On the evening of July 3rd, the Ministry of Commerce and the General Administration of Customs of China announced a significant piece of news. We declared an export control announcement on gallium and germanium-related items. These two key rare metal minerals, including their finished products, are not allowed to be sold abroad and are subject to export control.
China fights back against the United States! The chip counterattack war has begun!
Why do we impose sanctions on these two related minerals, gallium and germanium? This is actually China's retaliation against the United States and also indicates that China has once again launched the "raw material war"!
Today, let's talk about this export control incident and its causes and consequences.
The United States increases sanctions against China, forcing China to fight back?
As a country that loves peace and is dedicated to development, China rarely takes the initiative to impose export controls. This time, it is actually forced to do so as a countermeasure against the United States.
Since the beginning of this year, Sino-American relations have reached an ice point due to the civilian balloon incident. High-level exchanges and contacts between China and the United States have almost been cut off. The two nuclear powers are in a state of high-level silence, which is very dangerous.
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The balloon incident at the beginning of the year caused the situation between China and the United States to be very tense.
In addition, the United States has regarded China as the main strategic competitor in terms of law and strategy, and has gradually increased economic and technical sanctions against China. China's situation is not easy.
For example, a large number of high-tech enterprises have been added to the United States "entity list". Under the instigation of the United States, South Korea, Japan, and the Netherlands have announced sanctions against China's semiconductors. Coupled with the "Chip Act" announced by the United States last year, almost all countries in the world with advanced semiconductor technology have closed their doors to China.The United States has recently imposed sanctions on dozens of Chinese companies, adding them to the Entity List.
What's even more detestable is that the United States is considering increasing economic sanctions against China, restricting some companies from investing in China. This is equivalent to treating us the same way as Russia. They say they don't want to decouple from China, but their actual actions show no signs of slowing down.
So, China's recent international environment is indeed very dangerous, and Sino-American relations are very tense. This cannot be changed even by the visit of U.S. Secretary of State Blinken to China, and the upcoming visit of U.S. Treasury Secretary Yellen.
Therefore, the United States still regards China as an imaginary enemy. If the Chinese side hopes to achieve peace through appeasement policies, they have fallen into the trap of the Americans.
So, should China just passively take the beating? Actually, it's not the case.
Due to the continuous pressure from the United States, we are forced to unite with Russia, Saudi Arabia, Iran, and other countries oppressed by the United States and harvested by the dollar hegemony. By establishing a new friendly multilateral relationship, we avoid being isolated by the world and have achieved good results.
China carries out multilateral diplomacy and maintains good relations with Saudi Arabia and Iran.
In dealing with the United States, apart from protesting, we have not taken any obvious countermeasures. Finally, we have been waiting for this, which is the upcoming "Rare Earth War"!
China fights back against the United States and starts the battle for rare metals!
The timing of this sanction is very interesting, because in a few days, U.S. Treasury Secretary Yellen will visit China. To coordinate with Yellen's visit to China, the United States has recently taken many sanction actions. The U.S. State Department issued a "travel warning" for Americans traveling to China. And Bloomberg also said that the United States is considering continuing to sanction us.The U.S. Department of State warns against traveling to China.
So, if we don't show the United States a bit of our capabilities, Americans might really think that it's still the Qing Dynasty with the Eight-Nation Alliance. So why should we restrict the export of gallium and germanium?
Firstly, both gallium and germanium are rare rare-earth metals and are among the core raw materials for manufacturing semiconductor materials. More importantly, China has a monopoly on these two core materials.
To what extent is the monopoly? In 2021, the global production of metallic gallium was about 430 tons, with China producing 420 tons. It almost completely monopolizes the production, and the monopoly on gallium reserves is slightly lower, with China's reserves accounting for about 80% of the world's total.
Global production chart of metallic gallium
In simple terms, if China imposes export controls, the global semiconductor industry chain will gradually become paralyzed after using up the existing materials. Because this mineral is only available in China.
No matter how advanced your equipment is, or how advanced your technology is, you can only "make bricks without straw."
Moreover, products related to metallic gallium are widely used in night vision devices, second-generation semiconductor materials, satellites, radars, mobile phones, fiber optic communications, and other products.
Gallium nitride is currently the most core third-generation semiconductor material, widely used in the most cutting-edge products such as 5G, fast charging, and new energy vehicles.
And the fourth-generation semiconductor material of the future, gallium oxide, is also a compound of gallium. Therefore, China's rare earth war this time is not only strangling the United States but also directly strangling the world.The Third Generation of Semiconductor Black Technology
In the past, when everyone had good relations, China's gallium products were widely exported to European and American countries, where they were processed into chips and other products and sold back to China, because our semiconductor equipment was indeed behind the times and lacked the ability for deep processing.
But now, with so many sanctions imposed by the United States, we might as well not hide it anymore and directly come up with a trump card, the purpose of which is to cut off the global semiconductor industry chain and directly overturn the table. Even if the United States has the technology, it cannot produce advanced products.
Therefore, when the United States announced sanctions against China to protect national interests, China also carried out "reciprocal countermeasures" and directly controlled the export of related raw materials to fight back.
Either take China to play together, or no one plays at all.
The purpose of restricting the export of rare metals this time is also very simple, to defend China's national security, and to negotiate with the United States.
Either everyone's semiconductor industry that uses gallium as a compound is ruined, and the third-generation semiconductor industry chain and chips are not produced, and it's better to close the door directly. Or let China return to the semiconductor industry chain again. Let everyone continue to develop.
Let's look at another metal, germanium. This metal is mainly used in infrared optics, solar cells, chips, biotechnology, and related weapons fields.
The resource production map of germanium shows that China accounts for 71%, Russia 5.3%, and the United States does not mine at all.
The three major producers of this metal in the world are China, Russia, and the United States. The United States has already announced that it will not mine. So the world's largest producers are China and Russia.After we announced the export control on germanium, it will be difficult for the United States to resume the mining of germanium in the short term and reach a certain production capacity. Our export control within two years has almost cut off the global supply of germanium.
So, when all the existing germanium products in the world are depleted, then either the production line will be shut down, or these countries will have to find alternative products in a short time and complete the transformation of technology and production lines, or they will have to obediently report to China and apply for the import of germanium.
The Ministry of Commerce and Customs announced export control on gallium and germanium.
So, will China's sanctions this time be a lose-lose situation? In fact, it won't be.
Because unfortunately, due to the backwardness of technology, our export of germanium and gallium is sold as primary minerals, and the selling price is not that exaggerated. So, even if it is a lose-lose situation, it is also a situation where we suffer 100 and the enemy suffers 1000.
If the United States continues to sanction, we will continue to counteract.
So, the Ministry of Foreign Affairs can finally stand up straight now. Once our news of counteraction comes out, there will inevitably be a bloody storm in the international community tomorrow, and the chain reaction it brings will also let the Americans know our determination.
The counteraction of the Ministry of Commerce and the confidence of the Ministry of Foreign Affairs.
More importantly, China is not the China of 20 years ago. We have almost occupied all the "industrial crowns" and have strong technology in many fields. This means that if the United States is aggressive, China can also take more aggressive countermeasures and unequal countermeasures. It's just that our trump card this time is a countermeasure with a particularly high cost-performance ratio. #Two departments announced export control on gallium and germanium-related items#
In this counteraction war! We have grasped the seven-inch of the United States!So, how will Americans actually respond? Will they show us their willingness to negotiate, relax sanctions, or stubbornly refuse to back down, continue to expand sanctions, and then wait for us to flip the table? Let's wait and see! Let's see how the United States is prepared to talk this time!