China is putting pressure on the European Union to try to halt its attempt to rebuild a solar panel manufacturing industry. In response to the decision to increase production, cut prices by about 25% and drive European companies out of the market, the Beijing government has been applying export controls on two key critical materials for the production of semiconductors and panels since August last year itself: gallium and germanium.
Under the new controls, special licenses will be required to export gallium and germanium from the Asian country, the world’s second-largest economy. According to the Critical Raw Materials Alliance, China produces 80% of the world’s gallium and 60% of germanium, meaning it controls a key point in the production of both products.
Brussels, for its part, is simultaneously promoting the new critical minerals regulations to restore the production of some of these key elements on European territory, while promoting the Critical Minerals Members Club – with the support of the Global Gateway Funds – with which they can work together to accelerate the energy transition, in return for being able to use their natural resources.
Beijing’s move comes after the United States and other major microprocessor makers such as Japan and the Netherlands announced restrictions on exports of key technology for making more advanced chips in the country, amid competition from Taiwan, which continues to lead production of the most advanced microprocessors.
China and the United States have been in a technology trade war that has been intensifying since 2019. Measures used included the United States using trade blacklists and export restrictions to isolate China.
Now the fight is reaching the wind industry. The problems of European manufacturers like Siemens Gamesa are leading to the emergence of Asian manufacturers who are starting to win orders.
On this occasion, Brussels reacted quickly to avoid the loss of this industry – as with solar energy – and announced a package of support measures. Trade swords are being raised and eyes are on the entry into force of the new Border Adjustment Mechanism (CBAM), which could impact Chinese exports.
