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Beijing announced on Monday, July 3, 2023, that it will impose controls from August 1 on exports of some gallium and germanium products, escalating a trade war with the United States that threatens to cause further disruption to supply chains.
Surprised, dozens of semiconductor and electric vehicle companies compete this Tuesday, July 4, in the world commodity market to ensure the supply of inputs, after China abruptly decided to restrict its exports of key minerals for the industry.
Gallium and germanium, of which China accounts for 80% and 60% of world production, respectively, are two metals widely used for the manufacture of computer chips, as well as fiber optic cables and even electric vehicles.
Beijing decided to impose restrictions on its external sale on Monday, May 3, and caused a global shock, not only economic, but also political, in what is seen as a backlash in a long-running dispute with Washington over high-tech trade.
The European Commission expressed concern and said it is assessing the potential impact on global supply chains and European industry. But the Asian government insists that the origin of its decision is not political.
“It is a common international practice to implement export control of relevant items in accordance with the law and does not target any specific country,” Chinese Foreign Ministry spokeswoman Mao Ning told a press conference.
Confused messages in a love-hate relationship
The United States has blocked Chinese access to advanced chips and the technology to make them and has persuaded its allies the Netherlands and Japan to limit exports of chip-making tools.
Under this new scenario, analysts see the Chinese measure as a response to these growing efforts by Washington to curb its technological advances.
Although citing “national security” reasons, the Xi Jinping government’s decision is also seen as a slap in the face to Washington, just days before Treasury Secretary Janet Yellen’s planned visit to Beijing.
Confirmation of Yellen’s visit to the country had been met with skepticism, after Secretary of State Antony Blinken’s somewhat infamous meeting with the Chinese president last month.
China is the world’s biggest source of gallium and germanium, which are produced in small amounts but needed to make computer chips for mobile phones, cars and other products, as well as solar panels and military technology.
The United States gets about half its supply of both metals directly from China, according to the US Geological Survey.
With Reuters and AP
