Embargoes have unintended consequences—and would hurt China more than the West.
Weaponizing commodities is in fashion. In September 2022, Russia cut off gas flows to Europe in a bid to weaken European economies after its invasion of Ukraine. Almost one year later, in July 2023, the Chinese government announced that exports of gallium and germanium, two niche metals used in technology manufacturing, would henceforth require licenses.
These metals share two features. First, they form part of a group of around 30 raw materials that are crucial for the green energy transition, digital hardware, and defense production. Second, as is the case for many critical raw materials, China holds a dominant position for the mining and processing of gallium and germanium, giving Beijing leverage over Western economies.
Chinese threats to clamp down on exports of critical raw materials have raised alarm bells in Western capitals. According to the U.S. Geological Survey, a 30 percent cut in the supply of gallium available to U.S. companies could shave around 2 percentage points from projected U.S. GDP growth, a similar economic hit to that taken by Europe following Russia’s gas embargo.
How serious is the Chinese threat? Here, the Kremlin’s decision to weaponize gas flows is an instructive precedent. The Russian embargo holds five lessons that should caution Chinese leaders against carrying out with their threats.
For the rest of this article: https://foreignpolicy.com/2023/07/27/china-critical-minerals-metals-embargo-russia-sanctions-energy-natural-resources/?tpcc=recirc_latest062921