Industrial Research Institute: "China's Gallium and Germanium Export Controls Will Have a Significant Long-Term Impact on Korean Industry"

China has begun export controls on gallium and germanium this month, raising concerns that even if there is no immediate significant impact on our industry from a supply and demand perspective, the long-term impact could increase as export controls may expand to other items. Policy responses from our government are necessary.

Our Government's Industrial Supply Chain Inspection Meeting on Gallium, Germanium, and Others

On the 2nd, the Korea Institute for Industrial Economics and Trade (KIET) diagnosed China's export controls on gallium and germanium as part of the "strategic assetization of raw materials." While the export controls on gallium and germanium may not have a major short-term impact on supply and demand, the fact that China's export controls could continue and expand to other items means that long-term countermeasures are needed.

KIET viewed China's ongoing advanced industry supply chain strategy as potentially having a greater impact on our industry in the future. China's advanced industry supply chain strategy is characterized by a leverage strategy that internalizes technology and supply chains while turning China's strengths into strategic assets. It was analyzed that China is pursuing a strategy that invests in research and development of core technologies it does not possess from a long-term perspective to secure technology-based supply chains, while leveraging its raw materials, large-scale manufacturing capacity, price competitiveness, and the world's largest consumer market.

Research Fellow Eun-Kyo Cho said, "China's strategic assetization of raw materials, expansion of global market share based on low-cost competitiveness, and technology internalization have the greatest industrial ripple effects and require policy responses. We rely heavily on China for some key minerals and materials/components, so it is necessary to prepare a response strategy to China's export controls," she advised. She added, "We also need to examine which advanced industries and technologies China is focusing on, in which items China can secure leverage, and the degree of our dependence on China in those areas."

She also raised the need to establish trade and industrial policies from a long-term and comprehensive perspective. A comprehensive trade strategy is necessary to respond to advanced industry and technology sanctions from a long-term viewpoint. Policies to reduce excessive dependence on China and diversify supply chains in response to export controls are already underway, but more importantly, it is necessary to review the advanced industries and technologies that China is focusing on and analyze our industry's dependence on China and competitive advantages in these fields to establish countermeasures.

Furthermore, a response strategy to prevent the outflow of personnel in related advanced industry sectors is also necessary. Strategic industries such as semiconductors and batteries have technologies in which we have an advantage over China, and core personnel management measures are needed to prevent industrial technology leakage in next-generation technology fields.

Research Fellow Cho said, "We should not overlook the possibility that China may gain market dominance in next-generation technology fields based on new materials, such as LFP (lithium iron phosphate) batteries, not just raw materials like gallium," and advised, "To this end, we also need to strengthen industrial development in next-generation technology fields and promote the establishment of a domestic ecosystem."

This content was produced with the assistance of AI translation services.