Structural Captivity Under Sino-American Decoupling: Triadic Resource Dependence and Compliance-Induced Value Destruction Across the APAC Critical Minerals Supply Chain
- Background
The Inflation Reduction Act marked a structural shift in critical-minerals supply chains. When the United States introduced domestic content requirements for battery supply chains in August 2022: linking billions in tax credits to the exclusion of Chinese-origin materials: it did more than adjust trade policy. It reshaped the investment calculus for multinational enterprises operating in critical resource sectors. China responded within twelve months by imposing export controls on gallium and germanium in July 2023 and extending licensing restrictions to graphite by October, turning geological concentration and processing dominance into instruments of state leverage. For MNEs operating across the Asia-Pacific, these competing mandates created a condition that classical theory has not adequately explained: simultaneous dependence on a home state demanding supply-chain restructuring and on a rival resource controller whose cooperation may be withdrawn.
- Research Rationale
What is the issue
Why is the issue important
- Research aim:
To understand Structural Captivity under Sino-American Decoupling: Triadic Resource Dependence and Compliance-Induced Value Destruction across the APAC Critical Minerals Supply Chain
1.3.1 Research Objectives
RO1: To audit the transmission mechanisms through which sovereign compliance mandates (FEOC restrictions, domestic content requirements, export control regimes) convert market-mediated supplier dependencies into regulation-bound, subsidy-dependent compliance architectures, isolating the financial inflection points at which the ECT transitions from transitory adjustment cost to irreversible capital destruction.
RO2: To map the structural mutations emerging when firms restructure under geopolitical constraint: asymmetric joint ventures, forced vertical integration, offtake obligation lock-in, compliance-driven asset stranding: and evaluate their capacity to reduce or amplify dependency exposure.
RO3: To evaluate the Efficiency-Compliance Trade-off across Ford (downstream), BHP (midstream), and Lynas (upstream) to establish whether compliance-driven restructuring produces the Structural Dependence Paradox, wherein localisation generates dependencies with longer time horizons and higher irreversibility thresholds than those being replaced.
RO4: To isolate the operational parameters of the Penalty-First Modality, mapping the causal sequence from structural position within geopolitically contested resource systems to penalty realisation (margin compression, impairment recognition, dividend suspension) prior to operational failure.
- Literature review
The theoretical foundations of this study come from the fields of international political economy, supply chain management, and resource governance. Singh, Sharma and Aier (2022) performed a secondary data search on oil and gas, semiconductors, logistics, and food supply chains in Russia, Ukraine, and other parts of the world, where they showed empirical foundations for a baseline framework. Their research uncovered that geopolitical risk, which is a major challenge post COVID19, for contingency planning in supply chain management and also showed a research interest in sanctions as a regime of commercial insecurity. Singh et al. (2022) research found that, compliance cost per se did not suffice, but their effort of mapping of sectoral disruption (mixing the financial, automotive, logistics) led to a predictive regulatory exposure, establishing the challenge for APAC- based organisations which are caught between Sino-American decoupling mandates. Barrie et al. (2022) research study in parallel, undertook a mixed method approach, including literature review, qualitative analysis, and documentary policy analysis, on a global North-South axis. Building on the study Barrie et al. (2022) mobilised ‘GVC theory’ and trade governance frameworks, that helped to reveal, how the regulatory divergence across jurisdictions created asymmetric compliance burdens, which can be seen directly in the triadic compliance architecture. This consisted of US Foreign Entity of Concern (FEOC) restrictions, Chinese export control regimes and the host-state resource nationalism structuring, found in their research.
By the year 2023, the literature expanded to address the dynamism of geopolitical dimensions, of a disrupted global supply chain, specifically for the semiconductor sector and rare earth minerals sector. Dmitriev (2023) research used qualitative inquiry and secondary data analysis to explore the question of global semiconductor supply chain between the United States and China, with the emphasis on geoeconomic statecraft and technological hegemonism. The regional framing offered by Dmitriev (2023), with the US and China as the key structural actors, brings out the dyadic axis of power, but his framing is also too weak on the middle power space of APAC, which is simultaneously caught up in both sovereign mandates. This gap was addressed by research of Moll, Schularick, and Zachmann (2023) which used literature review, case study, and qualitative analysis to investigate the energy-intensive industries and critical raw materials supply chains of Germany and the EU. Their research used substitution theory, social metabolism and production function, Moll et al. (2023) argued that Europe’s “Zeitenwende” a strategic reorientation ,triggered by their dependence on energy that is similar to APAC firms relying on China for critical minerals supply to gain processing capacity. Their analysis introduced the notion of ‘economy-wide metabolic disruption’, which is directly analogous to the value-destroying nature of compliance shown in RO4 (research objective) in this research proposal. There is margin compression and asset impairment is a symptom of the misalignment between firm-level resource flows and pathways imposed by the sovereign.
