US-China trade war intensifies as Beijing cuts supply of key tech materials

China has announced a ban on the export of essential high-tech materials such as gallium, germanium, and antimony to the United States, escalating tensions over trade and technology.

The move comes in retaliation against recent US actions to limit semiconductor-related exports to China, Caliber.Az reports via foreign media.

The Chinese Ministry of Commerce made the announcement following Washington’s decision to expand its list of Chinese companies subject to export controls on computer chip-making equipment, software, and high-bandwidth memory chips—key components in advanced technologies.

These heightened trade restrictions are unfolding as US President-elect Donald Trump has hinted at the possibility of imposing sharply increased tariffs on imports from China and other nations, fuelling fears of intensified trade disputes.

China's Foreign Ministry issued a forceful rebuke, with spokesperson Lin Jian condemning the US actions. "China has lodged stern protests with the US for its update of the semiconductor export control measures, sanctions against Chinese companies, and malicious suppression of China's technological progress," Lin said during a regular press briefing on December 3.

"I want to reiterate that China firmly opposes the US overstretching the concept of national security, abuse of export control measures, and illegal unilateral sanctions and long-arm jurisdiction against Chinese companies," Lin added.

The minerals affected by the new ban are crucial to industries ranging from electronics to automotive manufacturing, and even defence technologies. Gallium, germanium, and antimony are key ingredients in the production of computer chips, solar panels, cars, and military hardware.

In a statement from the Ministry of Commerce, China noted it had already imposed export licensing requirements in July 2023 for materials like gallium and germanium. Furthermore, it announced tighter controls in August on exports of antimony, a metal used in a variety of products, including batteries and weapons.

The new restrictions also apply to super-hard materials such as diamonds, which are essential for industrial applications like cutting tools and disc brakes.

China is a dominant global supplier of gallium and germanium, both of which are produced in small quantities but are indispensable in the production of high-tech devices. The United States relies heavily on China for these materials, with the US Geological Survey reporting that China is the source of about half of the US's gallium and germanium supply.

The move follows an update to the US "entity list," which added 140 Chinese companies to a list subject to stringent export controls. Although most of the companies on the list are based in China, some are Chinese-owned businesses located in Japan, South Korea, and Singapore. In response, China’s Ministry of Commerce stated that it would take necessary actions to safeguard its "rights and interests."

The Chinese government has long expressed frustration over the US’s restrictions on access to critical technological components, including advanced processor chips. However, it has been cautious in its retaliation, likely to avoid disrupting the development of China’s nascent chip, AI, and tech industries.

Various Chinese industry groups have voiced their discontent over the US’s trade restrictions. The China Association of Automobile Manufacturers condemned the use of national security concerns as grounds for export controls, calling it an "abuse of export control measures" that undermines fair competition and disrupts the global trade order.

The China Semiconductor Industry Association issued a similar statement, claiming the US restrictions were damaging supply chains and inflating costs for American companies.

"US chip products are no longer safe and reliable. China's related industries will have to be cautious in purchasing US chips," the association stated.

As global supply chains are affected, the restrictions have led to a sharp rise in the price of critical minerals, including a more than 100% increase in the cost of antimony, which now exceeds $25,000 per ton. The prices of gallium, germanium, and graphite have similarly risen.

The US is aware of the challenges posed by its dependence on China for these materials and is currently exploring ways to increase domestic production, though mining projects are still in early stages.

The new measures by China underscore the ongoing battle over technology and trade between the two economic superpowers, with both sides citing national security concerns as justification for their actions.

By Aghakazim Guliyev