Political And Commercial Weapons

In a move aimed at safeguarding national security and preserving its interests, China's Ministry of Commerce declared on Monday that it would enforce export controls on certain metals extensively utilized in the semiconductor sector. This action represents the latest development in the intensifying conflict between Beijing and the United States regarding access to cutting-edge microchips.

  • Under the newly announced regulations, exporters will be obligated to obtain approval before shipping specific gallium and germanium products.
  • These measures seek to ensure China's control over the export of these crucial metals, further emphasizing the nation's commitment to protecting its strategic assets in the semiconductor industry.

Stricter Controls Amid Heightened US Restrictions

Exporters will be required to adhere to specific procedures in order to obtain export licenses, as stated by China's Ministry of Commerce. The ministry emphasized that individuals who export these products without proper authorization or exceed the permitted volumes will face appropriate penalties.

  • China's surprise declaration of export limitations on some gallium and germanium goods, which are also used in electric vehicles (EVs) and fibre optic cables, has left industries racing for supply and raised costs.
  • These regulations reinforce China's efforts to assert control over the export of these vital metals, particularly as they hold strategic significance in the semiconductor industry.

The United States and the Netherlands are planning to tighten sales of chipmaking equipment this summer, aiming to prevent China from leveraging such technology to bolster its military capabilities.

Just A Start

China's export limits on metals used in semiconductor manufacturing are "just a start," a prominent Chinese trade policy advisor said on Wednesday, as the country heats up a tech battle with the United States just days before US Treasury Secretary Janet Yellen visits Beijing.

Former Vice Commerce Minister Wei Jianguo told the China Daily newspaper on Wednesday that nations should brace themselves for more if they continue to put pressure on China, calling the measures as a "well-thought-out heavy punch".

"If restrictions targeting China's high-technology sector continue then countermeasures will escalate," said Wei, who was vice commerce minister from 2003 to 2008 and is currently vice head of the state-backed research tank China Centre for International Economic Exchanges.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. Please note that the writer of this article is not registered as a financial advisor.

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