Germany may restrict export of chip chemicals to China and China's spokeswoman expresses opposition

By Gabby Chen

(JW Insights) May 1 -- Germany may limit the export of chemicals to China that are used to manufacture semiconductors as part of the government's efforts to reduce its economic exposure to the Asian economic superpower, according to reports by Bloomberg and Reuters on April 27.

The move was still in the early stages of discussion but officials taking part in the talks were aware that such a step could damage business ties with China, the report said, citing those familiar with the matter.

China's foreign ministry spokesperson Mao Ning, in response to a question on April 28 about the potential German curb, said it was "not constructive for some countries to impose export controls on China in the name of reducing dependence."

Mao said it would only hurt others and destabilize the global industrial supply chain, urging countries planning curbs to respect the laws and regulations of the market economy, and "work with China to safeguard the international economic and trade order."

The German proposal is part of a package of measures that Chancellor Olaf Scholz's government is discussing that would cut off China's access to goods and services needed for the production of advanced semiconductors.

If implemented, such a step would limit German companies like Merck KGaA and BASF SE from selling some of their semiconductor chemicals to China.

The quickest and most practical way to implement the export controls would be to put the respective goods and services on Germany's national dual-use list, said the Bloomberg report.

The move would be the latest in steps under consideration by Germany as it reassesses ties with China. Chancellor Olaf Scholz's coalition government is pressing for fairer market access to its largest trading partner but is also increasingly wary of China as a strategic rival, said Reuters.

German Economy Minister Robert Habeck had in March suggested that Berlin could impose export restrictions to China to prevent Germany from losing its technological edge.

"Export controls with regard to technology must be constantly checked, constantly expanded and constantly updated," a government spokesperson added at the time.

Scholz's government is working on a strategy paper on China that will be rolled out later this year. Germany, and the European Union as a whole, are pushing efforts to bring more chip production on home soil by offering subsidies, said the Reuters report.