China’s sudden announcement that it will impose export controls on certain gallium and germanium products from August 1st has caused companies to scramble to secure their supplies, resulting in price increases.
Analysts have pointed out that this measure was announced on the eve of the American Independence Day and ahead of Yellen’s visit to Beijing on Thursday, to send a clear signal to the US government, which is focusing on the Chinese chip sector and pushing allies like Japan and the Netherlands to follow suit.
China’s move also raises concerns about potential restrictions on the export of rare earth metals. Analysts note that China restricted supplies twelve years ago during a dispute with Japan. China is the world’s largest producer of rare earth metals used in electric vehicles and military equipment.
Germanium is used in advanced computer chips, plastics, and military devices such as night vision equipment. Gallium is used in the production of radars, radio communication devices, satellites, and LED lights.
According to analysts, the trade restrictions on metals are currently China’s biggest countermeasure in the long-standing battle between the US and China in advanced technologies. In May, China banned some important domestic industries from purchasing memory chips from American manufacturer Micron.
Weijian Guo, former Deputy Minister of Commerce and current Vice Chairman of the state-supported institute called the China Center for International Economic Exchanges, stated in an interview that countries should be prepared for further steps if they continue to pressure China.
The state-run Global Times wrote in an editorial on export restrictions that it is a practical way to tell Washington and its allies that their efforts to restrict China’s acquisition of advanced technologies are a mistake.
Washington is now considering new restrictions on the supply of advanced microchips to China. It is also expected that the US and the Netherlands will further limit the sale of chip manufacturing equipment to China to prevent the use of their technologies by the Chinese military.
What concerns are raised by China’s decision to restrict the export of rare earth metals, and how does it impact global supply chains
China’s recent announcement imposing export controls on specific gallium and germanium products, set to take effect on August 1st, has sparked a rush among companies to secure their supplies, leading to price hikes.
Experts have noted that China timed this move just before American Independence Day and ahead of US Treasury Secretary Janet Yellen’s visit to Beijing on Thursday. The intention appears to be sending a clear message to the US government, which has been focusing on the Chinese chip sector and urging allies like Japan and the Netherlands to follow suit.
The decision by China has raised concerns about potential restrictions on the export of rare earth metals. Analysts recall that China limited supplies of rare earth metals during a dispute with Japan twelve years ago. As the world’s largest producer of these metals, which are used in applications such as electric vehicles and military equipment, China holds significant control over global supply chains.
Germanium is a key component in advanced computer chips, plastics, and military devices like night vision equipment, while gallium is crucial for the production of radars, radio communication devices, satellites, and LED lights.
Analysts believe that trade restrictions on metals currently represent China’s most significant retaliatory measure in the ongoing battle over advanced technologies with the US. In May, China banned some domestic industries from purchasing memory chips from American manufacturer Micron.
Weijian Guo, former Deputy Minister of Commerce and current Vice Chairman of the state-supported China Center for International Economic Exchanges, stated in an interview that countries should be prepared for further actions if they continue to pressure China.
The state-run Global Times expressed support for China’s export restrictions in an editorial, considering it a practical way to convey to Washington and its allies that their efforts to restrict China’s access to advanced technologies are misguided.
In response, Washington is reportedly considering additional restrictions on the supply of advanced microchips to China. The US and the Netherlands are also expected to tighten control on the sale of chip manufacturing equipment to China, aiming to prevent Chinese military utilization of their technologies.
China’s decision to impose export controls on gallium and germanium products is causing a significant surge in prices. This move will undoubtedly impact the global supply chain, highlighting the importance of diversifying our sources and ensuring stability in critical industrial resources.
This recent move by China to impose export controls on gallium and germanium products is alarming. The resulting price surge could have far-reaching implications for industries heavily reliant on these materials. It highlights the need for diversifying supply chains and finding alternative sources to avoid such disruptions in the future.