The decision by China to impose export restrictions on gallium and germanium, two critical minerals vital for advanced technologies, marks another significant escalation in the ongoing US-China rivalry. This move comes in response to the United States’ intensified efforts to restrict China’s access to advanced semiconductor technology, creating a new front in the geopolitical struggle for global power and technological dominance.
On December 3rd, China’s Ministry of Commerce announced its decision to ban the export of Gallium and Germanium as part of newly imposed export controls, citing national security concerns as the primary justification for the restrictions. Gallium is critical for the production of semiconductors, LEDs, and 5G technology, while Germanium is essential for fiber optics, infrared optics, and solar cells. The ban is widely perceived as a strategic countermeasure in response to the United States’ escalating export controls aimed at restricting China’s access to advanced technologies, particularly in the semiconductor industry. China’s dominant position in the global production of these materials, accounting for approximately 94% of gallium and 83% of germanium, highlights its leverage in global supply chains. This decision reflects Beijing’s broader strategy of utilising control over critical materials as a geopolitical tool. The US-China relationship has deteriorated significantly over the past decade, transitioning from an uneasy economic partnership to an outright strategic rivalry. At the core of this competition is the race for supremacy in key technologies such as semiconductors, artificial intelligence, and quantum computing, which are vital for economic growth and integral to military power and national security. This rivalry is expected to intensify further as the incoming president, Donald Trump, plans to increase tariffs, using them as leverage to pressure China into accepting trade terms more favourable to the United States.
This escalation exemplifies the broader, decades-long efforts by the United States to limit China’s technological advancement. However, these efforts became more explicit and aggressive in the late 2010s, peaking during the Trump administration (2016–2020), particularly in the semiconductor sector. Semiconductors, the backbone of modern technology, power everything from smartphones to advanced military systems. Washington’s strategy to maintain its technological edge has centred on three key aspects: export controls, blacklisting Chinese entities, and the enactment of the CHIPS Act.First, the US Commerce Department has expanded restrictions on the export of advanced chipmaking equipment and semiconductors to China. These restrictions apply not only to US companies but also to foreign firms that rely on US-origin technology. Second, hundreds of Chinese companies and research institutions have been blacklisted, with accusations of aiding Beijing’s military modernisation and surveillance programs. The blacklisting includes some of the leading companies in the field, such as Huawei Technologies and Hikvision. Finally, the CHIPS Act, passed in 2022, allocated $52 billion to bolster domestic semiconductor manufacturing and reduce reliance on imports, particularly from China. Furthermore, the United States has been reinforcing its partnerships with key allies such as Canada and Japan to address the challenges posed by critical material shortages. Canada, a significant player in the global mining industry, possesses substantial reserves of zinc and coal, which serve as primary sources of Gallium and Germanium as byproducts. Meanwhile, Japan has emerged as a leader in recycling technologies, particularly in the recovery of valuable materials from electronic waste. These measures aim to preserve US dominance in critical technologies while slowing China’s progress in high-tech industries.
China, in turn, perceives US export controls as an effort to contain its rise and prevent it from achieving technological self-sufficiency. By imposing restrictions on the export of critical minerals like Gallium and Germanium, Beijing is actively challenging US efforts to decouple supply chains, exposing the vulnerabilities in global supply chains and the challenges of rapidly transitioning to alternative sources. Unlike Trump’s approach of leveraging tariffs, Beijing has focused on restricting materials where it holds a dominant global position, which allows China to send a strong message while avoiding an escalation into a full-scale economic conflict. This strategic move is designed to demonstrate strength while leaving room for negotiation. The export ban also serves domestic political purposes, enabling the Chinese government to project strength and resilience in response to US-led efforts to isolate it technologically. By taking assertive action, Beijing seeks to bolster domestic support and reinforce the narrative that it will not be intimidated by external powers.
However, this is not the first time China has exploited its dominance over critical materials as a geopolitical tool. A similar situation occurred in 2010 during a confrontation over the Senkaku Islands (known as the Diaoyu Islands in China), a group of uninhabited islands in the East China Sea claimed by both Japan and China. In retaliation, China imposed an informal embargo on rare earth element exports to Japan. This embargo created an immediate supply chain crisis for Japanese companies, particularly in the electronics and automotive sectors. Major firms such as Toyota and Sony faced production challenges due to shortages of critical materials required for products such as hybrid car batteries and advanced electronics.
Given the complexity of the conflict, it is complex to envision a single definitive scenario for the future. In a positive scenario, the export ban on Gallium and Germanium incentivises the United States and its allies to accelerate efforts to diversify critical material supply chains and invest in alternative technologies. This could lead to significant advancements in recycling, substitution, and the development of new sources outside of China, such as mines in Australia. Collaborative efforts among nations, facilitated by alliances like the Quad (US, Japan, India, and Australia) or partnerships with the European Union, could strengthen global supply chain resilience. Over time, China’s leverage over these materials could diminish, reducing the risk of similar disruptions in the future. Additionally, diplomatic negotiations between the US and China might de-escalate the current tensions, leading to agreements on trade and technology that ensure a more stable global economic environment. This scenario fosters innovation, diversification, and a more balanced geopolitical dimension.
However, in a negative scenario, the ban exacerbates the already deteriorating US-China relationship, escalating into a broader economic conflict. The inability of countries to rapidly develop alternative sources for gallium and germanium could lead to severe disruptions in industries reliant on these materials, such as semiconductors, telecommunications, and renewable energy. This could delay technological advancements in fields like 5G, AI, and green energy, negatively impacting global economic growth. The situation might also push China to impose additional restrictions on other critical materials, such as rare earth elements, further straining global supply chains. In retaliation, the US could escalate sanctions or increase restrictions on Chinese companies, deepening the decoupling of the world’s two largest economies. Such escalation could polarize global markets, forcing nations to choose sides in a fragmented geopolitical and economic order, while leaving smaller nations and emerging economies disproportionately affected by rising costs and resource scarcity.
The export ban on gallium and germanium by China marks a significant escalation in the ongoing US-China strategic rivalry, highlighting the critical role of these materials in global supply chains and advanced technologies. While the decision underscores Beijing’s ability to leverage its dominant position as a producer of these resources, it also exposes vulnerabilities for nations reliant on Chinese exports. The outcome of this dispute will largely depend on the responses of the United States and its allies, as well as the broader geopolitical dynamics at play. While both the US and China are likely to continue pursuing their strategic objectives, avenues for dialogue and cooperation must remain open to prevent the situation from spiralling into an all-encompassing economic conflict. The ability of both nations to navigate these tensions will have far-reaching implications for the future of global trade, technology, and economic stability.
