China retaliates against the US: stop supplies of strategic metals

The Chinese retaliation against the United States has not been long in coming. And it has put a series of strategic metals in its sights, of crucial importance not only in hi-tech applications but also in the defence industry. We are talking about gallium, germanium and antimony, for which Beijing has announced an immediate stop to exports to the USA: a 'revenge' announced a few hours after Washington's umpteenth clampdown on the microchip front.

The export of the three metals, of which the People's Republic is the world's largest producer, had already been restricted by measures issued by the government between 2023 and 2024. The new regulations - which only apply to the US - have been justified by the Chinese Ministry of Commerce as necessary to protect national security, as these materials lend themselves to dual use, in both civil and military spheres. Beijing also prescribed stricter end-use surveillance for graphite sold to US customers.

The measures that have just been announced highlight how trade wars - which Donald Trump threatens to intensify once he takes office in the White House - can lead to rapid and dangerous escalations, especially when a country like China is in the crosshairs, which boasts a strong position in many supply chains and even an almost absolute dominance in the case of certain products and materials. Take, for example, photovoltaic panels, or certain rare earths used in super magnets.

Against the US, Beijing has not hesitated to use the commodity weapon, as it has already done on several occasions in the past. And this could turn out to be a bazooka, although the effects may not be immediately visible. For gallium and germanium in particular - both of which are used in semiconductors and are subject to export controls from summer 2023 - the embargo has in fact already been in place for some time: shipments to the USA dropped to zero in the first ten months of this year, according to Chinese customs statistics, suggesting that US users are drawing on stocks. Recycling is limited and recourse to alternative suppliers is an unlikely scenario.

In the case of germanium, China controls about 60 per cent of the production of the refined metal, which is used (in addition to microchips) in infrared technologies, optical fibre cables and solar cells. On the other hand, China has a virtual monopoly in the case of refined gallium, which is used among other things in LEDs, infrared circuits, and state-of-the-art missile defence and radar systems: Beijing has a 98.8% share of global production, according to the consultancy firm Project Blue.