context: The US announced further restrictions on advanced semiconductor exports to 140 PRC companies on 2 December 2024. The Ministry of Commerce responded swiftly with tit-for-tat measures, stopping exports of some critical minerals used in semiconductors to the US such as gallium, germanium, antimony and ultra-hard materials. As PRC–US high-tech rivalry intensifies, similar sanctions may follow, exacerbating decoupling as both sides step up 'self-reliance' drives.
Huo Jianguo 霍建国 China Society for WTO Studies vice director shares his insights on the Ministry of Commerce's latest measures
- objectives
- safeguard national security and interests
- fulfil its international obligations, such as preventing proliferation
- countermeasure against the US' abuse of export control measures and unilateral hegemonic practices
- rationale of the measures
- exert greater pressure on the US in procuring these critical minerals
- with the PRC's dominance in the export of these products and relevant technological processes, the US faces challenges in finding alternative suppliers
- these supply contracts are usually long-term and fixed, it is hard to switch suppliers easily
- with the PRC's dominance in the export of these products and relevant technological processes, the US faces challenges in finding alternative suppliers
- the measures are aimed to let the US' feel the 'pain' and costs from unilateralism so that it would return to the negotiating table with the PRC
- exert greater pressure on the US in procuring these critical minerals
- future strategies for the PRC
- PRC retaliatory measures may expand beyond entities and assets in PRC, to impact entire global industry chains related to the PRC
- the PRC will work together with other like-minded cuntries to raise the US' costs for its radical containment strategy
- three key significances of the measures
- demonstrates the PRC's determination to defend its development rights and push for industrial upgrades
- targets the US military-industrial complex and semiconductor industry directly
- aims to deter further US provocations and encourage a more rational approach
- facing higher pressure, US chip manufacturers are likely to put more pressure on the incoming Trump administration
- relevant PRC industry associations in internet, semi-condutor and automobile are also calling for 'cautious procurement' of US chips and to step up domestic chip production
- PRC market influence as the world's largest market will put even more pressure on US chip firms