Tuesday, December 5, 2023
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America finished the game – China tightens the screws around the world


America finished the game – China tightens the screws around the world

China will drastically reduce foreign supplies of metals for semiconductors.

China restricts the export of metals for semiconductors and electric vehicles. This is reportedly a response to pressure from the United States to curb China’s technological progress. Experts warn of future disruptions to global supply chains and rising tensions between countries.

From August 1, China will tighten its control over the export of a number of products based on gallium and germanium, which are widely used in high-tech industries. China produces most of these metals in the world, with Japan, Germany, the Netherlands, France and the United States being the main importers.

Chinese exporting companies will need to go through procedures to obtain additional export licenses. And any domestic company that exports in excess of the permitted volumes will be punished, China’s Commerce Ministry said in a statement.

“China has hit US trade restrictions where it’s really felt,” said Peter Arkell, chairman of China’s Global Mining Association.

Some in the industry have previously expressed concern that China could impose new export restrictions on rare earth metals, which are of paramount importance for the production of electric vehicles and military equipment. China is the world’s largest producer of rare earth metals.

“Gallium and germanium are just a few of the many minor metals that are nonetheless extremely important in a variety of technical products. China is the dominant producer of most of these metals. It is a fantasy to suggest that another country can replace China in the short or even medium term,” Arkell said.

The above restrictions will affect not only exports to the United States, but any shipments abroad in principle. A number of foreign companies, against the backdrop of the latest news, are already trying to stock up on rare earth metals for the future, before the official adoption of restrictions, which is why metal prices have risen significantly. And some importers are looking for ways to get around these restrictions or even alternative suppliers. However, it can hardly be done so simply.

In the meantime, shares of some metals and rare earths stocks are gaining as their investors have been betting ahead of time that further restrictions could be put in place.

China’s control of exports comes as Washington is considering imposing new restrictions on the supply of high-tech chips to China, as well as on the sale of chip-making equipment to Chinese chip makers.

Beijing last retaliated against U.S. pressure on the chip industry in May of this year, when it banned some domestic sectors from buying products from the U.S. memory maker. Micron.

“The risk of a rapid escalation of tensions between the US and China is not small. If this action does not change the dynamics of relations between countries, we should expect even more restrictions on the export of rare earth metals, ”said the company’s analysts. Jefferies.

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