China's latest "counterattack": "Just the beginning"

China’s Ministry of Commerce and Customs announced on May 3 that starting August 1, exports of some gallium and germanium products will require special approval to “safeguard national security and interests.” The metals are used in high-speed computer chips, as well as in the defense and renewable energy sectors.

The announcement comes after media reports that the US is considering new restrictions on exports of artificial intelligence chips to China.

In a May 3 editorial, China's Global Times said Washington and its allies have sought to suppress China's tech sector without regard to the potential damage the tech iron curtain could cause to global supply chains and industries.

“Compared with the US pressuring its allies to cooperate in the chip ban against China, this move by China may be more of a warning, showing that China will not be able to be excluded from the global semiconductor supply chain,” the newspaper added.

Reaction of countries

Immediately after the announcement of China's export restrictions, trade officials from various countries immediately assessed the consequences of these measures.

South Korea's trade ministry has convened an emergency meeting to discuss China's decision to control exports of the two metals.

“We are monitoring the situation in key countries such as the US and Japan and will make every effort to prepare countermeasures against unlikely situations. We cannot rule out the possibility of this measure being extended to other products,” said South Korean Vice Trade Minister Joo Young-joon.

According to Mr. Joo, China does not control a large amount of germanium in the world like it does with rare earths. The ministry will continue to support the development of alternative materials and import channels, Mr. Joo added.

Meanwhile, according to Japanese Trade Minister Yasutoshi Nishimura, Tokyo is also studying the impact on its companies as well as examining Beijing's plans to implement the controls. Tokyo has left open the possibility of action at the World Trade Organization, warning that it will protest any violation of international rules.

South Korea is home to Samsung, one of the world's leading semiconductor manufacturers, while Japanese conglomerates play a key role in the chip supply chain.

In Germany, Europe's largest metals importer Wolfgang Niedermark said the controls showed how dangerous Europe's dependence on China was.

The group said Germany and Europe's dependence on raw mineral materials such as rare earths from China has become greater than their dependence on oil and natural gas from Russia.

“Europe and Germany need to quickly reduce their dependence on China for important raw materials,” said Mr. Niedermark.

“Just the beginning”

Beijing’s announcement on July 3 showed President Xi Jinping’s administration is ready to target Western interests in response to Washington’s tightening of curbs on China’s access to advanced technology.

Chinese Foreign Ministry spokeswoman Mao Ning said on July 4 that China “has always implemented export control measures that are fair, reasonable and non-discriminatory.” She said the measures are “common international practice and do not target any specific country.”

China's move comes just days before US Treasury Secretary Janet Yellen's visit to Beijing (scheduled for July 6), a trip seen as an effort to stabilize the tumultuous relationship between the US and China.

World - China's latest — US Treasury Secretary Janet Yellen met with Chinese Ambassador to the US Xie Feng on July 3, before going to China (expected from July 6-9). Photo: CGTN

Analysts have described the move as China's second and biggest countermeasure in the protracted US-China tech war, which comes after the country banned some key domestic industries from buying from US memory chipmaker Micron in May.

On July 5, former Chinese Vice Commerce Minister Wei Jianguo told the China Daily that countries should be prepared if they continue to pressure China. Mr. Wei described China’s latest control measures as a “heavy and carefully considered blow” and “just a beginning.”

“If restrictions targeting China’s high-tech sector continue, countermeasures will escalate,” added Mr. Wei, who served as vice minister of commerce from 2003 to 2008 and is now vice president of the state-backed China Center for International Economic Exchanges.

It is a “pragmatic way” to tell the US and its allies that their efforts to block China from acquiring more advanced technology are a “miscalculation,” according to the Global Times .

Nguyen Tuyet (According to Financial Times, Reuters, Al Jazeera)

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