China, the world’s leading producer of gallium and germanium, crucial minerals for semiconductor manufacturing, recorded no exports of these materials in August. This comes a month after Beijing imposed restrictions on their overseas sales. It is citing national security concerns, according to data released by Chinese customs on Wednesday.
In July, China had exported 5.15 metric tons of forged crucial gallium products and 8.1 metric tons of forged germanium products.
In response to the absence of exports in August, He Yadong, a spokesperson from China’s commerce ministry, indicated during a press briefing on Thursday that the department had received export applications for these materials. He confirmed that some applications had been approved but did not provide further details. These export restrictions appear to reflect China’s readiness to respond to US export controls, despite concerns about its economic growth, amidst ongoing technology tensions.
China is currently facing challenges from weak domestic demand and a housing crisis, with its exports experiencing their most significant decline in over three years last month, further impacting its recovery efforts.
Analysts view these export restrictions as a “double-edged sword” that could potentially harm the Chinese economy and accelerate the relocation of supply chains outside the country. While China dominates gallium and germanium production, alternative producers and substitute materials are available, as outlined in a July research report by Eurasia Group analysts.
The effects of the export collapse are already being observed within China. Export controls have led to a surplus of gallium, causing prices to plummet. As of Thursday, the spot price of gallium was 1,900 yuan ($260) per metric ton, marking a nearly 20% drop from early July, according to data from the Shanghai Metal Market.
In contrast, the spot price of germanium has slightly increased due to supply constraints, reaching 10,050 yuan ($1,376) per metric ton on Thursday.
In July, Beijing announced export controls on gallium and germanium, materials used in various products, including computer chips and solar panels, citing national security and interests. These controls came into effect on August 1. It is requiring exporters to obtain special permission for shipments. This move intensified the technology rivalry between China and the United States, particularly concerning access to advanced chipmaking technology it is critical for a wide range of applications from smartphones and self-driving cars to weaponry.