Deng Xiaoping’s rhetoric has come true in 30 years, and the full interpretation of China’s layout of “Metal War” (source・Dreamstime/Dianjiang video)
“Metal Wars” begins! China has taken steps to control the export of gallium and germanium metals, and the competition between the United States and China has escalated. However, this may only be an outpost of a raw material war. What awaits the world is China’s huge empire monopolizing more than a dozen rare and precious metals.
China, which is frequently blocked by the United States and its allies in technology, announced that it will control the export of gallium, germanium and related compounds from August 1 this year. In the future, it must first declare the end user and end use, and obtain a license from the Ministry of Commerce of China before exporting related products. ——The practice is the same as the US’s export control to China, which has a strong sense of retaliation.
One faction says the impact will be great, while the other faction says the fear of self-injury
A pessimistic view, as Alastair Neill, director of the Critical Minerals Institute, pointed out, “China’s foreign reserves will not last for six months, so the shock will come soon.” He believes that the real challenge lies in, If other countries turn to their own production, and China suddenly deregulates, these companies will be trapped in huge and useless investments.
The other school of thought is that the possibility of China’s large-scale tightening of exports is not high, because China’s related industries are already deeply embedded in the global supply chain. “During an economic downturn, it may instead affect Chinese manufacturers,” an executive at a Chinese semiconductor materials company told the Financial Times.
In 2009, in the name of environmental protection, China implemented export controls on metals such as rare earths and tungsten. However, at that time, they only restricted the total amount of mining and exports, and did not target specific countries. The real purpose was to control prices.
Testing the water temperature for the “weaponization” of rare earths
Among them, rare earths are still the most lethal. Rare earths consist of 17 elements that are used in almost all of today’s high-tech products. Moreover, China not only has the world’s largest reserves, but also has the world’s largest mining and processing technology.
In early 2021, the draft of the “Regulations on Rare Earth Management” will be launched, with particular emphasis on the control of rare earth processing technology; after the Diaoyutai dispute, the number of China’s rare earth patent applications has increased by 2.5 times in 8 years, and the total amount exceeds the sum of the rest of the world.
At present, the bill has not yet been enacted. Perhaps the regulation of gallium and germanium this time is to test the waters for the “weaponization” of rare earths in the future.
Take resource nationalism, want to fight for three wins
At present, the bill has not yet been enacted. Perhaps the regulation of gallium and germanium this time is to test the waters for the “weaponization” of rare earths in the future.
In the 30 years since Deng Xiaoping made his announcement, there are seven non-ferrous metal companies in China, which were included in the Forbes Global 500 list last year, and their influence cannot be underestimated. The top-ranked China 5 Mining Group is even only 3 places lower than Alibaba.
Ideally, China’s calculation is a three-win situation: countering sanctions, attracting investment, and cultivating industries. Controlling exports can not only increase bargaining chips with Western countries, but also attract foreign capital to directly invest in production lines in China, or when prices are raised due to control, it can take the opportunity to cultivate local industries. Therefore, as soon as the news of gallium and germanium control came out, the stock prices of related Chinese companies rose instead.
When the United States continues to push China to “stuck its neck”, China will also choke the throat of the global production chain. When companies calculate supply chain risks in the future, they must take these metal raw materials monopolized by China into consideration.
※This article is published with the authorization of Business Weekly, and reprinting is prohibited without consent.
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2023-07-20 08:06:38
