Foreign media: This is China's first counterattack! Prohibition | US | Foreign Media
On July 5th, the German foreign policy website published an article titled "China's First Counterattack" by Lu Gang. The full text is excerpted as follows:
In the escalating economic war launched by the West against China, the latter launched its first comprehensive counterattack against the former and announced export controls on strategically important raw materials starting from August. This applies to gallium and germanium, which are essential elements for producing high-performance chips, fiber optic cables, solar cells, and military equipment such as night vision goggles.
Experts estimate that the deliveries that China has stopped cannot be replaced in the short or medium term. Although these elements can be mined and processed in the West in principle, the cost is much higher than importing from China and can cause significant environmental damage. Beijing responds to the fact that the United States is constantly trying to harm China's semiconductor industry and prevent its rise through new sanctions, while the European Union is also planning to implement new export and investment controls.
Washington is once again expanding the scope of sanctions. The United States has begun to take punitive measures against Chinese high-tech enterprises on a large scale, mainly under the pretext of protecting the United States from Chinese spies and hacker attacks, or slowing down China's military escalation. The United States first attempted to destroy Huawei and some other Chinese high-tech companies, and forced third countries to abandon Chinese technology when building 5G networks. Last autumn, the United States banned the supply of high-performance chips to China, and the equipment used to manufacture such chips was also affected by the ban. Under pressure from the United States, the Netherlands has recently agreed to stop providing China with equipment for producing state-of-the-art semiconductors, following Japan. Washington is constantly pushing forward and now does not want to supply the chips needed for artificial intelligence applications, and even plans to exclude Chinese companies from US cloud products.
Germany and the European Union are closely behind - although there is a certain distance. Berlin and Brussels insist that they refuse to decouple from China, but will avoid the risks of further cooperation with China. From an official perspective, this will lead to Western attempts to no longer purchase primary products from China, but rather from other countries such as India or Vietnam.
China has shown restraint in taking comprehensive countermeasures so far. It only took a strong response in May to take measures against American chip manufacturer Micron Technology to ban its products from being used in critical infrastructure in China. Now China has implemented the above-mentioned export control measures for gallium and germanium. These two elements are mainly mined and processed in China. This is not because these two elements are not available elsewhere, but because their production is labor-intensive and China's prices are significantly lower than those in the West. In addition, its mining and processing processes sometimes cause serious environmental damage. According to data from the European Key Raw Materials Alliance, China's recent production of germanium accounts for over 60% of global usage, while its production of gallium accounts for approximately 80% of global usage.
The specific impact of new export controls is difficult to estimate. The EU has recently imported approximately 71% gallium and 45% germanium from China. If Beijing restricts raw material exports like the EU and its member states hope to cut off technological ties between China and Europe, it will have a heavy impact on the EU's semiconductor industry and may also have a heavy impact on the upcoming semiconductor factories to be established in Germany. The planned decarbonization project will also be damaged, as the technology required for the decarbonization project also depends on gallium and germanium.
Experts believe that China's supply cannot be quickly replaced, except for supply shortages that will lead to price spikes. Simon Talyapetra from the Bruegel Institute said that the West will need at least a decade to "break free from China's raw material supply chain.".
