China’s critical minerals export ban falls short

As geopolitical contestation between the world’s two largest economies shows no signs of slowing, export controls have emerged as one of the most favoured tools for competition. In the past three years, both the US and China have resorted to a wide range of export control measures to impose costs on one another and test each other’s resilience.

One such battle was fought over access to gallium and germanium — critical to the manufacturing of semiconductors and defence equipment. China’s dominance in the production of primary low-grade gallium and germanium and the US’s overwhelming dependence on imports enabled Beijing to potentially weaponise the world’s dependence.

Accordingly, in July 2023, China imposed export restrictions on the sales of these two elements. It imposed licensing requirements on Chinese exporters and tightened end-user controls in an attempt to specifically target the US. The restrictions came into effect from 1 August 2023.

Later, on 3 December 2024, China further tightened the export controls and imposed a total ban on the sales of gallium and germanium to the US. The United States Geological Survey (USGS), in its November 2024 report, estimated that a total ban on exports of gallium and germanium from China could cost the US about US$3.4 billion in GDP.

China suspended its export controls on gallium and germanium on 9 November 2025, with the suspension effective immediately and lasting until 27 November 2026. Even with the restrictions now eased, a few questions remain. Did China succeed in inflicting strategic pain on the US? Or did the US manage to weather the impact of export controls?

Three distinct metrics become key to evaluating the policy success or failure of China’s export control. First, the variation in the US’s industrial consumption of gallium and germanium, since the primary aim was to choke the supplies. Second, whether the US attempts at substitution — both by source and product — succeeded. And third, the price variation for the US as a result of export restrictions. A drastic increase in the economic cost for the US would mean a victory for China.  

The US’s imports of gallium are primarily a mix of gallium metal and gallium arsenide. The data suggests that China managed to squeeze the US’s gallium imports substantially during 2023 and 2025. In volume terms, the gallium arsenide imports in the three years between 2023 and 2025 averaged around 140,000 kg as opposed to 424,000 kg in 2022 alone. The imports of gallium metal, however, followed a diverging trend. Not only did it remain stable in 2023 and 2024, but it also recorded a near 250% year-on-year increase in 2025.

Notwithstanding the cumulative fall in imports of gallium, both by value and volume, the US’s industrial consumption of gallium remained insulated from the effects of China’s export controls.

Despite disruption in supplies for most of the second half of 2023, the US’s annual consumption in 2023 declined by less than 10% compared to the peak of 19,700 kg recorded in 2022. In 2024, while the licensing restrictions continued to be in operation, the US’s consumption was just 5% short of the 2022 figures. And subsequently, in 2025, despite the blanket ban in force, the US industrial consumption of gallium remained stable at over 19,000kg — just 3.5% short of 2022 figures.

Unlike gallium, which at least witnessed a decline in imports, China’s export restrictions failed to even enforce a contraction in the US’s imports of germanium, which mainly comprises the metal and dioxide.

The US annual imports by volume showed little negative pressure in 2023, despite disruptions from license acquisition delays for most of the second half of that year. In fact, while germanium metal imports increased from 14,000 kg to 22,000 kg, imports of germanium dioxide declined marginally from 15,000 kg to 14,000 kg. In the following year, defying restrictions, the US imports of germanium metal stood at 21,000 kg.

Thus, for two continuous years, the US imports of germanium metal stood at over 150% of its previous two years’ average of around 13,500 kg — suggesting aggressive stockpiling efforts. Accordingly, in 2025, the US imports of germanium metal stood at a mere 7,000 kg. In the three years from 2023-2025, the average US imports of germanium metal stood at around 17,000 kg, higher than the two-year average of around 13,500 kg between 2021 and 2022. 

On the other hand, imports of germanium dioxide declined in 2024 to 11,000 kg from 14,000 kg in 2023, before sharply rebounding to 17,000 kg in 2025, when the blanket ban was in effect. This suggests that China’s export restrictions, per se, did not impact the US imports in the first place. Furthermore, the fact that the US maintains a national stockpile of germanium (undisclosed) and has an extensive capacity to recover germanium from scrap suggests that there is a greater likelihood that the US’s industrial consumption remained unaffected.  

