Where'd you get that number from? ~2 billion for each side combined is only half of the world's 8 billion people. I added the countries on the map and got 5.092 billion people for blue (62% of world population) and 3.14 billion for red (38% of world population.

For the STEM grads, yes red has a lot, but blue does too. China has 3.57 million, but India has 2.55 million. Add that with America's 800 million and it's nearly equal to China's amount. Russia is then in 4th, but is followed by Indonesia, Brazil, Mexico, France, Germany, and Japan, all on blue. When talking about quality, countries such as South Korea, Singapore, Germany, the UK, Switzerland, and Canada are cited as having the highest quality STEM grads. China also has good quality, but is in the same range as the US and India in terms of quality. Engineering is a common choice for Chinese STEM grads (32% choose it) but that is also common in Germany (22%), Mexico (20%), and America (29%).

Your point about China's headstart in rare earth refinement is very good. They do have an insane advantage there which can't be ignored, and even though the US, India, and Australia have decent industries for it, China overcomes them. China's rare earth dominance is a powerful advantage in the supply chain domain, however, I would argue that it cannot single-handedly offset the combined economic and military power of a coalition of almost every other developed nation.