China tightens rare metal export rules amid US chip export deliberations

China has announced its decision to impose restrictions on the export of rare metals essential for semiconductor manufacturing. The move aims to safeguard China’s security and national interests, and it requires Chinese exporters to seek approval before sending specific gallium and germanium products overseas.

These guidelines, released jointly by the Ministry of Commerce and China Customs on Monday, are set to take effect from August 1.

The decision comes amidst reports of the United States contemplating fresh restrictions on the export of advanced chips to China. Gallium, a critical raw material recognized by the European Union, plays a vital role in the production of integrated circuits, LEDs, and photovoltaic panels used in solar panels. Similarly, germanium is an essential component in the creation of optical fibers and infrared camera lenses. Notably, China currently accounts for approximately 80 percent of global rare metal production, as reported by the European Commission.

The growing geopolitical rivalry between China and the US has led both nations to implement reciprocal measures in the semiconductor and other crucial tech sectors. Washington, in particular, has blacklisted numerous Chinese companies, aiming to limit their access to American chips and advanced technologies, citing potential risks to US national security. Furthermore, the US has been urging allied countries to impose restrictions on China’s tech industry, with the Netherlands planning to introduce export curbs targeting China later this year.

China has countered the actions of the US, accusing Washington of attempting to stifle Chinese innovation to maintain its supremacy in the tech industry. The ongoing tensions between the two economic powerhouses have prompted a series of trade actions and counteractions, leading to an increasingly complex trade landscape in the semiconductor sector and beyond.