Germany is preparing for a much more confrontational phase in its economic relationship with China. The package now under discussion goes well beyond tariffs and reflects a broader shift in Berlin’s thinking: Chinese competition is increasingly being treated not only as a commercial challenge, but as a strategic vulnerability requiring coordinated action across trade, investment, procurement, technology and critical raw materials.

The significance of the plans lies in their scope. German ministries are mapping areas of dependence on China and considering measures ranging from new tariffs on plug-in hybrid vehicles to tighter inbound and outbound investment screening, stronger export controls, local-content incentives, procurement preferences and mandatory joint-venture structures. If adopted, this would amount to a major expansion of the economic-security state.

China’s August commodity data reveal a striking divergence inside the country’s heavy industrial economy. Aluminium output surged to a record as Chinese smelters rushed to fill a global supply gap created by the Middle East conflict, while steel production continued to fall under the weight of the property slump. Refining activity improved only modestly, coal output remained weak, and fossil-fuel power generation barely grew.

The result is a two-speed industrial picture shaped simultaneously by export opportunity, domestic weakness and energy disruption. Aluminium is the clearest beneficiary. Output rose 4.7% from a year earlier to just under 4 million tons in August, pushing year-to-date production above 31 million tons. Chinese smelters have been responding aggressively to elevated global prices and export margins after the Iran war disrupted roughly 9% of world supply.

The Pentagon’s decision to take a near-20% stake in Elmet Group marks another significant step in the United States’ effort to reduce dependence on China for strategically important minerals. The $450 million investment is not simply a defense procurement measure. It reflects a broader shift in U.S. industrial policy, with the federal government increasingly willing to become a direct shareholder in companies considered essential to national security.

Tungsten is an obvious candidate for this treatment. The metal is exceptionally dense, heat-resistant and difficult to substitute in many military applications. It is used in armor-piercing ammunition, aerospace systems, electronics, cutting tools and other high-performance components. For the Pentagon, secure access is therefore not optional. A sustained shortage would affect weapons production and broader industrial capacity.

China’s August data confirm that the economy is becoming increasingly divided between a relatively strong export-oriented industrial sector and a much weaker domestic economy. Industrial output accelerated more than expected, supported by booming foreign demand for AI-related products, but retail spending, fixed investment, property and employment all deteriorated.

The result is an economy that can still produce and export at scale, but is struggling to generate confidence, investment and consumption at home. The contrast is stark. Industrial production rose 5.2% from a year earlier in August, up from 4.5% in July and above expectations. Retail sales, however, increased only 0.4%, half the consensus forecast and weaker than the previous month.

The Trump administration’s signal that deep-sea mining permits could be approved within months shows how rapidly critical-mineral security is reshaping U.S. industrial policy. Washington increasingly views access to nickel, cobalt, manganese, copper and other strategic materials as a national-security issue, and the seabed is now being treated as a potential new source of supply for electric vehicles, defense systems and advanced electronics.

The immediate driver is China. U.S. access to several critical minerals has tightened over the past 18 months as Beijing restricted exports and reinforced its control over processing. That has exposed how vulnerable Western industries remain to Chinese leverage.

BYD’s plan to launch a heavy-duty electric truck in Europe next year and eventually manufacture trucks locally marks an important expansion of Chinese competition into one of the continent’s most strategically important industrial markets. The company is no longer positioning itself simply as an exporter of electric vehicles. It wants to become a local European manufacturer with an integrated commercial ecosystem covering vehicles, financing, charging infrastructure, maintenance and roadside support.

That distinction matters because heavy trucks are a very different market from passenger cars. Fleet operators are less influenced by branding and consumer sentiment and more concerned with total cost of ownership, vehicle uptime, charging availability, financing, maintenance and residual value. BYD’s decision to offer a full package rather than just a truck suggests it understands that competing successfully in commercial vehicles requires control over the broader operating system around the vehicle.

The renewed use of SPACs by defense and space companies reflects a broader change in the economics of national-security technology. Early-stage firms that once would have remained private for longer are increasingly seeking public capital before their revenues become predictable, because demand for drones, missiles, propulsion systems, satellites and autonomous platforms is rising faster than many companies can finance expansion internally.

SPAC mergers are particularly well suited to this type of business. Unlike a traditional IPO, which depends heavily on market timing, investor roadshows and conventional financial metrics, a SPAC allows a company to negotiate valuation privately and secure financing before the listing is completed. For defense and space startups with large contract pipelines but irregular revenue, that flexibility can be valuable.

The collapse in LNG demand across China, India and Pakistan during the U.S.-Iran war increasingly looks like a temporary affordability shock rather than a structural retreat from gas. The Middle East conflict has removed large volumes of Qatari and Emirati LNG from the market, pushed Asian spot prices to extreme levels and forced price-sensitive buyers to switch temporarily toward coal, oil and other fuels.

But industry executives expect demand to return once supply conditions normalize and the next wave of LNG capacity enters the market. The scale of the shock has been severe. Shell estimates that around 36 million tons of Middle Eastern LNG supply has been lost so far this year. Before the war, roughly one-fifth of global LNG moved through the Strait of Hormuz.