Report Card
The U.S. has secretly built a sovereign critical mineral wealth fund
“The Middle East has oil. China has rare earths.” — Deng Xiaoping
In 2010, China discovered something the rest of the industrial world had forgotten: a country does not need to dominate the finished product if it controls the material buried underneath it. A territorial dispute near the Senkaku Islands escalated into something much larger when Beijing quietly restricted rare-earth exports to Japan. No missiles flew. No ports closed. Yet electronics manufacturers, defense contractors, and industrial planners across the developed world suddenly found themselves staring at the same uncomfortable reality: the magnets inside the motor, the guidance package, and the wind turbine all ran through China first. The modern industrial economy had outsourced a strategic layer of itself to a geopolitical rival.
At the time, China controlled roughly 95% of global rare-earth refining and separation capacity. Fifteen years later, Beijing still controls around 70% of rare-earth mining, roughly 85–90% of refining, and close to 90% of permanent-magnet production. Readers of this publication already understand the list: F-35s, precision weapons, radar systems, semiconductors, EV drivetrains, robotics, permanent magnets. By 2010, one reality sat underneath all of them: the industrial world had quietly rebuilt itself around Chinese refining capacity.
Washington spent much of the following decade pretending this was mainly a trade problem. It was not. It was a sovereignty problem in drag. That realization now hangs over the next Trump–Xi meeting like cigar smoke in a backroom negotiation. The headlines will focus on tariffs, semiconductors, and export restrictions. The real discussion sits further down the chain, where ore becomes metal and metal becomes leverage. The United States enters this round in a materially stronger position than it occupied fifteen years ago, not because it rebuilt the entire rare-earth sector overnight, but because it finally started using the balance sheet of the state the way other great powers already do.
The quiet center of that shift is Steve Feinberg. Most Americans have never heard of him. Feinberg made his fortune buying distressed assets and navigating political timing, which turns out to be unusually good preparation for industrial policy during an era of geopolitical fragmentation. As Deputy Secretary of Defense, he now sits near the center of a sprawling effort—a $1.5 trillion defense budget that treats critical minerals less like commodities and more like industrial terrain. The Pentagon used to buy weapons sitting at the end of the supply chain. It is increasingly trying to shape the chain itself.
In February 2026, the Department of Defense formally launched Feinberg’s Economic Defense Unit, an internal apparatus designed to pull procurement, financing, export controls, grants, and equity stakes into the same orbit. Washington would never publicly describe this arrangement as a sovereign wealth fund because Americans associate that language with Gulf monarchies or Chinese state capitalism.
Washington may reject the label, but as the United States moves further down its own path of statecraft capitalism, it is worth taking inventory of the results. Let’s being grading the returns
