On December 3, China’s Ministry of Commerce announced a new export ban to the US, prohibiting the export of dual-use items, gallium, germanium, antimony, and superhard materials. The Ministry also warned organizations and individuals in any countries or regions of transferring dual use-items originating in China to the US.
Some comments could be drawn from these recent developments
First, China’s export controls indicate the growing intensity of Sino-US economic competition, with areas like technology and minerals have become highly politicalized.
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- Some deem China’s move as a tit-for-tat response as just one day earlier US Commerce imposed 3rd round of export restriction to China, which includes 24 semiconductor types, software, high-bandwidth memory, and 140 additions to the Entity List, in order to prevent China from developing AI and advanced computing for military application.
- Observes also share concerns over potential China’s export ban of cobalt, nickel and tungsten if the Sino-US competition escalates.
Second, export control measures that China and the US imposed on each other will induce significant economic consequences on both sides:
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- For the US, US Geological Survey predicts that China’s complete export prohibition of gallium and germanium could result in a $3.4bln loss in US’s GDP ($9bln loss in high-impact cases). A total ban of gallium and germanium export from China would pressure the US economy in seeking alternatives, at least in near future while Japan - a major alternative source of US gallium import – also import a considerable amount of gallium from China. Additionally, the US economy will also suffer if China decides to ban cobalt and nickel exports in a tougher move. Currently, the US only has one operational nickel mine, which is anticipated to be exhausted by 2028.
- With new US export restrictions in place, especially the ban of software and HBM chips, China will also face great hardships in keeping up with the US in the AI race (though China could still nurture domestic production and gain significant foothold in the market for legacy semiconductors).
An original version of the article was published hereTranslated by NNDH
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