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According to Bloomberg, the German government is considering restricting exports of chemicals used in the production of semiconductors to China as part of the US-led policy of limiting Beijing’s access to breakthrough technologies.
According to reports, Berlin is looking to cut its commercial ties with the Asian country. The initiative is part of a government package of actions aimed at preventing China from obtaining critical items and services required for microchip manufacture.
Semiconductor chips are an essential component of the global supply chain, appearing in everything from automobiles and refrigerators to smartphones and artificial intelligence.
If executed, the plan might harm the Chinese economy by restricting exports of delicate chemicals supplied by German companies such as Merck and BASF, the world’s largest chemical maker, according to the outlet, citing persons with knowledge of the situation.
Germany does not have its own semiconductor sector; however, Merck and BASF sell crucial chemicals to chip makers all over the world. According to Bloomberg, export restrictions would jeopardize China’s capacity to develop sophisticated technology and potentially its ability to manufacture semiconductors.
According to the site, German Chancellor Olaf Scholz and Economy Minister Robert Habeck are working closely with the US and EU on the issue.
Washington has advocated for a global blockade of China’s access to critical technologies, such as semiconductor fabrication. Germany is attempting to strike a balance between relations with its allies and China, which is Berlin’s most significant commercial partner for the seventh consecutive year.
Under pressure from Washington, the Netherlands agreed last month to limit semiconductor shipments to China, promising to place curbs on the “most advanced” semiconductor technology.
In a letter to parliament, Dutch Trade Minister Liesje Schreinemacher announced the decision, stating that the limits will go into effect before the summer.
Germany’s export restriction proposal is in its early stages, since policymakers are mindful that such regulations would harm commercial relations with China.
Beijing has often stated that the United States is violating free trade norms by imposing export restrictions.