Lend me a Royal Hand? America's Secret Play to Catch Up

The Sunday Essay ☕️

Today is Part Three of a series on US-China relations and the future of global influence.

Part One: Today’s Handshake is Tomorrow’s Sanctions: Why China Made a One Trillion Dollar Bet.

Part Two: Two Roads, One Goal, How the U.S. and China Compete for Global Control

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Let’s get into it.

Over the last two weeks, we’ve examined China’s and the United States’ attempts to stake claims on the future.

Through its Belt and Road Initiative (BRI), China has provided over $1 trillion in infrastructure loans to 150 countries, mainly in the emerging economies of Africa, Southeast Asia, and Latin America.

The United States, by contrast, provides weapons, weapons materials, and weapons technologies to strengthen foreign governments it likes, fund opposition to those it does not, and build future credit with favourable nations. Today, the U.S. holds weapons contracts with 103 countries.

Each superpower is, in effect, seeking the same thing: future global influence. Chinese infrastructure loans are far more than debt agreements, and U.S. weapons sales are more than simple purchase orders.

Whether a bridge or a tank, the fine print of these deals includes strategic geopolitical and trade agreements: China wants allies in a future (or maybe present) standoff with the United States, and the United States wants the same in a conflict with China.

But despite the best efforts of both superpowers, geopolitical agreements are never binding. As I expressed in last week’s letter, geopolitics is not so much about what you did for me yesterday as it is about what you can do for me tomorrow.

And of all the needs of tomorrow, none is more important, or more urgent, than energy.

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“A healthy man wants a thousand things; a sick man only wants one.”
— Confucius

For a nation, there is no sickness worse than an energy crisis.

A healthy nation (energy-rich) can focus on broad policy goals: innovation, social programs, climate commitments, and defence modernization.

A sick nation (energy-starved) scrambles to keep the lights on and factories running. GDP contracts, inflation soars, and public unrest grows.

Think of Germany and France in 2022.

Both had broad goals to phase out fossil fuels and lead the world towards clean and renewable energy by the 2030s. But when the invasion of Ukraine compromised their supply of Russian natural gas, and their renewable infrastructure wasn’t yet built, both countries fast-tracked the restart of their lignite coal mining operations and coal-fired power plants.

The leaders of the clean energy movement ran back to “dirty coal.” Why?

Because governments facing an energy crisis stop thinking in decades and start thinking in days.

Or consider Sri Lanka, also in 2022.

Sri Lanka’s tourism-dependent economy was one of the worst hit during the COVID era. They struggled to recover, and by 2022, the Sri Lankan government had defaulted on $51 billion in debt.

Sri Lanka imports over 50% of its total energy consumption and virtually 100% of its hydrocarbon-based energy, such as oil and gas.

No cash or credit? No energy.

Fuel shortages led to the suspension of fuel sales to non-essential vehicles.

Fifteen-hour blackouts became the norm. Hospitals had to shut down.

Mass protests followed, culminating in the storming of the presidential residence.

Three days later, the president fled the country with his wife.

A country with abundant, cheap energy has a thousand ambitions. A country in an energy crisis has only one: survival.

Whether you are an emerging nation or Europe’s economic powerhouse, an energy shortage can cripple you.

How does this fit into the China–U.S. balance?

Here’s one way to look at it.

Although the world will find renewable, zero-emission energy at some point in the future, in the meantime:

• Over 90% of global transportation still runs on petroleum products — gasoline, diesel, jet fuel.

• Aviation, shipping, and trucking are still virtually 100% oil-dependent.

• Without oil, global logistics collapse — overnight.

• And every military on Earth relies on oil. Period.

According to the International Energy Agency’s 2023 reports, oil and natural gas account for roughly 55% of global energy consumption.

But it’s about far more than just transport. Roughly 10–15% of global oil demand goes into petrochemicals, meaning plastics, fabrics, cosmetics, medicines, detergents, and more are all heavily oil-reliant.

Oil remains the most traded commodity in the world by dollar value. The global oil trade is worth $2–3 trillion per year — more than all metals and minerals combined.

So, for today, there is no more strategic resource.

And the United States is the world’s largest producer of oil. Also, by a very wide margin, it is the largest producer of natural gas. That’s security.

*Note - while the United States produces more oil today than Saudi Arabia or Russia, both nations hold much larger reserves. That means they pump less (for now), but they’ve got a lot more left in the tank. And this is important — I’ll explain why in a minute.

But before we get to that, let’s step back and tie this into the bigger picture.

