On December 11, 2025, the world witnessed the emergence of a new strategic global alliance called the ‘Pax Silica Initiative’, led by the United States State Department, with the inaugural summit being held in Washington.
The goal was simple: securing Artificial Intelligence (AI) and semiconductor supply chains, with countries like the US, Australia, Greece, Israel, Japan, Qatar, Republic of Korea, Singapore, the UAE, and the United Kingdom feeling the urge to derisk their supply chains in the coming years. In February 2026, the group saw a notable entry, with India, the world’s fourth-largest economy, joining the alliance.
When talking about the Pax Silica, Jacob Helberg, US Undersecretary of State for Economic Affairs, told CNBC, “Pax Silica is really not about China, it is about America. We want to secure our supply chains.”
But then, the question remains: to secure from whom?
Let’s go back to October 2025, when the Xi Jinping-led China decided to tighten export controls for its critical rare-earth metals, effectively turning the global economy’s dependence upon these materials into a strategic leverage.
So, if we look at the developments that made the headlines since October 2025, we may be witnessing a phenomenon where globalisation is evolving into a pattern where it is picking sides, with supply chains getting reorganised along geopolitical lines. Is it going against the core principle of globalisation as a concept itself, which preaches the growing interdependence of the economies, cultures, and populations, facilitated by factors like cross-border trade in goods and services, technology, flow of investment, people and information.
Weaponised supply chain
Let’s go back to October 2025 again, when China announced its ’announcement number 61 of 2025’, increasing export controls for five rare-earth metals in addition to the seven the Xi Jinping administration announced in April in the same year.
Out of the 17 rare-earth metals in total, China put export restrictions on 12 of them. Not stopping there, it also placed restrictions on the export of specialist technological equipment required to refine rare-earth metals. Foreign companies were mandated to obtain special approvals from Beijing if they wished to export rare-earth magnets and certain semiconductor materials containing a minimum 0.1% heavy rare-earth metals from the world’s second-largest economy.
Citing the rationale of national security interests for the move, which has been in effect since December 2025, China made sure that foreign companies end up explaining the intended use of the product they wish to make using Chinese rare-earth metals, attacking the very basis of globalisation, which advocates unrestricted flow of cross-border trade in goods, services and technology.
The Xi Jinping administration, however, believes that since rare-earth-related items have dual-use properties for civilian and military applications, implementing export controls on them is an ’international practice’.
In October 2025, the Chinese Commerce Ministry spokesperson told these exact things to the global media: “Certain foreign organisations and individuals have been directly transferring – or processing and then transferring – controlled rare-earth materials originating from China to relevant organisations and individuals directly or indirectly for military and other sensitive applications.”
Rare-earth metals are used in the production of electric cars, lithium-ion batteries, LED televisions, AI semiconductors and camera lenses. Most importantly, these raw materials are crucial for the US defence industry. According to the Centre for Strategic and International Studies (CSIS) think tank, rare earths are used to manufacture components of F-35 fighter jets, Virginia and Columbia-class submarines, Tomahawk missiles, radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs.
Pax Silica countering Chinese pressure?
Rahul Nath Choudhury, a Delhi-based economist specialised in international trade, trade policy, investment, advisory and research who has handled several economic and trade-related projects for the Government of India’s Ministry of Commerce, World Bank, Asian Development Bank, International Finance Corporation and Singapore government’s Ministry of Trade and Industry, told International Finance that globalisation has always been transactional and geopolitically inclined towards the countries that are politically and strategically aligned and share common interests.
“Inter-country blocks, such as BRICS, ASEAN, and the EU, all have some common features. The emerging incidents like trade war, political unrest, and civil disorder have further influenced the decision of various countries to align or tilt towards like-minded countries and reduce the impact of global uncertainties. This is evident as countries increasingly enter into trade, investment and strategic agreements, with those countries that are geopolitically aligned, rather than purely based on commercial efficiency,” he said.
On the other hand, Derek Scissors, Resident Scholar, American Enterprise Institute, whose research concerns the Chinese, Indian, Japanese and other Asian economies, and their connections to the American economy, commented, “Globalisation was initiated and led by the US. The Trump administration wants to partly reverse that, to make trade and investment more transactional. However, Trump administration agreements are being reached without approval from the US Congress, and may not last beyond 2028. The long-term path for globalisation is unclear. The global economy may fade somewhat in favour of regional blocs. It’s hard to see China’s goal of taking a dominant position in as many supply chains as possible being compatible with the goals of other large economies.”
However, there is no doubt that China is weaponising its supply chains. Given that it is the largest producer of rare-earth metals, mining at least 60% and processes about 90% of these resources (as per CSIS’s report in 2024), it is going to use this as a leverage to gain a position of dominance in global geopolitics.
This raises questions about the idea of a deeply connected global economy.
Derek doesn’t believe in any deeply connected global economy “All the connections and associations have always been among like-minded countries that share common interests. We are now experiencing the emergence of a bipolar/multipolar world where power is no longer concentrated with one country. The entire concept of a deeply connected global economy is getting reshaped with the advancement of new developments. The idea of ‘Pax Silica’ also brings together like-minded nations, which, in turn, reflects a broader shift toward concentrated globalisation, instead of one integrated global system.”
