Germany Denies Chip Making Chemical Export Ban To China

Officials in Beijing will relieved with the clarification issued by German government officials on a sensitive subject.

Reuters reported that German officials on Friday as saying that there are currently has no plans to ban the export to China of chemicals used to manufacture semiconductors.

It comes Bloomberg reported on Thursday that Germany was in talks to limit the export of chemicals to China that are used to manufacture semiconductors, as Berlin seeks to ramp up efforts to reduce its economic exposure to the Asian nation.

German denial

The Bloomberg report suggested the move was in early stages of discussion, but officials taking part in the talks were aware that such a step could damage business ties with Beijing.

Shortly after that Bloomberg report, Beijing reacted and called it a destabilising move.

China’s foreign ministry spokesperson Mao Ning, in response to a question on Friday about the potential German curb, reportedly said it was “not constructive for some countries to impose export controls on China in the name of reducing dependence.”

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

However Germany has denied that it is currently considering such as a move.

Chancellor Olaf Scholz’s office “is not currently pursuing any plans for an export ban on chip chemicals to China,” a spokesperson told Reuters.

The person added that talks with foreign partners were confidential, without elaborating.

A second German government spokesperson, representing the economy ministry, reportedly told a briefing on Friday they were not aware of any mooted chemicals export ban and said there were no related plans for stricter dual-use regulations.

Germany is increasingly wary of China as a strategic rival as well as its largest trading partner, and has considered a series of steps as it reassesses bilateral ties, Reuters reported.

Merck KGaA and BASF, two German chemicals majors who could be affected by the export curbs if implemented, reportedly declined direct comment.

But Merck’s chief executive Belen Garijo on Friday told its annual meeting that she hoped “common sense and citizens’ interest” would prevail, noting that Merck had strong roots in China going back nearly 90 years.

China exports

If Germany were to introduce an export ban on chip-making chemicals to China, it would be a further blow to Beijing after recent moves by the US, the Netherlands and Japan.

Earlier this month China urged the World Trade Organisation (WTO) to scrutinise the US-led technology export restrictions on advanced semiconductor technology.

It came the US had announced its sweeping export controls for semiconductor manufacturing equipment in October 2022, and the Netherlands had announced in early March that it too would restrict the export of the chip making kit to China.

Those restrictions also include Japan, and involves the only three countries that are home to manufacturers of advanced machines to print microchips.

The Netherlands of course is home to ASML Holding, which dominates the market for lithography systems used to create chips’ minute circuitry.

Japan meanwhile is home to major chip equipment makers such as Nikon and Tokyo Electron.

The Biden administration is seeking to slow Beijing’s technological and military advances by hobbling its semiconductor industry.

Reuters reported that German Economy Minister Robert Habeck had in March suggested that Berlin could impose export restrictions on China to prevent Germany from losing its technological edge, and Scholz’s government is working on a strategy paper on China to be rolled out this year.

The US, Germany, and the European Union as a whole, are already pushing efforts to bring more chip production onto home soil by offering subsidies.