China's sudden announcement of the introduction of export controls on gallium and germanium used in electric vehicles and fiber-optic cables from August 1 has led to an increase in prices for these rare earth materials.
Shares in Chinese metals companies such as Yunnan Lincang Xinyuan Germanium Industry Co and Yunnan Chihong Zinc & Germanium Co surged on Wednesday, with local media reporting that a rise in germanium prices would boost revenue growth for the firms.
China is the world's biggest producer of gallium and germanium used in EVs and military equipment.
Analysts said the move announced on the eve of U.S. Independence Day and just before U.S. treasury secretary Janet Yellen's planned visit to Beijing from Thursday was clearly timed to send a message to the Biden administration, which has been targeting China's chip sector and pushing allies such as Japan and Netherlands to follow suit.
Analysts have described Monday's move as China's second, and so far the biggest, countermeasure in the long-running US-China tech fight, coming after it banned some key domestic industries from purchasing from U.S. memory chipmaker Micron in May.
On Wednesday, former Vice Commerce Minister Wei Jianguo, described the controls as a "well-thought-out heavy punch" and "just a start".
"If restrictions targeting China's high-technology sector continue then countermeasures will escalate," added Jianguo, who is now the vice chairman of state-backed think tank China Center for International Economic Exchanges.
The Global Times state media tabloid in a editorial published on Tuesday, said that the Beijing's decision was a "practical way" of telling the U.S. and its allies that their efforts to curb China from procuring more advanced technology was a "miscalculation".
Washington is considering new restrictions on the shipment of high-tech microchips to China, following a series of curbs over the past few years.
The United States and the Netherlands are expected to further restrict sales of chipmaking equipment to China, part of efforts to prevent their technology from being used by China's military, Reuters notes.
Alex Shishlo for Rough&Polished