The trend now is China Plus One
A new feature of the post-pandemic global order is the ‘China Plus One’ business strategy. Companies are now diversifying their supply chains and manufacturing bases beyond China, adding alternative locations in Southeast Asian countries like Vietnam, Thailand or India. The reason: mitigate business and supply chain-related exposure to China, given the geopolitical tensions that crop up often between the world’s second-largest economy and the United States-led Western Bloc.
Tim Cook-led Apple has become the brand ambassador of this practice. The iPhone maker has been aggressively diversifying its supply chain in the last couple of years, placing its bets on Vietnam and India. Till COVID-19 showed up, China used to be at the centre of everything Apple used to do, especially in terms of manufacturing. Then, as the pandemic kicked in, lockdowns in key manufacturing hubs like Zhengzhou, dubbed ’iPhone City’, caused severe production bottlenecks and shipment delays for the American giant, ultimately impacting the global product availability.
Also, given that bilateral trade relations between the world’s two largest economies have been anything but normal, manufacturing and shipping products from China will always face the risk of being tariffed.
So, Apple wanted a resilient and future-proof manufacturing network and, in that pursuit, found their answers in Vietnam and India, with advantages like considerable lower labour costs, attractive government policies, and import tariff rates suiting high-tech manufacturing, and, most importantly, capturing the lion’s share of one of the world’s largest and fastest-growing smartphone markets (again India), while maintaining its sales and profits lead in the home market of United States.
Rahul Nath says, “The China Plus One strategy does not seem to be over. Companies in various parts of the world are still exploring the option of relocating their base from China to other locations, despite it being a very difficult task. I don’t see this ending in the near future, at least in 2026.”
Derek, however, had a nuanced view of the unfolding scenario.
“The China Plus One strategy is much more a response to predatory Chinese policies than US-China decoupling. The problem with American policy is its inconsistency, as with President Trump being extremely conciliatory to China prior to his trip to Beijing at the end of March 2025,” he noted.
Another trend, which is also likely to redefine the transactional nature of the neo-globalisation, is ’friend-shoring’, which is already happening in domains like technology and semiconductors, with politically allied nations (read Uncle Sam and his friends) strategically relocating supply chains in a way to gradually reduce dependence on China.
Initiatives like the CHIPS and Science Act in the US, implemented by the Joe Biden administration, incentivise domestic semiconductor manufacturing while mandating that companies receiving federal funds restrict capacity expansion in China. While preventing access to high-end semiconductors for China, to maintain an edge over Beijing in the AI race, has been a consistent policy take in the White House, irrespective of the administration’s political alignment, ’Pax Silica’ in 2026, looks like an extension of a ’Minus China’ approach – building resilient, secure, and trusted networks for critical components without Beijing.
On this, Rahul Nath said, “Today, every major government is trying to reshape their supply chains in a way that insulates them from geopolitical risks. This is affecting big businesses in all areas and influencing their strategy and investment decisions. The semiconductor industry is particularly active in responding to these changes. According to a report by The Engineer, manufacturers from the EU and the US are increasingly moving their supply chains to North America, the UK, Mexico, Vietnam, India and North Africa to minimise geopolitical risks and increase proximity to key markets. Several major projects are underway in North America. Numerous new semiconductor factories are being built in the US and Europe to boost regional production and reduce dependence on Asian suppliers.”
Middle powers’ strategic cooperation path
Hurt by China’s rare-earth minerals’ export control in 2025, European policymakers have taken a new stance, which is basically a ’do no harm’ approach. Bilateral engagement continues, while carefully avoiding escalation. And Donald Trump’s maverick approach to the continent, especially in the garb of resetting trade ties, is forcing the European leadership to seek diplomatic and commercial reassurance from the Xi Jinping government, despite structural issues like widening trade imbalances, persistent concerns over industrial overcapacity, growing unease over economic coercion risks, and China’s continued alignment with Russia remaining firmly in place.
Canada, United States’ all-weather North American ally, too, has faced a tariff onslaught from the Trump administration, forcing Ottawa to reassess its economic ties with Beijing, which were marked by years of tension on account of tariffs, import restrictions, and diplomatic disputes.
In fact, India, the latest entrant to the Pax Silica, was another global player which got hurt by Uncle Sam’s strong-arming tactics. It resulted in the Narendra Modi-led government increasing its engagement with the BRICS (supposed rival of the G7), while increasing economic engagement with China and Russia.
So, even if we take into consideration the fact that the above-mentioned incidents were results of short-term policy blips from the White House, the fact remains, there are players like India, Canada and Europe, who believe in the concept of a ’multi-polar world’, where instead of overcommitting to one particular geopolitical block, interest-driven approach will rule foreign policy and diplomacy.
Scissors said, “India is big enough to stand on its own, but only if it pursues reforms much more aggressively. Labour laws continue to favour existing workers, with the result that new workers cannot contribute properly to the economy. The demographic boom is being repressed. Smaller, but still sizable economies, should place their long-term bets on the US. America has pulled away from China in GDP over the past decade, and has a history, at least, of being open to its partners. However, these countries should also protect themselves from US policy shifts over the next three years.”
“All these middle powers are aligning or re-aligning with one or other superpowers. Global South nations are forming new trade alliances and partnerships that sidestep the US and the EU. India’s changing approach towards FTAs and partnering with new economies, like Australia and the UAE, shows its participation in bloc-based trade realignment,” Rahul Nath concluded.