China’s outward investment has stalled while its leverage over critical minerals grows. The Rhodium Group reports announced greenfield projects in the EU fell from an average of €18 billion in 2022‑23 to just €5.5 billion in 2024‑25. With tariffs proving porous, Beijing prefers exporting raw materials rather than building factories abroad, leaving European policymakers scrambling for alternatives. This retreat underscores Beijing’s strategic resource diplomacy.

Washington and Brussels have tried to counter Beijing’s advantage with a joint critical minerals memorandum, yet progress stalls. The U.S. trade chief warned allies that participation will carry a price tag, while the Turnberry pact from last summer remains deadline‑free. Investors see the gap widening between cheap, coercive Chinese supplies and pricier, politically‑laden alternatives from the West, and raises doubts about its viability.

Meanwhile, the United States’ own EV supply chain frays as imports from Canada tumble and domestic expansion slows, a symptom of broader decoupling from USMCA partners. Canadian officials now entertain Chinese EV projects, echoing European strategies. With Europe’s electrification lagging and China offering low‑cost minerals, companies face a stark choice between price and geopolitical risk, as regulators grapple with supply security and climate goals.