China es un importante productor de galio primario y refinado.\u00a0La capacidad primaria de galio de China es en gran medida un subproducto de la industria del aluminio\u00a0del pa\u00eds.\u00a0En 2021, China represent\u00f3 el 29%\u00a0de las exportaciones mundiales de galio y consumi\u00f3 una parte significativa de su capacidad de fabricaci\u00f3n a nivel nacional.<\/p>\n
On July 3, China\u2019s Ministry of Commerce announced<\/a> that it would impose restrictions on the export of gallium and germanium for reasons of national security. The move, widely seen as a response<\/a> to U.S. restrictions on technology sales and transfers to China, targets key elements within the Department of Defense\u2019s (DOD) supply chain<\/a>. The announcement has sparked renewed concern in the United States about its dependence on critical mineral imports from China. However, current and future production capacities in Japan, Germany, and Australia undermine the power of this most recent Chinese economic swipe at the United States.<\/p>\n Q1: What is gallium and why does gallium nitride matter? <\/strong><\/p>\n A1:<\/strong> Gallium is a \u201csoft, silvery metallic element\u201d that has a similar structure to silicon and is used in advanced microelectronics. Gallium compounds have a wide range of applications<\/a>, ranging from semiconductors to LEDs. Primary gallium production is a by-product of bauxite or zinc processing and generally relies on sodium aluminate or zinc sulfate solution to extract gallium. Recycling plants can recover gallium<\/a> from production scrap of other gallium-based devices. Refineries use fractional crystallization and zone refining to increase the purity of gallium created by primary production or recycling. Globally, gallium production is geographically constrained, and the United States is wholly dependent on foreign sources\u2014including China.<\/p>\n Gallium compounds are key inputs to some advanced U.S. defense systems and, by extension, the DOD supply chain. Gallium nitride (GaN) is used in the U.S. Navy\u2019s AN\/SPY-6<\/a> radar and the U.S. Marine Corps\u2019 AN\/TPS-80 G\/ATOR<\/a> radar. Additionally, GaN is increasingly used in advanced microelectronics<\/a>. These two industrial applications mean that gallium is essential to the global supply chain for both military and civilian applications.<\/p>\n Q2: How large is China\u2019s role in the global market, and how could that impact the effectiveness of these restrictions?<\/strong><\/p>\n A2:<\/strong> China is a major producer of primary and refined gallium. China\u2019s primary gallium capacity largely is a by-product of the country\u2019s aluminum<\/a> industry. In 2021, China accounted for 29 percent of global exports of gallium and consumed a significant portion of its manufacturing capacity domestically. While China is the global leader<\/a> in gallium production, it is not the only player in the global supply chain. Gallium is a commodity, and a handful of other nations make up an important share of global production. China\u2019s lack of a chokehold on the global supply chain may undercut the effectiveness of its sanctions to such a degree that they may be mostly symbolic\u2014by intent or otherwise.<\/p>\n Q3: Outside of China, which nations play a role in the global gallium supply chain?<\/strong><\/p>\n A3:<\/strong> Japan is a major player in worldwide gallium production, with three methods of production. First, Japanese companies can import lower purity gallium and refine<\/a> it. Many of these companies currently rely on China for primary gallium imports<\/a> as a low-cost input. However, refining imported gallium will still be possible with Chinese export controls, as China only has a 22 percent share<\/a> of Japan\u2019s imports of gallium and other critical minerals. Second, Japan produces gallium by recycling globally available scrap, which will be slowed but not halted by Chinese export controls. Lastly, Japan also has its own primary gallium production, carried out by the DOWA Metals and Mining Company using by-products of smelting zinc imported from Mexico, which is outside of Chinese control. These three sources of gallium, some totally insulated from China, make Japanese production relatively resilient to supply chain pressures from China.<\/p>\n Several U.S. allies have the capacity to restart primary production of gallium. Germany\u2019s Ingal Stade GmbH produced primary gallium in Germany until it ceased operations in 2016. In 2021, the company announced plans to restart gallium production in response to increased global prices. Though there is currently no gallium production in Australia, the country was also previously a major producer and has numerous sources of zinc and bauxite, which are key to gallium production. A mothballed facility located near Alcoa\u2019s Pinjarra alumina refining plant could provide Australia with a surge capacity.<\/p>\n Chinese export controls limiting low-cost mineral availability and growing global demand will lead to higher gallium prices in the coming years. These market conditions could spur the same reopening process in Australia that is underway in Germany, leading to greater production of gallium by reliable U.S. allies.<\/p>\n Q4: How will these controls impact U.S. defense manufacturing?<\/strong><\/p>\n A4: <\/strong>China may have targeted gallium because of its role in the DOD supply chain. While targeting the DOD supply chain is difficult at the commodity level since most commodities are dual use, gallium plays a unique role in some modern military systems. Gallium has long been identified as an important component in high-energy radars, given its ability to handle high voltages at high temperatures. Leading-edge U.S. military radars, including the AN\/SPY-6 and AN\/TPS 80, rely on gallium to support their antennas and other essential components. This makes gallium essential to the DOD, because it is needed in critical systems and cannot be easily substituted. Gallium is also used commercially in technologies ranging from electric cars to phone chargers. Because gallium is dual use, and there is a network of suppliers that are not reliant on China, the short- and long-term threat to the DOD and the defense industrial base is likely minimal. Costs may rise as demand grows relative to supply, but China will not be able to completely cut off access.<\/p>\n Q5: How do these export restrictions fit within the broader context of Chinese economic and supply chain coercion? <\/strong><\/p>\n A5:<\/strong> China likely enacted these export controls in response to the United States, the Netherlands, and Japan\u00a0restricting\u00a0China\u2019s access to some of the world\u2019s most complex semiconductor manufacturing equipment. This would follow a long-running Chinese tactic of attempting supply chain coercion in response to foreign pressure. In 2010, China blocked rare earth exports to Japan; in 2019, China informally sanctioned South Korea for deploying the terminal high-altitude area defense system (THAAD); and in 2021, China stopped importing lasers from Lithuania in response to its recognition of Taiwan. Threatening supply chains is clearly part of China\u2019s coercive playbook. What makes the restriction of gallium interesting, however, is that other global sources clearly exist. Chinese leaders may have been intending to send a deliberately weak signal to both save face and prevent further escalation.<\/p>\n Regardless of China\u2019s intent, the United States still lacks the policy tools to meaningfully respond to Chinese economic and supply chain statecraft. Some have suggested that deterrence by denial may be the best approach while others have advocated for coordinated export controls between partners and allies. Regardless of the approach, the United States and its allies would clearly benefit from tools to economically respond to China. This will certainly not be the last time that China deliberately seeks to threaten global supply chains, and the United States and its allies and partners should be prepared to respond in kind.<\/p>\n