China blocks key high-tech metal exports to US, further escalating trade tensions

China’s Ministry of Commerce has announced it will ban exports to the US of gallium, germanium, antimony and other key high-tech materials with potential military applications.

The move comes just 24 hours after the US expanded its list of Chinese technology companies subject to export controls to include those that make equipment used to manufacture computer chips, chipmaking tools and software—critical for high-end applications such as generative artificial intelligence (AI) training.

The companies are nearly all based in China but the list also includes Chinese-owned businesses in Japan, South Korea and Singapore.

Chinese AI tools

The US Commerce Ministry said the goal was to slow China’s development of advanced AI tools that could be used in war and to undercut the country’s homegrown semiconductor industry, which threatens the national security of the US and its allies.

This means that export licences will likely be denied for any US company attempting to do business with Chinese companies on the list.

China’s Ministry of Commerce firmly opposed the move.

“The US preaches one thing while practising another, excessively broadening the concept of national security, abusing export control measures and engaging in unilateral bullying actions,” it said.

A day later, it introduced the gallium export ban.

Trade tariffs

China’s fresh round of bans follows a threat this week by US president-elect Donald Trump to impose trade tariffs on countries within the BRICS alliance (including China) if they were to create a rival currency to the US dollar.

If implemented, a 100% tariff at the US border would sharply drive up the cost of goods imported from BRICS members.

This in turn would potentially fuel US inflation and intensify simmering trade and technology tensions between China and the US.

Military edge

The high-tech metals ban is the latest in a string of “tit-for-tat” measures by the US and China in the race for an edge in military technology.

In May 2023, China said it would block government purchases from US memory chipmaker Micron after the company failed a security review.

That decision was regarded by some as China’s first retaliatory move in the escalating trade war and raised concerns about the fate of US tech giant Intel, which received over 25% of its total revenue from China last year.

The US announced in June 2023 that it would halt exports to China of AI chips made by Nvidia and other companies.

The US was also considering restricting sales of chipmaking equipment to Chinese chipmakers in an effort to prevent its technology from being used to strengthen China’s military.

Critical metals limits

China fired back a month later with a limit on exports to the US of some critical metals widely used in the semiconductor industry, requiring Chinese companies to seek permission to ship products containing gallium and germanium.

Any company exporting these products without permission, or in excess of the permitted volumes, could expect to be punished.

Then China placed restrictions on antimony exports to the US, where the metal is essential to the manufacture of armour-piercing ammunition, infrared sensors and precision optics used by the defence sector.

Just this week, China enforced new regulations on the export of dual-use products with civilian and military applications, allowing for easier identification of supply chain dependencies on China within the US military-industrial complex.

Core component

High-tech metals are a core component of high-speed computer chips and are also used in applications within the defence and renewable energy sectors.

Germanium is key to fibre optic cables and infrared radiation and is important for low-carbon technologies such as solar cells.

The metal and its oxides are used in military applications such as night-vision devices as well as satellite imagery sensors.

Semiconductor wafers made with gallium arsenide are heat-resistant and can operate at higher frequencies than traditional silicon devices.

They also produce less noise than silicon, especially at high operating frequencies, making them useful in radars, radio communication devices and satellites.