China imposes export curbs on critical metals, drones

Beijing – Chinese controls on exports of two metals critical to making semiconductors came into force yesterday, a day after Beijing imposed curbs on the foreign sales of some drones.

The Biden administration has in recent months stepped up measures to restrict Chinese companies’ access to the most advanced semiconductors.

China, which seeks to become self-sufficient in semiconductor design, said those measures are aimed at maintaining US supremacy in the field.

From Tuesday, Chinese companies seeking to export gallium or germanium will need to obtain a licence, according to a directive from the Ministry of Commerce.

Under the new rules, they will also need to provide information on the final recipient and give details about their end use.

China accounts for 94 percent of the world’s production of gallium – used in integrated circuits, LEDs and photovoltaic panels – according to a report by the European Union published this year.

For germanium, essential for fiber optics and infrared, China makes up 83 percent of production.

The export curbs “send a clear signal that China holds all of the power in this dangerous game”, analyst James Kennedy told AFP, calling the curbs “an unambiguous message” to the United States.

“If the US chooses further escalation, China’s next response will have consequences.”

For now, he said, China “aims to cause a minimum of damage” to the United States, because their needs in gallium and germanium are “low” and the metals can be acquired elsewhere.

The measures come as the Biden administration mulls fresh curbs on Chinese access to high-tech chips, as well as on outbound US investments in China.

They also follow curbs by Beijing on the exports of certain types of unmanned aerial vehicles, also known as drones.

As of September 1, exporters will require a licence laying out their end use, as well as other details before they can be sold overseas.

A China commerce ministry spokesperson said the move was not aimed at “any specific country or territory”.

But they did cite the risk of drones “being converted for military use” in justifying the restrictions.

China is a major exporter of drones, with the US-blacklisted DJI representing more than 70 percent of global market share, according to CNBC.

The company’s drones are reported to have been used extensively by both sides in the war in Ukraine.

In April 2022, DJI said it was temporarily suspending business in both Russia and Ukraine while it “internally reassess(ed) compliance requirements”.

The United States has accused China of mulling arms shipments to support Russia’s campaign – claims Beijing has strongly denied.