The US also succeeded in achieving substantial diversification, thereby reducing its direct import dependence on China. The US cumulative dependence on China for imports of gallium metal reduced drastically from around 53% during 2018-21 to just 21% during 2019-22, suggesting a significant decline in 2022. It further dropped to 18% during 2021-24.

As for gallium arsenide, which makes up an overwhelming majority of the US’s gallium imports, China’s share has historically been low given the latter’s limited capability in producing arsenide wafers. Between January 2021 and July 2023, when the licensing requirements were introduced, China’s share averaged a mere 4.8%. Between July 2023 and October 2024, the share dropped below 1%.

In November 2024, just a month ahead of China’s announcement of a blanket ban on export of gallium to the US, its share soared to over 79%, before dropping to its earlier levels. Eventually, US imports of gallium arsenide from China stopped in April 2025 and have remained so since then. The US also expanded its domestic production of gallium arsenide and gallium nitride wafers.

The US’s dependence on China for germanium hasn’t been high either. For instance, the US’s cumulative direct import dependence on China for germanium metal during 2016-19 stood at 58%. However, this dropped to 41% during 2021-24.

As for germanium dioxide, the US sourced over 93% of its requirements from Belgium and Canada alone. In terms of overall dependence, too, the US’s import basket is substantially diversified, with over 75% of its needs being met from countries other than China.

Moreover, the US has also scaled its domestic capability to both produce and recover germanium. Thus, the US succeeded in diversifying away from China while managing to keep its gallium and germanium consumption afloat.

Prices for both the elements can vary based on grade (high- or low-purity), distribution (wholesale or retail), and market (international, or within China). Data compiled from various sources indicates that average prices witnessed a massive spike for both gallium and germanium since July 2023, when restrictions first came into force. The maximum appreciation was seen for international retail prices. By January 2026, retail prices had appreciated by two-and-a-half times since January 2023.

The average annual import prices for gallium and germanium reported by the USGS also indicate substantial cost escalation. For gallium, the cumulative price rose by over 200%. For germanium, the US reported a nearly threefold increase for both germanium dioxide and germanium metal between 2023 and 2026. 

China’s action did succeed in raising costs for the US economy. But beyond inducing a price spike, the effectiveness of the export measures remained limited.

To begin with, the divergence of interests between the government and businesses perhaps also undermined the intended objective. A lack of alignment in their respective interests often gives way to black marketing, smuggling and rerouting. Further, a single-country ban undermines the effectiveness of export controls by allowing leakage via a third country.

But there is another factor, much more significant, that determines the effectiveness of export controls. It pertains to whether dependence is a result of market forces or a significant capability differential. Similarly, the lack of alternatives may reflect either market forces or a capability gap.

In cases where the requisite capability is diffused, but the market acts as an inhibitor, a sustained price rise can break the monopolistic dominance. China’s predominant position in the production of gallium and germanium is a product of its price competitiveness. Hence, the market can solve for the distortion if the prices remain elevated for long.

However, given China’s overwhelming dominance in the global production of these two elements, it can also discourage such substitution efforts by flooding the global market with cheap supplies.

Consequently, in such a scenario, state intervention becomes key to mitigating the impact and building resilience. Besides offering subsidies, the options range from acquiring equity stakes in enterprises that are potential alternatives, assuring a minimum price floor for emerging alternatives, and providing preferential market access by mandating domestic content requirements. The US has already experimented with some of these.

However, for the market and the state to work in tandem to break the monopolistic dominance of the coercive state requires one precondition: the differential capability between the coercive and dependent country or the rest of the world is not significantly high. If the differential capability is significant, as in the case of advanced photolithography tools, export control can be relatively effective.

If not, export restrictions may fail to achieve the desired results. Beijing’s dominance of gallium and germanium belongs to the latter category. Its sustained weaponisation of resources is likely to trigger greater global diversification in the long run.

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