China imposes new export controls on metals as chip war heats up

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China has imposed new export controls on shipments of key rare earth metals used in applications such as chipmaking.

The Chinese government has introduced new export controls that will prevent key metals used in making semiconductors from leaving the country without a special license, as the country's trade war with the US over hi-tech chipmaking continues.

Beijing said the rules are necessary for national security and will apply to exports of gallium and germanium - rare earth materials that also have applications in military technology and solar panels as well as computer chips.

According to the Critical Raw Minerals Alliance, China is responsible for 60 percent of the world's germanium production and 80 percent of global gallium supplies.

The rules will take effect from August 1st, after which companies will have to go through a strict procedure in order to obtain an export license for eight gallium-related products and six germanium-derived items. The country's commerce ministry warned of punishments for any company exporting without a license, or those that exceed agreed quotas.

It comes after Washington was reported to be considering further controls on exports of US-made semiconductors to China. It had already imposed restrictions on some of the most high-tech items last year and is expected to add more stringent measures that will cover a greater number of products in the coming weeks.

Responding to the news, the US Department of Commerce said it "firmly" opposed the new Chinese export controls.

In a statement to Reuters, a spokesperson for the department said: "These actions underscore the need to diversify supply chains. The United States will engage with our allies and partners to address this and to build resilience in critical supply chains."

The EU also expressed concerns about the moves, with Germany's economy minister Robert Habeck warning it would be "problematic" if China broadens its export controls to other critical rare earth materials such as lithium, which is a key component in products such as electric vehicle batteries.

Beijing's latest step in the growing trade war comes shortly before US treasury secretary Janet Yellen is due to arrive in the country for talks in an effort to build bridges between the two sides.