China restricts key metal exports

Beijing is restricting the export of niche metals used in semiconductors, citing national security grounds. Chinese firms looking to sell certain gallium and germanium products abroad will need a special licence from 1 August.

Been a while since you took chemistry?

• 📟 Gallium is a soft, silvery metal used in advanced circuitry, and
• 🔭 Germanium is a brittle, grey metal used in advanced optics

They’re the ‘special sauce’ in everything from semiconductors, LEDs, and niche comms gear, through to weapons-sighting and night-vision systems.

And China produces 98% of the world’s gallium and 80% of the germanium. So its new export curbs will be felt just about everywhere.

Why’d China do this?

• The official statement (in Mandarin) says it was to “safeguard national security and interests”, and
• State media then said the quiet bit out loud, linking the new measures to the West “relentlessly stepping up crackdowns on China’s technological development”.

Intrigue’s take: When the world’s two largest economies get into a trade war, collateral damage is inevitable. That explains some of the early reactions:

• 🇰🇷 South Korea has called an emergency meeting on the new rules
• 🇯🇵 Japan says it’s scrutinising China’s rules for WTO violations, and
• 🇪🇺 The EU was quick to express… “concern” (🔥🔥🔥🔥)

But the move will impact China, too: it risks vindicating concerns about China’s coercive economic policies, and accelerating the West’s “de-risking”.

For now, the new process is technically just a licensing requirement; a lot will depend on what China does with it. And that probably gives China leverage.

Also worth noting:

• Gallium and germanium are also used in solar panels and EVs.
• The Netherlands just expanded (on Friday) its own restrictions on the export of advanced machinery that produces semiconductors.
• Washington is reportedly looking to limit China’s access to cloud services provided by US companies such as Amazon and Microsoft.