In a move escalating tensions between China and the United States, China announced a ban on the export of critical minerals, including gallium and germanium, to the US on Tuesday.
These materials, essential for a range of technologies, are heavily relied upon in both the semiconductor industry and military applications. This action marks a direct response to recent US export controls on Chinese companies, reflecting the ongoing technological and economic rivalry between the two nations.
The announcement, made by China’s Ministry of Commerce, underscores the growing complexity of US-China relations, particularly in the fields of technology and national security. Gallium and germanium are dual-use materials, meaning they have applications in both civilian and military sectors, including the production of semiconductors, solar panels, radar systems, fiber optics, and satellite technologies.
China’s decision to impose stricter export controls follows the US government’s recent announcement of its third round of export restrictions in as many years. The US measures were designed to limit China’s access to advanced semiconductor technologies, which are crucial for the country’s military and AI advancements. US Commerce Secretary Gina Raimondo described the new controls as the most stringent yet, aimed at weakening China’s ability to produce cutting-edge chips for its military modernization.
In response, China’s actions have deepened the trade divide, with additional steps being taken in the semiconductor sector. Four of China’s largest industry associations, representing the semiconductor, communications, automotive, and internet sectors, have urged their members to reduce or reconsider purchases of US-made chips. This coordinated effort signals China’s intent to increase its self-reliance in technology, particularly as tensions with the US escalate.
The minerals affected by the ban are vital to the US defense industry. Gallium, for example, is integral to the production of next-generation missile defense and radar systems. According to the US Geological Survey, China produced nearly 98% of the world’s gallium supply in 2023, while it also controls a substantial portion of the global market for germanium. The ban comes on the heels of a broader shift in global supply chains, with prices for these critical materials rising due to China’s tightening of controls.
While the US continues to source these materials from other countries like Canada, Japan, and Germany, the sharp increase in prices and the potential for disruption in the supply chain have raised concerns. The Center for Strategic and International Studies has warned that a complete ban on gallium and germanium could result in a $3.4 billion reduction in US GDP.
China’s actions reflect its growing frustration with the US’s technology controls, which Beijing views as efforts to stifle its development. Analysts suggest that this move is part of a broader strategy by China to reduce its dependency on the West, particularly the United States. Claire Reade, a senior trade expert, noted that China is increasingly asserting its position on the global stage, emphasizing its right to development and national security.
Looking ahead, China’s approach to rare mineral exports also has implications for global supply chains. The country has begun encouraging domestic companies to reduce their reliance on US technology, while simultaneously fostering the growth of local alternatives. This shift is evident in the increased focus on local semiconductor solutions, as seen in recent displays by Chinese companies showcasing products that use domestic microprocessors.
Deutsche Welle and the Financial Times contributed to this report.
