China is taking revenge on the West

The Chinese government's trade policy adviser says his country's export controls on semiconductor metals are "just the beginning."

The ongoing chip wars between the US and China have taken on a new dimension. The decision to retaliate from China came as Washington considers imposing new restrictions on exports of artificial intelligence chips to Beijing.

A Chinese official announced that Beijing will further tighten export controls on metals used in the semiconductor industry if some countries continue to put pressure on China.

Escalating Technology War with US Shortly before US Treasury Secretary Janet Yellen's visit to Beijing, the Chinese government's trade policy adviser said his country's export controls on metals used to build semiconductors are "just the beginning".

After the announcement from Beijing, shares of Chinese metallurgical companies rose on the stock exchange. Expectations that an increase in gallium and germanium prices could increase their revenues were instrumental in this increase.

Minerals banned by China

Germanium is used in high-speed computer chips, plastics, night vision devices, and military hardware such as satellite image sensors, while gallium is used in the construction of radar, radio communications, satellites, and lamps.

China's announcement that it will control the export of some gallium and germanium products, which are also used in electric cars and fiber optic cables, starting from August 1, prompted companies to make extensive efforts to supply and increase prices.

According to analysts, Beijing's decision is the latest move in the trade war with Washington.

Also, this situation is a harbinger of a deep crisis in the global chip supply chain.

Analysts also point out that the decision, announced on the eve of US Independence Day, is a message to the Biden administration that China is targeting the chip sector and wants its allies such as Japan and the Netherlands to take steps in the same direction. He said Beijing's move also raises concerns about whether it will restrict the export of rare earth elements.

Well thought out heavy punch

Wei Jianguo, China's former vice minister of commerce, told China Daily that countries should be prepared for more if it continues to pressure China, calling the restrictions a "well-thought-out heavy punch" and "just the beginning."

"If restrictions targeting China's high-tech sector continue, countermeasures will increase," Wei, who served as vice minister of commerce from 2003 to 2008 and is currently vice president of the state-backed China Research Center for International Economic Exchanges, said in December.

An editorial published in the state-backed Global Times on Tuesday commented that the move was a "practical way" to tell the United States and its allies that efforts to prevent China from providing advanced technology was a "miscalculation."