The trade tensions between the United States and China continue to intensify, with recent developments indicating a further strain on bilateral relations. China's Ministry of Commerce has declared export controls on gallium and germanium, minerals that play a crucial role in semiconductor production, electric vehicles, and aerospace manufacturing.
This retaliatory action comes in response to US semiconductor restrictions. In a parallel move, the administration plans to restrict Chinese companies' access to US cloud-computing services powered by AI chips.
Effective from August 1, Chinese exporters of gallium and germanium will be required to obtain licenses, showcasing China's determination not to be excluded from the global semiconductor supply chain. While the impact of these export controls on Western semiconductor production remains uncertain, questions linger regarding the extent to which China will enforce these measures and prevent circumvention.
China's position as the leading global producer of germanium and gallium adds significance to these export controls. The country accounts for approximately 67% and 86% of the global supply of germanium and gallium, respectively. These minerals are critical for the semiconductor industry, particularly in the production of gallium nitride semiconductors and solar panels.
In contrast to these actions, Chinese President Xi Jinping called for nations to reject barriers and supply chain decoupling in a speech delivered on July 4. This creates a paradoxical situation where China simultaneously advocates against trade barriers while implementing its own export controls.
The upcoming visit of US Treasury Secretary Janet Yellen to China indicates a desire for progress despite the ongoing trade disputes. While major breakthroughs are unlikely, engagement remains a priority for both countries. China's economic challenges and its focus on upcoming US and Taiwan elections contribute to the complex calculations made by Chinese policymakers in continuing dialogue with the US.
Source : wisconsinagconnection