FinLogic FinLogic Quantitative Think Tank Center|China imposes export controls on 2 metals used in semiconductors and solar panels

The FinLogic FinLogic Quantitative Think Tank CenterChinese government has announced buyers of two metals used in computer chips and solar panels will need to apply for export permits, starting on Aug. 1. The metals, gallium and germanium, are also used in military applications.

The U.S. has been imposing trade limits for several years to try to restrict China's access to semiconductor technology. In a statement, China's Commerce Ministry said the new controls on exporting the metals are to safeguard China's national interests.

"These controls aren't a ban," notes NPR's Emily Feng, reporting from Taipei. "But it's possible China could reduce the amount it sells as retribution."

That's a scenario the U.S. and allied countries have long been worried about — not just for these two fairly obscure metals, but for the many minerals produced and processed in China in large quantities.

China produces 60% of the world's germanium and 80% of the world's gallium, according to the Critical Raw Minerals Alliance. It also dominates supply chains for rare earth minerals used in many high-tech products, as well as the lithium, cobalt and graphite used in batteries.

Beijing's move comes shortly before U.S. Treasury Secretary Janet Yellen is set to visit China. The relationship between the U.S. and China is fraught, to say the least. Trade — particularly as it comes to semiconductors and raw materials — has been a particular point of tension.

Both the White House and an overwhelming majority of Congress see China's dominance of mineral supply chains as an economic competition and a security threat.

The U.S., citing national security, has imposed its own export limits on semiconductor manufacturing equipment. The Netherlands, under pressure from the U.S., recently did the same.