US-China bi-lateral mineral trade and energy transition in the landscape of global value chain pressures, geo-economic fragmentation and US-China geopolitical risks

The global energy transition relies heavily on minerals, as these serve as essential raw materials in manufacturing clean energy technologies. The mineral trade between resource-rich nations like the US and China faces growing pressures from multiple global risks. We examine how bilateral mineral trade between the US and China impacts their energy transitions, considering three key factors: global value chain pressures, geo-economic fragmentation, and US-China geopolitical risks. Using monthly data from January 2000 to December 2023, we employ cross-quantilogram (CQ) and wavelet local multiple correlation (WLMC) techniques for our analysis. Our findings indicate that bilateral mineral trade between the US and China positively correlates with their clean energy transitions across bear to bull markets. The long-term negative impact of diverse risks on mineral export-driven energy transitions is more pronounced in the US and China than the short-term risk dynamics identified in the CQ technique—a trend that somewhat reverses under the WLMC technique. Among these risks, global geo-economic fragmentation exerts a stronger adverse effect compared to global value chain pressures and US-China geopolitical risks. We suggest fostering effective diplomatic dealings and cooperation between the US and China to mitigate multifaceted global pressures and risks, thereby facilitating smooth mineral trade and achieving their energy transformation goals.