China Informed US and Europe in Advance About Export Controls

China's Ministry of Commerce has announced that the country informed the US and Europe in advance about its recent export controls. The ministry stated that they communicated through established export control dialogue channels. The purpose of these restrictions is to protect national security, and they do not target any specific country. Starting August 1, China will impose restrictions on the export of gallium and germanium, two metals used in semiconductor manufacturing. Companies in China will need to apply for licenses to export these metals, of which China is the largest producer in the world. Despite the announcement, the ministry has not received any applications for export licenses yet. According to the ministry spokesperson, the export restrictions are not a complete ban on exports, and applications that meet the requirements will be approved. However, specific details were not shared. The US Treasury Department, Office of the US Trade Representative, and the EU Commission have not responded to CNBC's request for comment. Analysts believe that China's new licensing regime is meant as a warning to the US, Japan, and the Netherlands, following their trilateral agreement earlier this year to coordinate chip export controls. Japan, Germany, and the Netherlands are the top importers of Chinese gallium, while Japan, France, Germany, and the US lead in germanium imports. The announcement of the export curbs comes right before US Treasury Secretary Janet Yellen's visit to China. Meanwhile, China's Ministry of Commerce revealed that Minister Wang Wentao had a meeting with foreign pharmaceutical companies, including GE HealthCare and Pfizer. The ministry intends to establish regular roundtables with these businesses to address their concerns. However, GE HealthCare and Pfizer have not responded to CNBC's request for comment. Conclusion: Impact on New Business The recent announcement of export controls on gallium and germanium by China's Ministry of Commerce has raised concerns about the potential impact on new businesses operating in the semiconductor manufacturing industry. As China is the largest producer of these metals, the restrictions could have significant consequences for companies that rely on these materials for their operations. For new businesses in this sector, the imposition of export restrictions could present challenges in terms of securing a stable supply of gallium and germanium. Obtaining the required export licenses may add complexity and delays to the procurement process, potentially affecting production timelines and overall business operations. The lack of specific details regarding the licensing requirements further creates uncertainty for companies planning to engage in international trade involving these metals. Moreover, the timing of this announcement, just before US Treasury Secretary Janet Yellen's visit to China, indicates a possible message being sent to the US, Japan, and the Netherlands. Given the trilateral agreement to coordinate chip export controls among these countries, it is crucial for new businesses to closely monitor the evolving geopolitical dynamics surrounding the semiconductor industry. However, the Ministry of Commerce's intention to establish regular roundtables with foreign pharmaceutical companies, including GE HealthCare and Pfizer, demonstrates a willingness to address concerns and maintain communication channels. This may provide some assurance to new businesses that the Chinese government is open to dialogue and cooperation in certain sectors. In conclusion, new businesses in the semiconductor manufacturing industry should carefully navigate the evolving export controls on gallium and germanium. They should seek alternative supply sources, explore opportunities for international collaboration, and stay informed about potential policy changes that may impact their operations. Building strong relationships with relevant government bodies and participating in roundtable discussions can also help address concerns and ensure a more stable business environment. Article First Published at: https://www.cnbc.com/2023/07/06/china-says-it-told-us-europe-about-chip-metals-export-controls-in-advance.html