Chinese flag with rare minerals representing halted exports to the U.S.
China announced on Tuesday that it would halt the export of several rare minerals to the United States. This move escalates the ongoing tech war between the two largest global powers. It follows closely behind the Biden administration’s expansion of restrictions on advanced American technology sales to China.
The decision is a strategic response to tighten Beijing’s control over critical components used in high-tech manufacturing. These components are essential for producing weapons, semiconductors, and other advanced technologies. Specifically, China will stop exporting gallium, germanium, antimony, and certain superhard materials to the U.S. These materials have both civilian and military applications.
The Strategic Importance of Rare Minerals
China controls much of the global supply of critical minerals necessary for the production of semiconductors and other technologies. For years, China has refrained from imposing severe export restrictions, especially during the Trump administration. Instead, it focused on more limited actions, such as shifting its soybean purchases from the U.S. to Brazil.
However, in response to tightening U.S. policies, China has taken stronger steps. Last year, it implemented a legal framework to regulate the export of gallium and germanium. Both of these materials are key to semiconductor manufacturing. In September, China added antimony to its export control list, as it is used in military explosives. As of October, exporters of rare earth metals, vital for products like semiconductors and smart bombs, were required to disclose how these materials were being used in Western supply chains.
This move is seen as retaliation for increasing restrictions on American technology exports to China over the past two years. In 2010, China imposed a similar ban on rare earth metals exports to Japan, causing significant concern in the Japanese manufacturing sector. While the U.S. may be somewhat less vulnerable to China’s actions, the ban could still create disruptions.
Impact on U.S. Defense and Technology Sectors
China’s ban on superhard minerals is particularly concerning for the U.S. defense sector. Tungsten, a superhard material essential for armor-piercing ammunition, may be one of the minerals targeted. The U.S. has been working to develop alternative sources for tungsten, but it will take years to establish new mines.
Additionally, global prices for antimony, which China has already limited in supply, have surged. In the past three months, prices have doubled. The U.S. Geological Survey reports that China supplies 54% of the germanium used in the U.S., a material critical for infrared technology and fiber optics.
Gallium, essential for semiconductor manufacturing, has not been mined in the U.S. since 1987. China currently supplies 21% of American gallium imports, with Japan and Germany supplying the rest.
China’s Response to U.S. Technology Restrictions
The Chinese government’s actions are a direct response to U.S. technology restrictions. On Monday, the Biden administration expanded its limitations on certain technology sales to China. This included a ban on specific chips and machinery, and the addition of more than 100 Chinese companies to a restricted trade list.
These actions are part of a broader strategy to prevent China from catching up to the U.S. in advanced technologies. Over the past three years, the Biden administration has expanded its efforts to restrict U.S. investment in China and block Chinese electric vehicle imports, citing concerns over data security.
Former President Trump has also pledged aggressive actions against China, including significant tariffs and the potential removal of permanent normal trade relations. These measures would further disrupt trade between the two countries.
China strongly criticized these U.S. actions, labeling them “illegal” and harmful to global economic stability. Lin Jian, a spokesperson for China’s Ministry of Foreign Affairs, stated that such practices undermine the international trade order and disrupt global supply chains.
In response to U.S. curbs, Chinese industry groups, including those in the semiconductor and automotive sectors, have urged Chinese companies to shift their purchasing to domestic or non-U.S. sources. The China Semiconductor Industry Association warned that U.S. chips are no longer “safe and reliable” for Chinese industries, which could hurt U.S. chip manufacturers.
This has already affected companies like Micron and Intel, who have faced national security investigations in China. In addition, Chinese officials have been encouraged to avoid foreign-made devices, which could negatively impact Apple’s market share in China.
Conclusion
China’s rare mineral export ban is a direct retaliation against U.S. technology restrictions. The decision signals China’s growing willingness to use supply chain warfare as a tool in the ongoing tech conflict. With both countries imposing more trade restrictions, the relationship between the U.S. and China is poised to become even more contentious in the coming years. The impacts on global supply chains, especially in technology and defense sectors, could be profound as both nations continue to tighten their economic and technological ties.