Divide
Rare earths and power batteries may both appear to be Chinese strongholds, but their strategic foundations are worlds apart.
The rare earth industry is, by nature, resource-driven. As Dong Yang notes, "the resource itself is the core barrier." China leads the world in reserves, technology, and a complete supply chain, with low dependence on foreign inputs across the board. In geopolitical maneuvering, that inherent strength—where the resource itself is the moat—naturally lends rare earths to being used as strategic bargaining chips.
Power batteries, however, operate on a completely different logic. Dong Yang makes it clear: strategically, this is a "manufacturing-led industry where resources are a constraint, but manufacturing is the advantage." China's edge does not lie in abundant mineral resources, but in formidable manufacturing capabilities and a comprehensive supply chain system. He emphasizes a critical vulnerability: while China holds an absolute advantage in graphite, its dependence on foreign sources for lithium, cobalt, and nickel exceeds 70%—a massive resource shortfall.
This is a fundamental difference. For power batteries, resources are a "hard constraint," while manufacturing is the "moat." Dong Yang goes further, stating that "a favorable international industrial environment is crucial for the development of China's power battery industry."
Pillar Industry vs. Strategic Asset: Rebalancing Risk and Reward
If industrial attributes determine whether something can be used as a tool, the impact on the national economy determines whether it is worth doing so.
The rare earth supply chain is short with relatively limited added value. Dong Yang points out that the industry accounts for a very small share of the national economy. Even if using it as a bargaining chip means sacrificing some export revenue in the short term, the shock to the broader economy remains manageable.
Power batteries are a different beast entirely. This is a long chain with high added value. Dong Yang offers some striking figures. The sector has already "surpassed the trillion-yuan mark." Its future output value could "reach over 10 trillion yuan, ranking it among the top in manufacturing." His conclusion is unequivocal: "Power batteries will become a pillar industry for China's economic development."
Image Source: FinDreams Battery
When an industry reaches this scale, its development strategy must transcend a purely industrial view and move onto the macro chessboard of the national economy. Dong Yang warns that if geopolitical rivalry forces China's power battery industry to "circulate only domestically," the consequences would be severe. Being "unable to participate significantly in the international market" would have severe negative consequences for national economic development.
This presents an unprecedentedly complex landscape. Dong Yang analyzes the current rivalry: the power battery sector is now a triad of China, South Korea, and Japan. While Korea and Japan match China technologically, they lag significantly in industrial scale, supply chain completeness, and cost advantages. Consequently, the US and Europe are eager to cultivate Korea and Japan to reduce dependence on China. Seoul and Tokyo, for their part, are eager to grow quickly enough to counterbalance—or even surpass—Beijing. This dynamic stands in stark contrast to the landscape of the rare earth industry.
This means that if China exits the global competition—whether by choice or by force—it amounts to ceding a massive overseas market to rivals. That would not only mean losing a key growth engine worth tens of trillions in future output. It would also trigger deeper risks at home, such as overcapacity and a slowdown in technological iteration.
In closing, Dong Yang raises a core proposition: "Power batteries are an emerging, high-value manufacturing sector and a pillar industry for a major power like China. But we have no experience in formulating an international strategy for an industry of this nature."
He points out a dilemma: the West is anxious, while Korea and Japan are circling, hoping China stays put. Yet going global inevitably brings risks of technology spillover and geopolitical friction. Therefore, Dong Yang argues, Beijing needs a strategy that "comprehensively analyzes development, risk, and rivalry." He stresses that looking at the issue solely through the lens of growth, or solely through risk mitigation, is incomplete.
The "trump card" of power batteries cannot be played like rare earths. It requires a complex, new strategy that balances growth, risk, and rivalry. The question of how to "go global" steadily is an unavoidable question of the times. It involves reshaping or even leading the global industrial landscape without triggering excessive technology leakage or hitting geopolitical reefs. It tests not just the resilience of the industry, but the wisdom of its policymakers.
