After China’s mineral export ban, how else could it respond to U.S. chip curbs?

China has banned exports to the U.S. of some goods containing critical minerals while tightening exports on others, after U.S. curbs a day earlier on the Chinese chip industry.

Following is background on export controls and other steps that analysts say Chinese authorities might take to safeguard China and its companies' interests.

DUAL-USE

On Dec. 3 China banned exports to the U.S. of items related to gallium, germanium, antimony and superhard materials, the latest escalation of trade tensions between the countries ahead of President-elect Donald Trump taking office.

China had already on Dec. 1 enforced new regulations on exports of so-called dual-use products that have both civilian and military applications.

That had seen it create a unified and simplified export control list while also requiring Chinese exporters of dual-use items to disclose details about end users.

The move allows Beijing to better identify supply chain dependencies on China within the U.S. military-industrial complex. Critical minerals are among these items, as China dominates global mining and processing of rare earth materials.

It already this year imposed export limits on antimony, a strategic metal used in military applications such as ammunition and infrared missiles, and in October 2023 put curbs on graphite products that go into electric vehicle batteries.

In July 2023, China announced restrictions on the export of eight gallium and six germanium products, metals widely used in chipmaking, citing national security interests.

In December 2023, China banned the export of technology to make rare earth magnets, which came on top of a ban already in place on exporting technology to extract and separate the critical materials.

SECURITY REVIEWS

Beijing's announcement in May last year that it would block some government purchases from Micron after the U.S. memory chip maker failed a security review is widely regarded as one of China's first retaliatory moves in the U.S.-China chip war.

Concern has grown that U.S. tech giant Intel could be a future target, after the Cybersecurity Association of China alleged the American firm had "constantly harmed" the country's national security and interests and that its products sold in China should be subject to a security review.

Intel is one of the largest providers of chips used in electronic devices including personal computers, and traditional servers in data centres in China. It received over a quarter of its total revenues from China last year.

Retaliatory action could also happen via other channels. U.S. business chambers in China have in past years complained of U.S. firms facing increased issues such as slower customs clearance and more government inspections during times of escalated tensions such as the U.S.-China trade war.

UNRELIABLE ENTITIES LIST AND ANTI-FOREIGN SANCTIONS LAW

China in September announced that it would probe U.S. firm PVH Corp, which owns fashion brands Tommy Hilfiger and Calvin Klein, for "unjustly boycotting" Xinjiang cotton and other products under the unreliable entity list (UEL) framework.

That was the first time Beijing had taken action against a company for removing Xinjiang cotton from its supply chain to comply with U.S. rules, and one of the few times it had used the UEL since the list's creation.

Beijing created the list during the first Trump presidency and threatened to ban U.S. companies from importing, exporting and investing in China.

To date the list has included U.S. companies involved in the sale of arms to Taiwan such as Lockheed Martin and RTX's Raytheon Missiles & Defense.

China also has an anti-foreign sanctions law in effect since June 2021, which it uses to target foreign companies that it deems to have harmed the country's national security or caused Chinese firms to be sanctioned.

When U.S. drone manufacturer Skydio was sanctioned under the law in October, that quickly cut off the company's supply of batteries, according to the Financial Times.

"As containment (of China) intensifies, more U.S. industries, businesses and the entire economy will pay an increasingly heavy price," state-owned outlet Global Times wrote in an opinion article about Skydio in November.