Dynamic Governance of China’s Copper Supply Chain: A Stochastic Differential Game Approach

As global copper demand continues to grow, China, being the largest copper consumer, faces increasingly complex challenges in ensuring the security of its supply chain. However, a substantive gap remains: prevailing assessments rely on static index systems and discrete scenario analyses that seldom model uncertainty-driven, continuous-time strategic interactions, leaving the conditions for self-enforcing cooperation and the attendant policy trade-offs insufficiently identified. This study models the interaction between Chinese copper importers and foreign suppliers as a continuous-time stochastic differential game, with feedback Nash equilibria derived from a Hamilton–Jacobi–Bellman system. The supply security utility is specified as a diffusion process perturbed by Brownian shocks, while regulatory intensity and profit-sharing are treated as structural parameters shaping its drift and volatility—thereby delineating the parameter region for self-enforcing cooperation and clarifying how sudden disturbances reconfigure equilibrium security. The research findings reveal the following: (i) the mean and variance of supply security utility progressively strengthen over time under the influence of both parties’ maintenance efforts, while stochastic disturbances causing actual fluctuations remain controllable within the contract period; (ii) spontaneous cooperation can be achieved under scenarios featuring strong regulation of domestic importers, weak regulation of foreign suppliers, and a profit distribution ratio slightly favoring foreign suppliers, thereby reducing regulatory costs; this asymmetry is beneficial because stricter oversight of domestic importers curbs the primary deviation risk, lighter oversight of foreign suppliers avoids cross-border enforcement frictions, and a modest supplier-favored profit-sharing ratio sustains participation—together expanding the self-enforcing cooperation set; (iii) sudden events exert only short-term impacts on supply security with controllable long-term effects; however, an excessively stringent regulatory environment can paradoxically reduce long-term supply security. Security effort levels demonstrate positive correlation with supply security, while regulatory intensity must be maintained within a moderate range to balance incentives and constraints.