In the year 2024, there was a considerable expansion and diversification of the theoretical discourse, that have been used to address the situation of geopolitical disruption of global supply chains. Hrybyk and Lavrijssen (2024) conducted a legal-doctrinal and comparative policy analysis of the dual-use technology governance landscape in the US, Netherlands, Japan, and China. Using Article XXI and the lens of ‘weaponised interdependence’. They argued how national security exceptions, that enable respective governments to derogate from trade liberalisation obligations, have increasingly become tools for economic statecraft, changing the compliance calculus for semiconductor companies in allied jurisdictions. Their findings showed how FEOC restrictions and domestic content requirements, as they are part of RO1 (research objective), are not only mechanisms of trade policy, but also of asserting sovereignty by reshaping the market structure in which companies operate.
In ‘Sustainability’ context, Antony Jose et al. (2024) explored mining and circular extraction from the perspectives of the circular economy and industrial ecology. The geographical coverage was worldwide, and the sectoral analysis was not limited to critical minerals, but findings offered a procedural underpinning, through an analysis of the geographical landscape of resource governance literature, about alternatives to Chinese processing dependency using recycling. Lastly, Sheetz (2024) focussed on ‘Economic Diplomacy’ in the Global context along with China, Asia-Pacific and BRICS context, systematically explored and analyzed the theoretical aspects of international trade, semiconductors and telecom, clean energy, and defence. Application of ‘Historical Systemic Theory (HST), Institutional Theory, and weaponized interdependence as explanatory frameworks, which emphasized on macro-structural perspective on how hegemonic systemic transitions create compliance architectures, to which intermediate economies are structurally captive and can only unilaterally escape in the context of this study’s present research agenda.
The 2025 literature have shown the improvements towards adopting, institutional granularity blending with empirical study. Bednarski et al. (2025) tried to understand the supply chain management and manufacturing logistics in the Brexit (UK/EU), US-China trade war, COVID-19 and Russia-Ukraine contexts. Research used Supply Chain Resilience (SCR), Dynamic Capability Theory (DCT), and Institutional Theory (IT), showed that the cumulative occurrence of geopolitically shocks, which occurred one after the other, creates qualitatively different adaptive problems for firms than isolated shocks — a topic relevant to APAC firms facing both the Chinese export control escalation and the US FEOC enforcement (research objectives RO1 and RO2 respectively).
D’Ambrosio & Lavoratori (2025) using GVC theory, sunk costs, the firm heterogeneity theory and the international business theory, used for the EU, US and developing economies, in manufacturing, GVC and Industry 4.0 contexts. Their study of asymmetric firm-level response to structural reconfiguration, which focuses on how different asset endowments contribute to amplify or weaken exposure to dependency in the structural mutations that are in focus of RO2 (research objective) like; asymmetric joint ventures, forced vertical integration, or offtake obligation lock-in, directly impact their own analysis. Clayton et al. (2025) included global supply chains with a primary focus on the US and China at the firm level, covering semiconductors, technology, energy, and automotive sectors. It offered finest-grained firm-level evidence to date on the link between sovereign policy pressure and a change in the firm’s balance sheet (the financial inflection point in the RO1 (research objective), at which a change in its cost of adjustment creates irrevocable capital destruction).
de Sadeleer (2025) conducted a thorough legal-policy analysis using comparative methodology on the EU’s 27 member states and acknowledged the constitutional-regulatory’ side of multi-jurisdictional compliance obligations that energy and industrial policy actors are tasked with in the critical raw materials sectors, complementing firm-level analyses by Clayton et al. (2025). The OECD’s Net Zero No. 5 Report (Garsous, Tresa, Gonzalez Marentis, Dellink, and Yamaguchi, 2025) used trade-environment nexus, circular economy, and institutional theory approaches in its policy synthesis, documentary analysis, and stakeholder consultation to analyse ‘Energy Generation Systems (EGS)’, critical raw materials, and clean technology as a whole, also looking to global and developing country impacts. OECD as (Garsous et al., 2025) research found to identity select institutional challenges comprising of coordination malfunction, that emerge strongly, during decarbonisation conflicts with geographic fragmentation of the supply chain requiring a trade-off explained in RO3 (research objective). Babić and Mertens (2025) mixed methods analysis of the German and EU energy and industrial decarbonisation landscape, mobilizing growth model theory, carbon lock-in, and international political economy, showed that compliance-led industrial decarbonisation created a new carbon lock-in pathways, where firms invest in stranded carbon assets to comply with one regulation but at risk of being stranded by another.
