China’s campaign to turn manufacturing power into strategic leverage is moving from rare earths to the machinery and know-how that underpin everything from solar factories to Himalayan tunnels.

The immediate test may be tunnel-boring machines: Chinese-made equipment is central to India’s effort to build roads and rail links near its contested border with China. Starting this month, Beijing may be able to decide whether Indian buyers can obtain them.¹

That is part of a broader burst of proposed export controls over the past month covering drones, AI models and agents, advanced-medicine processes and solar-panel manufacturing technology. Beijing’s calculation is straightforward: after spending decades and billions building dominant supply chains, it does not want foreign competitors reproducing them at home.

Xi Jinping’s government also frames the policy as national security. Sun Chenghao of Tsinghua University said China is now weighing “what technologies and equipment can be exported, to whom, and what they will ultimately be used for,” citing the military or cyber risks attached to AI, dredging gear and tunneling machines.²

The shift follows years in which Washington restricted Chinese access to advanced chips and software, and Beijing used rare-earth exports as a bargaining tool in its trade confrontation with the United States. Chinese officials and analysts now appear to be looking beyond rare earths for new sources of leverage. “China is also worried that it might lose the rare earths card,” Fudan University scholar Zhao Minghao said.³

But the pressure campaign carries a cost. Governments in the United States, Europe, Japan and India are already trying to diversify supplies and rebuild domestic capacity. India began seeking other tunnel-machine suppliers after Chinese shipments were delayed as early as 2024.⁴

The central tension is clear: Beijing sees control over indispensable technology as insurance against containment; its customers see it as a reason to escape dependence. As Scott Kennedy of the Center for Strategic and International Studies put it, “This way of doing business through threats is unsustainable.”⁵