- On December 2, 2024, the US announced tighter export controls on advanced chips and chip-making equipment to China. In response, China announced immediate export bans on gallium, germanium, antimony and superhard materials to the US, alongside stricter end-use reviews for graphite exports.
- This is not the first time China has resorted to export controls on critical metals as a tit-for-tat measure. But it is China’s first official material export ban targeting a specific country. It sends a clear signal to the US that China is willing to escalate tensions.
- While China calls for an „in principle“ ban, a „de facto“ ban has already been in effect. The absence of exports of gallium and germanium from China to the US last year suggests that American industries may have been relying on inventories or alternative sources. How China enforces controls, especially on third countries, requires continued monitoring.
- China’s leverage in strategic metals stems mainly from its dominance as a processing and refinery hub and global mining investment, less so on geological reserves.
- China’s export controls are likely to first target minerals where it has both geological and processing advantages, such as tungsten and rare earth elements, and later extend to processing-dominant minerals like lithium and cobalt. For minerals with less geological abundance, such as lithium hydroxide, China might impose restrictions if it views supplier countries as politically aligned or neutral.
- China also has its own vulnerabilities to the global mineral trade, including reliance on rhenium for aircraft engines and hafnium for HBM memory.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.