Export restrictions can lead to significant supply chain disruptions and inflationary pressures, particularly if they impact trade with third parties.
China has recently escalated trade tensions with the United States by banning the export of critical minerals to the US, including gallium, germanium, and antimony. These minerals are essential for semiconductor manufacturing and have military and civilian applications.
China’s Commerce Ministry has announced that exports of graphite, a crucial component in semiconductors, will now undergo “stricter reviews of end-users and end-uses.” This initiative is vital to safeguarding China’s national security interests and fulfilling important international obligations, such as non-proliferation. By strengthening export controls on relevant dual-use items to the United States, China is taking a significant step to ensure that its resources are used responsibly and for legitimate purposes.
Gallium and germanium are essential for advanced semiconductor technologies, while germanium also contributes significantly to infrared technology, fiber optic cables, and solar cells, underscoring its versatility. Antimony, meanwhile, is vital in manufacturing bullets and weaponry, showcasing its strategic importance.
Moreover, graphite is the dominant material in electric vehicle batteries, a key component in the transition to sustainable transport. As Beijing’s attention may shift towards targeting other vital minerals, including widely used nickel and cobalt, the implications for global supply chains and technological innovation warrant serious consideration, claims a leading British daily newspaper.
In December 2023, China banned the export of technology needed to manufacture rare earth magnets, further tightening restrictions on the earlier ban on extracting and separating these critical materials. This move follows Beijing’s announcement in May of the previous year to block certain government purchases from Micron, after the U.S. memory chip maker did not pass a security review. This decision is widely seen as one of China’s initial retaliatory actions in the escalating U.S.-China chip war.
Chinese customs data indicates a significant shift in trade dynamics, revealing that there have been no wrought and unwrought germanium or gallium exports to the US this year through October. The US was the fourth and fifth-largest market for these vital minerals just a year prior. The British daily also reported that China’s overall shipments of antimony products saw a staggering 97 percent decline in October from September, a direct consequence of Beijing’s strategic measures to restrict exports. This trend underscores the growing implications of China’s export policies on global supply chains.
According to Chong Ja Ian, an associate professor of political science at the National University of Singapore, the ongoing export restrictions by both nations could lead to significant supply chain disruptions and inflationary pressures, particularly if they impact trade for third parties. Meanwhile, Brady Wang, associate director at the technology market research firm Counterpoint, stated to AFP that while these metals are essential for high-tech industries, they are positioned upstream in the supply chain, suggesting that the immediate effects on production are somewhat limited.
