The two global powers have been imposing mutual export controls for months, each trying to limit the other’s progress in advanced tech and AI sectors.
China has recently halted the export of rare but crucial earth elements to the US, which are essential for making high-tech semiconductors. This move marks the latest escalation in the ongoing technological rivalry between the US and China.
Beijing made the announcement on Tuesday, just a day after the US tightened its chip export restrictions aimed at hindering China’s development of advanced weapons and artificial intelligence.
So, why are the US and China locked in a high-stakes tech conflict—and why is this important?
What is driving the US-China tech dispute?
For several months, both countries have been trading restrictions in an effort to limit each other’s technological growth. The US wants to stall China’s progress in military technologies, artificial intelligence, and green energy leadership.
This back-and-forth has disrupted global chip supply chains and driven up costs for semiconductor producers.
Under President Joe Biden, relations with China have reached a low point, fueled by disputes over tech, Beijing’s growing military strength, its human rights record, and what the US deems aggressive regional activities, including military operations in the contested South China Sea.
This week’s developments precede President-elect Donald Trump’s inauguration in January. He’s known for his tough stance on China and has vowed to implement even harsher penalties and a steep 60 percent tariff on all Chinese goods.
What took place this week?
On Monday, the US escalated tensions by expanding limits on chipmaking gear and blacklisting numerous Chinese firms.
This new package blocks shipments to China of high-bandwidth memory (HBM) chips—vital for AI training—alongside 24 chip tools and three software systems. It also applies to tools manufactured in places like Malaysia and Singapore.
US officials stated the aim is to delay China’s advancements in AI and semiconductor production, which are crucial for modern technologies.
Additionally, 140 companies were added to the “entity list,” barring them from dealing with US firms or allied nations. Included were China-based Piotech and SiCarrier, a close partner of tech giant Huawei.
US National Security Adviser Jake Sullivan called the measures essential for safeguarding national security.
“We will continue to work with allies to protect our critical tech and ensure it doesn’t threaten our security,” he said.
Since 2022, the Biden administration has steadily cut off China’s access to advanced US chips and tech through what it calls a “small yard, high fence” strategy—an expansion of Trump-era tech policies. The prior round of sanctions was introduced in October 2023.
These sanctions often extend to non-US firms, particularly those from allied countries. For example, the US has convinced Japan and the Netherlands—leaders in chip tech—to join in limiting China’s access.
The Netherlands began enforcing these restrictions in September 2023. Japan is considering similar action, though a formal agreement is still pending.
Following Monday’s ban, the Dutch said they agree with US concerns and are reviewing the latest curbs to decide on further action.
How did China respond to the new restrictions?
After the US issued its new export ban, China declared it would defend its “rights and interests” by restricting dual-use product exports—items that serve both civilian and military functions.
On Tuesday, China’s Commerce Ministry declared a ban on gallium, germanium, and antimony exports to the US. These minerals are crucial in semiconductors, weapons manufacturing, and other industrial uses.
This move extends earlier rules. In July 2023, China required special licenses to export gallium and germanium to the US. By October, it had also restricted graphite sales, a key material for electric vehicle batteries.
The updated rules now cover lab-grown diamonds and other synthetic hard materials used in industries. Exporters must now identify the final users of these goods so China can trace links to US firms.
Officials in Beijing argue the US is overusing export controls and deliberately hindering China’s technological rise.
“We strongly oppose the US misuse of national security and illegal sanctions targeting Chinese businesses,” said Foreign Ministry spokesman Lin Jian.
Chinese trade groups also criticized the US bans, warning that they disrupt supply chains and raise costs for US firms.
The China Association of Automobile Manufacturers stated that such moves “go against market rules, disrupt fair competition, damage trade order, and hurt global interests.”
Why are these minerals significant?
Many of the banned elements are rare and difficult to mine but are vital in modern tech, defense, and electronics. Semiconductors and AI depend heavily on them.
Gallium is used in LED displays, car tech, solar panels, and cutting-edge weapons. Antimony plays a role in battery production and military hardware like night-vision goggles and munitions.
These materials are hazardous to extract, making production costly and environmentally harmful. China leads the world in gallium production, with 600 tonnes in 2022 and a 98 percent share of global exports. It’s also a major chip producer.
The US relies on China for over half its gallium and germanium, as it has no domestic production. However, in March, a US mining firm reported finding gallium-rich deposits in Montana.
Taiwan, another key player, supplies more than 60 percent of the world’s advanced chips. The island is a major flashpoint between the US and China—Beijing claims it as its own, while Washington supports its autonomy.
What’s likely to happen next?
Experts believe a Trump administration would further tighten restrictions on chip exports and high-tech sales to China to stall its progress.
But such moves come at a cost—global tech firms dependent on semiconductors face soaring expenses. Antimony prices alone have more than doubled in 2024 to over $25,000 per tonne. Gallium, germanium, and graphite have also seen steep price hikes.
