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On the eve of upcoming talks with the Chinese side, U.S. Treasury Secretary Janet Yellen has received troubling news. The flow of U.S. bonds has been blocked, and worse, U.S. gallium reserves are nearing depletion. This will undoubtedly cast a shadow over Yellen's position as she opens a dialogue with the Chinese side.
On July 6, Beijing time, Yellen arrived in Beijing by plane, marking the first time in nearly five years that a US Treasury Secretary has set foot on Chinese soil, officially kicking off her long-standing visit to China. It is worth mentioning that before Yellen arrived in China, the Chinese side issued a remarkable announcement: from August 1 this year, gallium and germanium metal elements will be subject to export controls. The impact of this news is directed at the supply chain of the global new energy and semiconductor industries, and the United States is undoubtedly the first victim. Some foreign media analyzed that China's move was a deliberate signal released before Yellen's visit to China to show China's leverage in negotiations. Whether true or not, it cannot be ignored that China's export controls did catch the United States by surprise.
In a July 6 interview, the Pentagon confirmed the shocking news: Although the United States still maintains strategic reserves of germanium metal, the United States no longer holds gallium stockpiles. A Defense Department spokesman then said: "The Department of Defense is actively taking steps to prepare to increase domestic mining and processing of critical materials in the microelectronics and space supply chain, including gallium and germanium." "This is effectively acknowledging that the United States does not have the ability to maintain a continuous supply of gallium metal without the loss of Chinese supplies." However, gallium metal is not only vital to the semiconductor and new energy industries, but also indispensable to military manufacturing, taking the radar of the US F-35 fighter jet as an example, it must use gallium nitride. If the gallium supply chain is disrupted, the United States will face serious problems in all fields from economic industry to military manufacturing.
It is worth noting that while the U.S. Department of Defense is confident that it will source gallium supplies from other sources, the reality is quite different. Without China, the United States struggles to find suppliers of the same size and at reasonable prices. Globally, China holds huge gallium ore resources, accounting for about 85% of global reserves. At the same time, the processing of gallium and germanium is an important link in the rare metal industry chain, and the processing process is quite complicated, especially the primary production of gallium needs to be synchronized with the aluminum industry. China has a highly sophisticated industrial chain in these fields that can meet most of the world's export needs. It can be seen that the United States not only finds it difficult to find alternative suppliers to China, but even if they do, prices will rise sharply.
For U.S. Treasury Secretary Janet Yellen, China's export controls on gallium germanium metal elements are undoubtedly an unavoidable issue, and it also highlights the vulnerability of the United States. Yellen may have hoped for China's support on issues such as U.S. bonds, and perhaps China would have taken over some of the U.S. bonds that could not be sold. However, the reality is that the US debt has not yet found a buyer, and China has thrown Yellen a difficult problem in the key supply area, which will undoubtedly weaken her confidence in negotiations with Chinese representatives. To some extent, the United States now deeply feels the embarrassing situation of being "stuck in the neck".
However, the United States is not without a way out of the problem. The answer is actually very simple, that is, to abandon those groundless blockades and export controls against China, such as China's concern about semiconductor chips. China has always adhered to the position of maintaining the stability of the international supply chain and opposed the artificial promotion of decoupling and chain breaking. This counteraction is to safeguard national security and interests, and can also be regarded as a warning and blow to the United States when it is acting recklessly. If the United States can correct its wrong trade policies and restrictive measures towards China, then China will naturally respond. However, if the United States wants to suppress China while obtaining supplies from China, they are not doomed. Yellen may grasp this in this conversation.
In short, as the dispute between China and the United States escalates, export controls in the rare metals sector have become a key factor in exacerbating tensions. United States
It has to face it squarely, and it has largely exposed the long-standing vulnerability of the United States in the rare metal supply chain. Yellen's visit to China has become a microcosm of this situation.
This scenario has provoked much reflection. Whether the United States can find a solution to the challenge of supply chain disruption and whether it can adopt a more pragmatic approach to international trade frictions are facing the US government and relevant interest groups. For the global industrial chain, the supply chain structure of some countries or regions that was highly dependent on the past needs to be re-examined to avoid the overall vulnerability caused by constraints on one side?
From the perspective of international relations, China's action also highlights China's rise and influence in the global landscape. As a major producer of rare metals, China has taken the initiative in negotiations through export controls, which sends a clear signal to other countries in international negotiations: China's determination to safeguard its core interests is firm and decisive. However, this also requires China to exercise its influence carefully and balancedly to avoid excessive impact on the global industrial chain.
Returning to Yellen's visit to China, despite the pressure of gallium germanium metal export controls, she hopes to reach consensus with China in other areas. However, this goal is even more daunting in the shadow of supply chain tensions. The U.S. Treasury secretary will not only need to move forward on economic and fiscal issues in the talks, but must also deal with the challenges posed by the supply of rare metals, which undoubtedly increases the uncertainty at her negotiating table.
Regardless of the final outcome of the talks, Yellen's visit to China will become an important node in Sino-US relations. Today, with the deep integration of the global industrial chain, the connection between countries is no longer superficial trade exchanges, but closely intertwined interest ties.
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