Kimura (2025) used empirical lens using a policy paper and a multi-sector analysis in three-country trade model, which explored the case of the ASEAN members’ states, the US, Japan, China and global supply chains in semiconductors, EVs and export controls. Kimura (2025) used the lens of the GVC, international production network (IPN) and national security economics to present the regionally specific quantitative evidence of structural repositioning of the APAC economies in the process of decoupling pressures, which does not only imply transitory adjustment costs, but long-horizon structural exposure to regulatory redirection. Using policy review and comparative analysis, Grosse (2025) studied US, China and EU through cross-sectoral technology, semiconductors, and energy lens, mobilizing geoeconomics (building on the framework of Luttwak) and strategic autonomy theory. The macro-political point of view to substantiate why localisation mandates, as RO3 (research objective) will use the ‘’Ford’’, ‘’BHP’’, ‘’Lynas’’ case triad, resulting in dependency reversals and not dependency elimination, is explained by the argument by Grosse (2025) in relation to strategic autonomy as the organising logic of sovereign resource policy. Fajgelbaum and Khandelwal (2026) used multi-sector trade models and quantitative trade models based on welfare economics to estimate the bilateral welfare cost of the decoupling of the US from China, balanced with an increase in trade with Canada, Mexico and the EU where they find decoupling to incur asymmetric welfare losses along the value chain hierarchy gives their results a macro-quantitative anchor for understanding the micro-economic penalty realisation documented in RO4 as a result of margin compression, impairment recognition and suspension of dividend payments.
The most recent publications Woods (2026), used formal modelling, case study and comparative analysis on semiconductors, SWIFT financial architecture, rare earths and defence for the US, China, Japan, Russia and ASEAN. Reframing mobilising feasibility-based power, access coercion, and structural power as theoretical constructs. The author argued that structural power, set the rules that others play by, which has become the most important currency of Sino-American competition, and rare earth export controls are its most direct manifestation in the critical minerals realm. Woods (2026), however, does not theorise the role of firms that are in between these two powerful structures, and the compliance architecture discussed in RO1 (research objective) and the value destruction mechanism discussed in RO4 remains untouched. A Systematic Literature Review (SLR) method and a stakeholder analysis approach were used to investigate critical raw materials from different perspectives comprising the circular economy, batteries and mining and recycling sectors and to explore the use of critical raw materials from the perspective of Resource Dependence Theory (RDT) (Xie, Machado, Spierdijk and Yazan, 2026, Resources Policy). Offering a theoretical architecture of the present study, Xie et al. (2026) findings in global perspective on firm-resource dependencies; focus on EU policies; and model dyadic RDT but do not theorise the triadic condition of competing sovereignty compliance obligations. In the context of natural resources, minerals and renewables, Kelly (2024) provided a qualitative literature review in the context of FI, AU, NZ, EU, CN and ZW (society) to highlight the structural tensions of natural resource, resourcing process towards green transition and the political economy of APAC critical mineral dependencies.
Academic gap:
The above literature discussion showed, three fundamental insights and exposed an academic gap. Firstly, the current literature depicts a fragmented global minerals supply chains that is not incidental but a pattern where Chinese export controlled strategy, and US decoupling mandates making it more like permanent regulatory mechanisms over the accidental shocks (Dmitriev, 2023; Kimura, 2025; Woods, 2026). Secondly, firms’ reactions to geopolitical constraint, such as supply chain reconfiguration, vertical integration and localisation, entail new and often more enduring dependency structures, which aligns with theory from RO3 (D’Ambrosio & Lavoratori, 2025; Grosse, 2025; Bednarski et al., 2025). Thirdly, compliance related issues like the financial implications, the cause and effect of organisational restructuring, GCSM realignment, causing financial margin squeeze, stranded asset recognition, and capital destruction was mentioned by (Clayton et al., 2025; Fajgelbaum & Khandelwal, 2026). What is missing, though, is an unified theoretical and empirical framework that involves three elements of structural captivity: the binding of APAC firms to Chinese upstream processing networks, US compliance architectures, and to the resource nationalist regimes of their host countries; and which tracks the exact causal pathway from structural position to the realisation of financial penalties along the upstream, midstream, and downstream value chains.
In this perspective, the current research proposal will be an attempt to assess the direct contribution as it advances the theory, by specifying the triadic ‘’Resource Dependence’’ under geopolitical duress, and advances the empirical field by operationalizing compliance-induced value destruction as a separate, consequential phenomenon along the APAC critical minerals supply chain.
- Research Methods:
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