Chinese restrictions on metal exports – just the beginning?

Monday China announced about imposing restrictions on the export of metals, such as gallium and germanium, for American technology companies. These metals are used, for example, in the production of microchips, composite semiconductors, optical fiber communications, night vision devices and radar. Most often they are used in the military and space industries.

The announcement was made on the eve of Independence Day and a few days before US Treasury Secretary Janet Yellen’s visit to China. Analysts believe this is a clear signal to the Biden administration, whose sanctions have long bombarded the Chinese microchip sector. It’s no secret that the US has encouraged its allies, such as Japan and the Netherlands, to follow suit.

The Chinese move caused fears among many: will it be followed by restrictions on the export of rare earth metals? Will America be left without electric cars, smartphones and other high-tech devices? China is the world’s largest producer of samarium, lanthanum, terbium and other rare resources. Once their supply was already reduced, 12 years ago in a dispute with Japan.

Analysts have described the new rules as China’s second, and so far biggest, retaliation in its long technological battle with the US. Of course, after the state banned some industries in May from purchasing products from the American chip company Micron.

Wei Jianguo, a former Chinese trade and economic adviser, warned that authorities could impose export restrictions on other strategic resources, including chips. If the US does not ease pressure on Beijing, he said, the current measures will be “just the beginning”:

“If restrictions against the Chinese high-tech sector continue, then retaliatory measures will be taken”

In an interview with Reuters, the politician said that China is ready for a long-term struggle: “We do not want an escalation of the conflict, but we are not afraid of it.” He expressed hope that Yellen’s visit would help improve relations between the two countries, but urged Washington to respect China’s position.

“We are ready for dialogue and cooperation with the United States on a mutually beneficial basis. But we will also resolutely protect our rights and interests. We hope that the United States will understand this and will not provoke a conflict,” Wei said.

In an interview, the politician assured that China does not seek technological dominance, but is only interested in its own development.

The struggle of such big leaders as China and the USA can harm the whole high-tech world. Who will be the first – is not yet clear. We can only continue to follow the news and hope that everything will be resolved peacefully.