The Biden administration's new restrictions on China's semiconductor industry have triggered a tit-for-tat response from Beijing, which announced an export ban on gallium, germanium, antimony, and other critical minerals with potential military applications to the US.
Bloomberg reports that the Chinese Commerce Ministry announced the new export controls on Tuesday morning, adding that tighter controls on graphite sales will also be seen.
"The US has generalized the concept of national security, and politicized and weaponized economic, trade and tech issues," a ministry spokesperson said, adding, "It has abused export control measures and unreasonably restricted certain products' export to China."
On Monday, the Biden admin revealed broader restrictions on AI chips that can be delivered to China, including prohibiting the sale of advanced chips to more than 100 Chinese companies.
Commerce Secretary Gina Raimondo told reporters Sunday that the move represented "the strongest controls ever enacted by the US to degrade the PRC's ability to make the most advanced chips that they're using in their military modernization," adding US officials had worked closely with experts, industry and allied countries to ensure that "our actions protect national security while minimizing unintended commercial consequences."
China's dominance in the global mining and processing of rare earth materials is very alarming, as it produces 94% of the world's gallium and 83% of germanium—critical metals used in the production of semiconductors, LEDs, and transistors. Beijing's Ministry of Commerce has justified the export restrictions to protect national security amid the ongoing tech war.
Joe Mazur, a senior analyst with the consulting firm Trivium China, told Bloomberg that these "export bans on critical minerals have been in the hopper for some time and are intended as a warning."
"It's a clear signal that China is preparing to strike back more forcefully against US economic pressure than it has in the past few years," Mazur emphasized.
Data from the US Geological Survey shows that the US imports about half its supply of gallium and germanium metals from China.
The new restrictions serve as a calculated warning to America's military-industrial complex and chipmakers, signaling that Beijing could escalate its response if Washington's tit-for-tat tech war intensifies. And just wait for more fireworks with Trump entering the White House next month.
Meanwhile, there could be new high-grade gallium supplies hiding in southwest Montana.
The US must build out its domestic supply chain of mining and refining rare earth minerals to break the addiction from China—something that won't be happening for a while.