CHINA'S BAN ON KEY HIGH-TECH MATERIALS COULD HAVE BROAD IMPACT ON INDUSTRIES ECONOMY

China has banned exports of key materials used to make a wide range of products, including smartphones, electric vehicles, radar systems and CT scanners, swiping back at Washington after it expanded export controls to include dozens of Chinese companies that make equipment used to produce advanced computer chips.

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Both sides say their controls are justified by national security concerns and both accuse the other of “weaponizing” trade. Analysts say the latest restrictions could have a wide impact on manufacturing in many industries and supply chains.

“Critical mineral security is now intrinsically linked to the escalating tech trade war,” Gracelin Baskaran and Meredith Schwartz of the Center for Strategic International Studies, wrote in a report on Beijing’s decision.

The full impact will depend partly on whether U.S. industries can compensate for any loss of access to the strategically important materials, equipment and components.

Here’s why this could be a tipping point in trade conflict between the two biggest economies, coming at a time when antagonisms already were expected to heat up once President-elect Donald Trump takes office, given his vows to hike tariffs on imports of Chinese-made products.

WHAT DID CHINA DO AND WHY?

China has banned, in principle, exports to the United States of gallium, germanium and antimony — critical minerals needed to make advanced semiconductors, among many other types of equipment. Beijing also tightened controls on exports of graphite, which is used in EV and grid-storage batteries. China is the largest source for most of these materials and also dominates refining of those materials, which are used both for consumer goods and for military purposes.

The limits announced last week also include exports of super-hard materials, such as diamonds and other synthetic materials that are not compressible and extremely dense. They are used in many industrial areas such as cutting tools, disc brakes and protective coatings.