In a significant escalation of its trade war with the U.S., China has banned exports of gallium and other critical minerals, retaliating against American restrictions on its chip industry. The move sent ripples through global markets, impacting industries from renewable energy to consumer electronics. Yet, the consequences extend even further, affecting Ukraine’s defense efforts in its war with Russia.
The news. The New York Times first reported that China’s ban came with fine print, as gallium, germanium, graphite and antimony are key minerals for semiconductor production.
For the first time, China imposed a transshipment ban, prohibiting exports to companies in third countries that might redirect these resources to the U.S. This marks a significant precedent in China’s export controls and a sharp escalation in trade tensions.
Implications. The immediate effect is increased pressure on global supply chains, compelling companies to choose between aligning with China or the U.S. Despite stockpiling efforts, China remains the dominant player in mining and refining these materials, vital for semiconductors and military technology.
Drone components targeted. Bloomberg reported an even broader scope: China has begun restricting exports of key drone components such as motors, batteries, and flight controllers. These are essential to Ukraine’s defense and Western military production.
The restrictions, potentially escalating to a full embargo in January, have drastically reduced access to affordable Chinese parts, which make up 80% of the global drone market.
Supply chains. According to Bloomberg, the situation is forcing western manufacturers to seek alternative suppliers in South Korea and Japan, but Ukrainian manufacturers remain heavily reliant on Chinese components to produce low-cost drones critical in the war with Russia.
Even advanced drone production in Europe and the U.S. has been impacted, forcing Ukraine to ramp up domestic production to fill the gaps.
Geopolitical tensions. The export ban is China’s response to U.S. sanctions targeting Chinese military-related companies and restrictions on advanced semiconductors. These measures are part of a broader technological and trade rivalry between the two superpowers, which includes cross-sanctions against key companies such as DJI and Shield AI.
Beijing has denied supplying weapons to Russia. However, Western reports reveal that Chinese components are being used in Russian drones and other military equipment.
Dual-use goods. China has become Russia’s top supplier of dual-use goods—items with both civilian and military applications—including microchips, drone components, and CNC tools. According to G7 data, China provided approximately 90% of these priority goods to Russia in 2023, up from 30% in 2021. These goods often circumvent sanctions via re-exports.
Although China avoids supplying lethal weapons directly, its exports of critical components bolster Russia’s military while maintaining plausible deniability. This approach allows Beijing to strengthen its strategic alliance with Moscow while protecting its global reputation and avoiding further sanctions.
Military impacts. China’s supply of semiconductors and related goods has fortified key sectors of Russia’s defense, from radar systems to attack drones. However, Moscow’s dependence on these imports has also driven up costs, as China charges premium prices to meet growing demand.
China’s actions highlight a complex geopolitical battle with multiple fronts. On one side, Beijing’s export restrictions on drone components weaken Ukraine’s defense while maintaining a delicate balance to protect its economic interests. On the other, China indirectly supports Russia’s war machine through dual-use goods, exacerbating the West’s challenges in the conflict.
For the U.S. and its allies, the only viable long-term response is to diversify supply chains, reduce dependence on Chinese components, and bolster strategic autonomy in critical industries such as defense and technology.
Image | Alejandro Luengo (Unsplash) | President Of Ukraine
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