China has announced it is banning exports of gallium, germanium, antimony and other key high-tech materials to the United States, citing their potential use in military technology. The move comes a day after the U.S. announced it would expand the list of Chinese companies subject to export controls on advanced technology. (AP)
China’s dominance over the mining and refining of rare-earth metals needed to manufacture advanced technology has long been identified as a key source of leverage Beijing could potentially use against the United States. But even as the trade and tech war between the two sides escalated, China held off on playing those cards.
If it did so now, it is in part because of how much the tech war between the U.S. and China has ramped up during U.S. President Joe Biden’s term in office, as part of a broadening of the trade war that began under former President Donald Trump. In the past four years, the Biden administration has utilized strategic tariffs and trade restrictions to cut off China’s access to the technologies—in particular advanced semiconductors—that are driving the AI and next-gen tech revolution.
Beijing’s announcement today is a reminder to Washington that China also has leverage in the standoff. More broadly, the tit-for-tat moves are part of an attempt by both sides to achieve self-sufficiency in strategic industries. But while both sides may see that as a necessary goal, given the state of U.S.-China relations, it comes with clear pitfalls.
As Lizzi Lee wrote in July, the semiconductor manufacturing industry is inherently global, meaning that no one country can succeed in it independently. “As a result, in their efforts to beat each other to self-sufficiency, the U.S. and China may both end up losing,” she wrote.
The quest for self-sufficiency in advanced tech industries is also likely to drive broader economic decoupling, further untethering bilateral ties from any need for cooperation. So while both Washington and Beijing may insist they can continue business as usual outside of key areas of competition, it’s becoming harder to see how that is possible.
With that in mind, the timing of the announcement also seems like Beijing’s way of firing a shot over the bow of the incoming Trump administration, given Trump’s threat to impose 60 percent tariffs on all Chinese exports to the United States. Unfortunately, Trump is no longer an outlier when it comes to the hawkish consensus on China in Washington, meaning that this probably won’t be the last step up the escalatory ladder between the two sides.
