Merely ten weeks after China’s National People’s Congress approved the 15th Five-Year Plan, Beijing is already translating its ambitious “AI+” agenda into concrete action. The plan, which mentions artificial intelligence 52 times, sets out an explicit strategy to embed AI across manufacturing, energy systems, compute infrastructure and public services. Early implementation signals from the National Development and Reform Commission point to accelerated procurement of AI systems, the rollout of national computing clusters and targeted measures to reduce reliance on imported inputs.
Australia’s Minerals Leverage Under Pressure
For Canberra, the implications are immediate. Australia’s critical-minerals strategy has been increasingly shaped by US–China geopolitical rivalry, with successive governments deliberately positioning the country’s lithium and rare earth resources as a strategic asset to support AUKUS and friend-shored Indo-Pacific supply chains. Indeed, Australia holds one of the world’s largest known lithium reserves and is a major supplier of rare earths outside China. Yet Beijing’s AI+ rollout is explicitly designed to reduce dependence on imported key minerals through domestic substitution, advanced materials innovation and accelerated downstream processing.
This development collides directly with AUKUS Pillar 2. The advanced-capabilities pillar requires secure supply chains for processed critical-minerals for AI, autonomy, quantum technologies and hypersonics. The Australia–United States critical-minerals framework agreement and the Australia–Japan strategic minerals partnership are meant to secure trusted supply for these technologies. Yet Australia still exports the vast majority of its lithium and rare-earth concentrates to China for processing: roughly 95% of Australian lithium is refined in China, and China accounts for around 90% of global rare‑earth processing capacity. Even where upstream extraction is geographically diversified, downstream value addition, and therefore supply‑chain control, remains heavily concentrated in China, a structural vulnerability that risks undermining AUKUS goals precisely as China accelerates its technological self-reliance. However, if China successfully decouples its AI industrial base from Australian raw exports, Canberra’s leverage shrinks precisely when AUKUS partners need reliable non-Chinese processed materials. China’s temporarily suspended mineral export controls remain a reversible policy lever that could be reinstated as early as November 2026, while Australian mining projects still face long permitting delays and limited domestic refining capacity. A narrow minerals-first strategy focused on raw exports therefore risks delivering diminishing strategic returns in an era of Chinese technological self-reliance.
Australia nevertheless holds a powerful untapped differentiator: its critical-minerals endowment is paired with some of the world’s most abundant and low-cost renewable energy. This rare combination could transform the country into a competitive Indo-Pacific hub for energy-intensive downstream processing and even AI-scale data centres, however, permitting delays and the absence of a coherent processing strategy continue to leave this advantage dormant. Unless Canberra acts decisively, it will supply the raw feedstock for everyone else’s technological future while forgoing the high-value, high-security role it is uniquely positioned to claim.
The Pacific Dimension: From Minerals Supplier to Trusted Digital Partner
It is important to note that Beijing’s AI+ initiative does not stop at domestic autonomy. Through the Digital Silk Road, the digital pillar of the Belt and Road Initiative, China is actively exporting AI-enabled infrastructure, data centres, subsea cables and technical standards across the Pacific Islands. Recent projects offer rapid connectivity and smart-city technologies to fiscally constrained island nations seeking to bridge their digital divide.
For Canberra, this creates a clear strategic tension for Australia’s economic security. Australia has invested heavily in the Pacific Step-Up, financing undersea cables, cyber capacity-building and digital-identity projects, yet its current minerals-first posture leaves Pacific partners with few credible alternatives when Chinese financing arrives bundled with AI-ready infrastructure. If the region adopts Chinese data architectures and governance models, Australia’s ability to shape open, secure regional standards will erode.
The same critical-minerals endowment that powers Beijing’s compute clusters gives Australia a genuine comparative advantage. Combined with clean energy investments, it positions the country to become a trusted Indo-Pacific data centre and AI-infrastructure hub. Early signals from the 15th Five-Year Plan show China accelerating its own technological self-reliance; Australia must therefore move beyond raw exports if it wishes to retain influence.
Integrating critical-minerals policy with AUKUS Pillar 2 and Pacific digital diplomacy would allow Canberra to offer Pacific Island nations a compelling alternative: transparent governance, open standards and reliable, non-coercive supply chains. Failure to do so would leave Australia supplying the raw materials while China supplies the digital architecture and dual-use infrastructure of the region, raising concerns about Canberra’s long-term security and strategic influence.
Conclusion
Canberra must now move with greater urgency. The government should accelerate domestic downstream processing and deploy AI‑enhanced technologies across its mining and refining operations, thereby extracting more value from Australia’s critical‑minerals endowment instead of relying on raw exports. At the same time, policymakers need to embed critical‑minerals security more explicitly into the AUKUS Pillar 2 framework, including joint processing facilities and shared supply‑chain standards with the United States and the United Kingdom. Finally, Canberra should extend these trusted‑tech partnerships into the Pacific by supporting regional AI and digital infrastructure projects under the Pacific Step‑Up. Only by moving beyond a minerals‑first mindset can Australia maintain meaningful leverage in the US–China technology competition.
Dr Gerald Mako is a Research Affiliate of the Cambridge Central Asia Forum at Cambridge University. His research focuses on artificial intelligence, cybersecurity, and great power competition in Asia.
