China’s decision to ban the export of critical minerals such as gallium and germanium to the United States has escalated tensions between the two global superpowers. This strategic move directly targets industries that rely heavily on these materials, particularly high-tech and defense sectors in the US, and signals China’s growing assertiveness in the face of intensifying geopolitical rivalry.
On Tuesday, China’s Ministry of Commerce unveiled the restrictions, which include dual-use metals—materials that serve both civilian and military purposes. Gallium and germanium, essential for the production of semiconductors, solar panels, and radar systems, are at the center of this export ban. These products are indispensable not only for cutting-edge civilian technology but also for military applications, including missile defense systems and electronic warfare equipment.
A Response to US Export Controls
This latest move by China is framed as a retaliatory response to the United States’ ongoing trade restrictions, which have increasingly targeted China’s semiconductor industry. Just days before the export ban, the Biden administration announced fresh sanctions on 140 Chinese companies, further tightening the US’s grip on Chinese technological advancements, especially in areas deemed sensitive for national security.
Claire Reade, a senior counsel at Arnold & Porter and expert on US-China trade relations, notes that both countries are engaged in a defensive posture. She explains that China perceives US actions as an attempt to curtail its economic development, while the US views China’s technological rise as a threat to its security interests. China’s Commerce Ministry emphasized that the export restrictions were necessary “to safeguard national security,” highlighting the intensifying nature of the geopolitical standoff.
China’s Strategic Economic Leverage
Gallium and germanium are particularly valuable because of their unique applications. Gallium is used in advanced semiconductors, solar panels, and high-frequency radar, while germanium is crucial for fiber optics and satellite technology. As the world’s largest producer of these materials, China controls a significant portion of the global supply. According to the US Geological Survey, China produced 98% of the world’s gallium in 2023, reinforcing its position as a linchpin in the global supply chain for high-tech and defense industries.
The ban is not merely a trade maneuver; it is a strategic attempt by China to assert its economic power and reduce its dependence on the West. By tightening control over these critical materials, China aims to remind the US and its allies of the vulnerabilities inherent in the global supply chain.
Although alternative sources for gallium and germanium exist in countries like Canada, Germany, and Japan, China’s dominance in production makes any shift away from its supply both challenging and costly.
Economic Impact and Future Projections
The immediate effect of the export ban is a spike in the global prices of gallium and germanium. The US has already faced supply disruptions since China started imposing restrictions in 2023, and the latest move could exacerbate these challenges. A study by the US Geological Survey projected that a complete ban on Chinese exports of these minerals could lead to a $3.4 billion reduction in US GDP. The ripple effects are particularly concerning for the US defense industry, which relies on gallium-based semiconductors for next-generation military technologies.
Despite these risks, the US has options. Gallium is a byproduct of bauxite mining, primarily used in aluminum production, and several countries, including the US, could increase domestic production. However, such an expansion would require significant investment and time, making it a longer-term solution rather than an immediate fix.
China’s Long-Term Goals
China’s actions are not solely reactionary; they are part of a broader strategy to become less reliant on Western technologies and markets. With the possibility of Donald Trump’s return to the White House, China is positioning itself to withstand further pressure from the US. Trump has previously signaled his intention to impose even harsher tariffs on Chinese imports, a stance that could escalate the trade war. However, experts like Reade argue that the underlying trend extends beyond any single administration.
By restricting exports of vital minerals, China aims to bolster its domestic technological capabilities while sending a clear message to the international community about its readiness to defend its economic and national security interests. This move marks another step in China’s broader efforts to reduce its vulnerabilities and increase its bargaining power on the global stage.
The Global Repercussions
As the geopolitical rivalry between the US and China intensifies, countries around the world will likely feel the impact of these trade tensions. For the US, this move highlights the vulnerability of its critical industries to supply disruptions, particularly as it competes with China for dominance in areas like artificial intelligence and defense technologies. For China, the ability to leverage its control over rare minerals provides an important tool in its strategic arsenal, ensuring that its role in global supply chains remains indispensable.
The next chapter in this ongoing trade war will likely involve further escalation, with both sides digging in their heels. For now, China has signaled that it is prepared to continue using its economic might to challenge the US, leaving the future of global trade and technology development hanging in the balance.
