editor’s Note: Sign up for CNN’s Meanwhile in China newsletter that breaks down what you need to know about the country’s rise and how it impacts the world.
Hong Kong CNN –
China’s exports of two rare minerals needed to make semiconductors dropped to zero in August, a month after Beijing banned sales abroad citing national security.
China produces about 80% of the world’s gallium and about 60% of germanium, according to the Critical Raw Materials Alliance, but it did not sell any of the elements on international markets last month, Chinese customs data released on Wednesday showed . In July, the country exported 5.15 MT of forged gallium products and 8.1 MT of forged germanium products.
When he was asked about the decline in exports last month. China’s commerce ministry spokesman He Yadong told a press briefing on Thursday that the department had received applications from companies to export both materials. Without elaborating, he said some applications had been approved.
The sanctions signal China’s clear willingness to retaliate against US export controls, despite concerns about economic growth that could spark a tech war.
world’s second largest The economy is already struggling with weak domestic demand and a housing crisis. Last month, the country’s exports suffered their biggest decline in more than three years, dealing a fresh blow to its faltering recovery.
Analysts say restricting exports is a “double-edged sword” that could damage the Chinese economy and accelerate supply chains shifting out of the country.
Eurasia Group analysts said China may be the industry leader in production of both elements, but there are alternative producers as well as alternatives to both materials. In a July research report.
The impact of the decline in exports is already being felt domestically. Gallium prices in China have fallen as stockpiles have increased due to export controls.
The spot price of gallium was 1,900 yuan ($260) per metric ton on Thursday, down about 20% from early July, according to data from the Shanghai Metal Market.
Meanwhile, the spot price of germanium rose slightly due to supply shortages, reaching 10,050 yuan ($1,376) per metric ton on Thursday.
In July, Beijing said the two elements, used in various products including computer chips and solar panels, would be subject to export controls to protect the country’s “national security and interests.”
From August 1, exporters will have to apply for special permission to send goods out of the country.
The move has escalated a tech war with the United States over who has access to advanced chip manufacturing technology, which is vital for everything from smartphones and self-driving cars to weapons manufacturing.
Last October, the Biden administration unveiled a set of export controls banning Chinese companies from buying advanced chips and chip-making equipment without a license.
But to make Washington’s campaign successful, other countries also had to participate. Japan and the Netherlands joined the effort earlier this year, further curbing chip manufacturing exports to China.
Beijing hit back in April by launching a cybersecurity investigation into US chipmaker Micron, before banning it from selling to Chinese companies working on major infrastructure projects.
More chip restrictions could come from Washington after Huawei introduced the Mate 60 Pro smartphone last month, which shocked the tech world.
The model is powered by an advanced chip, which was created Despite US sanctions, the intention is to keep the Chinese tech giant away from such technology.
Jefferies analysts wrote in a Monday research note that the release of the Mate 60 Pro “has created political pressure” on the United States to extend sanctions on Huawei and Semiconductor Manufacturing International Corp (SMIC), which is believed to be That the Chinese chip maker has made the semiconductor. ,
“We expect Biden to focus vigorously on [chips] Sanctions against China in the fourth quarter,” he said.