On Tuesday, China’s Commerce Ministry announced that it was banning the export of certain minerals and metals to the United States.
The products, such as gallium, germanium and antimony, are so-called dual-use items, which can be used in the production of semiconductors and also for a wide range of military and technological applications.
Why has China taken this step?
China’s move is a direct response to export controls that the United States placed on Beijing on Monday. The US and Chinese actions are the latest exchanges in the countries’ rivalry, with much of the recent focus being around trade, the production of military technology and the development of artificial intelligence.
“It’s a hardening and a defensiveness on both the Chinese and the United States side, and it’s not a new phenomenon for either country,” Claire Reade, a senior counsel with Washington, DC, legal firm Arnold & Porter and an expert in US-China trade relations, told DW.
Reade said the perception had become widespread in China that the United States is trying to halt the country’s legitimate development, whereas the US sees it as a national security issue to prevent China from gaining supremacy in certain areas.
The Commerce Ministry said its decision to strengthen export controls on dual-use items to the United States was “to safeguard national security.”
The US continued its ongoing campaign against China’s semiconductor sector by announcing its third list of restrictions in as many years.
Just over a month before it is set to leave office, the Biden administration launched export controls on 140 companies, including chip sector specialists such as Naura, Piotech, ACM Research and SiCarrier Technology.
US Commerce Secretary Gina Raimondo said: “They’re the strongest controls ever enacted by the US to degrade the People’s Republic of China’s ability to make the most advanced chips that they’re using in their military modernization.”
China’s response is not limited to the restriction on certain key metals and minerals. Four of the country’s main industry associations — covering the semiconductor, internet, car and communications sectors — have told their members to reduce their purchases of US chips, with the country’s semiconductor association saying “US chip products are no longer safe or reliable.”
How will the new restrictions affect the US?
The US National Security Council says it is still assessing the latest move from China. Officials “underscore the importance of strengthening our efforts with other countries to de-risk and diversify critical supply chains away from the People’s Republic of China.”
Gallium and germanium are two of the products that China has banned from export to the United States, having already placed controls on their export in 2023.
They have many specialty applications, with gallium particularly needed for high-end semiconductors, as well as for solar panels and radar equipment. Germanium has several uses, including for fiber optics and satellites.
The Center for Strategic and International Studies, a US think tank, says “gallium-based semiconductors are vital to the US defense industry, particularly in next-generation missile defense and radar systems, as well as electronic warfare and communications equipment.”
According to the US Geological Survey, a government agency, China produced 98% of the world’s supply of raw gallium in 2023. Data for germanium extraction and production is not readily available but China also controls the majority of global supply.
The US imports both products from China but also trades with countries such as Canada, Germany and Japan. However, since China began phasing in restrictions last year, prices have increased markedly on the global market.
The risks of supply disruption are well-known. In November 2024, the US Geological Survey said there could be a $3.4 billion (€3.23 billion) decrease in US GDP if China implements a total ban on exports of gallium and germanium.
China’s dominance does not mean that the United States does not have other options. First, there are other producers, and, second, it is possible to increase non-Chinese production. Gallium is largely derived as a byproduct of bauxite processing, the primary ore for aluminum. While investing in gallium extraction in the US and other countries would be costly, it is possible.
What does China hope to achieve?
The latest developments come just over a month before the start of Donald Trump’s second term as US president. Trump has vowed to put massive tariffs on Chinese imports, having begun a trade war with Beijing during his first term.
Though the possibility of future negotiations with Trump has probably fed into China’s decision-making, Reade said, “it definitely is a broader trend that goes beyond any given president.”
Reade said the decision suggested that China is becoming more assertive in its efforts to shake off any dependence it has on the West.
“This will be another step along the road where China hopes that it will not harm China, and it will send messages to the rest of the world about China’s unwillingness to sit by if its economic development and its national security — which is a very broad term in China — is somehow being compromised or threatened,” she said.
Edited by: Ashutosh Pandey
