By Rhod Mackenzie
It will be Europe that will suffer the most from the restrictions on the export of gallium and germanium announced by China from August 1. It is a united Europe that is now leading the way in the "green" transition, the replacement of fossil fuels with renewable energy sources.
China is the world's largest producer of these very rare and very expensive metals, located next door in the 14th group of the periodic table and are used in electronics, mainly in semiconductors, telecommunications and electric vehicles. China accounts for about 60% of the world production of germanium (the rest is produced by Canada, Finland, Russia and the USA). Last year, according to Chinese customs, Beijing exported 43.7 tons of this metal. As for gallium, the share of China in its production is almost 80%, and 94 tons were exported last year, which, by the way, is 25% more than last year.
Europe receives from China, notes Bloomberg, 71% of the gallium it needs and 45% of its germanium. No less is the dependence and, consequently, the vulnerability of the United States on Chinese supplies of gallium and germanium, despite the fact that the market for these metals last year was estimated at only $225 million. By the way, the size of the market is not surprising, because 1 kg of gallium costs $245, and germanium costs $1264.
The decision to limit the export of these critical metals comes just weeks after the EU adopted a new economic security strategy that focuses on the export of important European technology and allows for restrictions on outside investment if it could threaten national security. The strategy is not particularly well advertised, but is adopted mainly against China and Russia, which Brussels, in turn, accuses of using the tactics of using trade and control of critical materials and raw materials for political and even military purposes.
“What China has done,” says Simone Tagliapietra of the Brueghel Research Center, “reminds everybody once again of the harsh reality that it will take at least a decade for the West to shake off its dependence on China for these important minerals.”
The EU has been waging a unilaterally declared trade and economic war against Russia since February last year, imposing 11 packages of sanctions against Moscow and ditching the import of most Russian oil and gas.
The picture is approximately the same in the relations of the united Europe with China. Just like with Russia, not all European countries are ready to refuse or reduce profitable trade ties with the Celestial Empire. The nearly 7 trillion dollar Chinese market is vital to the European auto, engineering and pharmaceutical industries. Suffice it to say that the German automakers Volkswagen AG, Mercedes-Benz AG and Bayerische Motoren Werke AG have built dozens of factories in China and that they sell more cars in China than in any other country on the planet.
The toughening of the European strategy in relations with China was, of course, not without the United States, which strongly advised the allies to take a tough stance. After consultations with Washington, European Commission (EC) President Ursula von der Leyen began to speak regularly about the threat of too close a level of cooperation with China and the need to significantly limit it. In March, the Critical Raw Materials Act came into force in the EU, designed to reduce the continent's dependence on Chinese suppliers. Washington and Brussels are actively discussing the creation of a "buyers" club, also directed against China and Russia.
“China is increasing not only its military capabilities, but also the policy of disinformation and economic and trade pressure on other countries,” von der Leyen recently stressed.
Europe is fighting China not only at the level of the entire Union, but also at the level of individual countries. The Netherlands, for example, announced last week a ban on the sale of certain state-of-the-art chip-making equipment to the Dutch company ASML Holding NV, which has a near-exclusive monopoly in the industry.
The EC may file a complaint with the WTO about Chinese restrictions on the export of gallium and germanium. However, the investigation and decision can take years. In addition, Beijing is likely to take advantage of a loophole in the WTO rules and claim that restrictions on the export of gallium and germanium should protect China's national security.
Brussels is worried that interruptions in the supply of gallium and germanium could slow down the "green" transition of the continent, in which these metals play an important role.
“Europe is now very dependent on China for cleantech and critical raw materials,” agrees Tagliapietra. “Escalating tensions could make it difficult for the continent to make a green transition.”
This article originally appeared in Russian at expert.ru