China bans exports of rare minerals to the US: it is important on making semiconductors exports

In a bold move, China announced on Tuesday that it is banning exports of gallium, germanium, antimony, and other key high-tech materials to the United States. This decision is a direct response to U.S. limits on semiconductor-related exports, escalating the ongoing trade tensions between the two economic giants. China's action highlights the critical role of these minerals in the production of semiconductors and other advanced technologies, potentially impacting various industries worldwide.

The Chinese Commerce Ministry's announcement follows Washington's expansion of its list of Chinese companies subject to export controls. These controls target computer chip-making equipment, software, and high-bandwidth memory chips—components essential for advanced technological applications. The move comes amid President-elect Donald Trump's threats to raise tariffs on Chinese imports, further straining the already tense trade relationship.

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The impact of export bans on semiconductor production

Gallium, germanium, and antimony are essential materials used in the manufacture of semiconductors, which are critical for mobile phones, cars, solar panels, and military technology. China's dominance in the production of these materials gives it significant leverage in the ongoing trade dispute. By restricting exports, China aims to protect its interests and counteract U.S. measures that have targeted Chinese technological advancements.

China's Foreign Ministry has issued a strong protest against the U.S. actions, accusing the United States of overstretching the concept of national security and abusing export control measures. Lin Jian, a spokesperson for the Chinese Foreign Ministry, reiterated China's firm opposition to the U.S.'s unilateral sanctions and long-arm jurisdiction against Chinese companies.

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Licensing requirements and national security concerns

In July 2023, China announced that exporters would need licenses to send strategically important materials like gallium and germanium to the United States. The following month, the Chinese Commerce Ministry tightened controls on antimony exports, a mineral used in a wide range of products from batteries to weapons. These restrictions also extend to super-hard materials such as diamonds, which are used in cutting tools, disc brakes, and protective coatings.

China's dominance in the supply of these rare minerals is critical for national security, as highlighted by a 2021 U.S. International Trade Commission report. The report underscored the importance of these materials in various high-tech and military applications.

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Response to U.S. trade restrictions

The latest Chinese export bans are a direct response to the U.S. adding 140 Chinese companies to its "entity list," subjecting them to strict export controls. Nearly all affected companies are based in China, although some are Chinese-owned businesses in Japan, South Korea, and Singapore. Both governments justify their export controls on national security grounds.

China's government has expressed frustration over U.S. restrictions on advanced processor chips and other technologies, which have hindered China's technological progress. Despite this, China had previously been cautious in its retaliatory measures to avoid disrupting its burgeoning tech industries, including chip development and artificial intelligence.

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Industry reactions and global impact

Various Chinese industry associations have condemned the U.S. move to limit access to advanced chip-making technology. The China Association of Automobile Manufacturers argued that such actions violate market economy principles, fair competition, and global trade stability.

The ongoing trade tensions and export restrictions have far-reaching implications for global supply chains and industries reliant on these rare minerals. As China enforces its export bans, the ripple effects will be felt across multiple sectors, from electronics to automotive and defense industries.