At the start of this essay series, I compared China’s Belt and Road Initiative (BRI) to the U.S.’s web of weapons deals. Both are ways of securing influence over future markets and political alliances.

But here’s the catch: China can continue rolling out the BRI without the U.S. — they don’t need America’s permission or participation.

The U.S., however, cannot continue making advanced weapons without China’s rare earth processing capacity.

This is a critical and underappreciated point. More than 78 percent of the U.S. military’s weapons rely on Chinese materials. A bit of a pickle.

You may not have heard of minerals like samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium - but the simple math is this: each F-35 Jet requires 900 pounds of these rare earth minerals. A navy warship like the Destroyer requires 5,200 pounds, and a Virginia-class submarine requires 9,200 pounds.

No minerals, no military.

Accutely aware of this, the Pentagon and the Department of Defence have invested $439 million into domestic rare earth supply chains since 2020. Companies like MP Materials, a key American rare earth miner, are trying to set up processing operations inside the U.S. But here’s the hard truth:

America can’t simply flip a switch and become self-sufficient.

Why?

Because these aren’t short-term projects. Building rare earth processing facilities requires billions of dollars, highly specialized engineers, metallurgists, and chemists, years of construction and testing, and therefore— most importantly — political will that lasts longer than a four-year election cycle.

Right now, the U.S. lacks that long-term, stable commitment. One administration's favourite is the next administration’s enemy. Everyone wants innovation, but no one wants a refinery in their backyard.

Even as the U.S. gains access to rare earth materials at home or in friendly nations, it still lacks the infrastructure to turn those into usable components at scale.

A reminder from last week’s issue:

China, on the other hand, has been planning and executing on rare earth dominance for over 30 years. For better or worse, China’s authoritarian system gives it an enormous advantage in building long-term industrial and resource strategies. They can move faster, plan in decades, and push through unpopular policies without public pushback.

That’s why they own most of the world’s processing capacity (roughly 90%) and control the downstream industries (like battery and EV manufacturing) that rely on those refined materials.

So, if America wants to compete, it needs a shortcut.

And this, is what I was watching when the American President made his trip to Saudi Arabia for the US-Saudi Investment Summit last week.

Saudi Arabia has three things the U.S. desperately needs in this race:

1. Political will (no elections, no shifting public sentiment, no “NIMBYism” to slow projects down)

2. Capital (deep pockets to fund big, ambitious projects)

3. And, increasingly, resource control — Saudi Arabia is pushing hard to develop its own mining and rare earth production industries as part of its Vision 2030 plan to diversify beyond oil.

And conveniently, Saudi Arabia wants American weapons.

During the Investment Summit, the media were focused on the American President receiving a $400 million airplane as a “gift” from the region.

What they didn’t cover was Ma’aden, a Saudi Arabian mining company, signing a memorandum of understanding with MP Materials, the US rare-earth materials company, to create a fully integrated, end-to-end rare-earth supply chain within Saudi Arabia.

By partnering with a kingdom like Saudi Arabia, the US can effectively “borrow” the speed and resolve it lacks at home.

This is why the emerging U.S.–Saudi resource partnership matters so much.

It’s about rebuilding the backbone of America’s industrial and military future in a world where China controls more and more of the critical inputs.

If America wants to stay competitive, it needs allies who bring speed, scale, and staying power.

And right now, the clearest path to that runs through Riyadh.

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Saudi Arabia has been aggressively (and successfully) building out the three pillars of its Vision 2030 plan:

1. Maintain Energy Dominance (Oil)

• Oil is still the engine of Saudi GDP and sovereign wealth.

• Aramco is one of the most valuable companies on Earth.

2. Industrial Development (Manufacturing, Logistics, Technology)

• Includes mega-projects like NEOM (worth a look if you are unfamiliar), smart cities, logistics hubs, and advanced technology manufacturing zones.

3. Mining

• Announced as the “third pillar” — with a goal to become a global hub for mineral exploration, refining, and downstream production.

• The Maaden-MP Materials deal is part of this pillar.

Saudi Arabia is strategically located at the intersection of Africa, Asia, and Europe, enabling it to capitalize on the third step of our energy supply chain framework from last week's issue, Infrastructure and Distribution:

As I watch this develop, I can’t help but wonder who needs whom more, between the United States and Saudi Arabia, and how that dynamic will shift over the next ten years?

And more near term, how will the US-Saudi deals mature under the next administration?

I’d love to know your thoughts in the comments.

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That’s all for today.

Have an epic Sunday.

Jay

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—Jay

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