Diamonds are forever — but when they are used in missile guidance systems, the rules of the game change completely. On October 9th, the Chinese Ministry of Commerce and the General Administration of Customs jointly issued a notice to implement export controls on super-hard materials and related technologies, directly targeting the "throat" of the U.S. military and semiconductor industries.

At this moment, super-hard materials, known as the "teeth of industry," have moved from the workshop to the battlefield. China has established absolute dominance in the global super-hard materials market. Data shows that the total output value of China's super-hard materials industry is about 100 billion yuan. In terms of production of diamond and cubic boron nitride single crystals, our country is ranked first in the world. Especially in industrial diamonds, the output exceeds 95% of the global total output.

Artificial diamonds are very powerful in modern industry. When processing non-ferrous metals and non-metallic materials, no other material can compare with it, and it cannot be replaced at all. Cubic boron nitride, on the other hand, is specifically used for processing ferrous metals. Its chemical properties are very stable, and when processing iron, the cutting tool will not get stuck.

These materials may sound professional, but in fields such as semiconductor cutting, precision grinding, and aerospace component processing, they are very important and indispensable. China's super-hard materials industry is not only large in scale but also highly concentrated. Take Henan Province, for example, one province accounts for 80% of the national cultivated diamond capacity and 90% of the industrial diamond capacity.

Zhengzhou ranks first in the comprehensive evaluation of industrial cluster development index. Its industry chain coverage exceeds 70%, and it has formed a cluster centered around the high-tech zone. This export control mainly targets "functional diamonds" with strategic significance, not ordinary cultured diamonds. This special diamond is different from regular diamonds, and it has a high infrared transmittance and low optical self-emission rate, allowing it to pass through well from deep ultraviolet to microwave millimeter wave bands.

Because of this property, it has become a key material for optical windows and fairings in airborne, missile-borne, and shipborne infrared search and tracking systems. In areas such as high-power microwave weapons, high-energy laser weapons, new weapon systems, medium windows for ECRH in nuclear reactors, and traveling wave tubes for terahertz bands, functional diamonds are equally indispensable.

Both the United States and Japan realized the strategic importance of functional diamonds early on. In 2022, they both listed high-end diamond materials and diamond design and manufacturing technologies for semiconductors in the scope of export control. Now, the focus of Sino-U.S. competition has expanded from traditional rare earths to more strategically significant super-hard materials.

The super-hard materials industry is now the "hidden boss" in China's high-end manufacturing sector. There are 41,500 companies engaged in super-hard materials across the country, and the industry is growing at a rate of over 15% per year. The number of valid invention patents authorized in the field of super-hard materials in the whole country has reached 34,929, an increase of 11.1% compared to last year.

China's super-hard materials industry chain is already quite complete, and it can basically produce what it needs without relying too much on others. From single crystals and micro-powders to grinding tools and cutting tools, as well as raw materials and downstream applications, everything is there. Institutions such as the National Testing Center, the National Standardization Committee, and the National Industry Association, as well as leading listed companies in the super-hard materials industry like Sinomach Jinger, Four Directions, are concentrated in Henan.

In the new field of new energy vehicles, super-hard materials play a very critical role. New energy vehicles need to be lightweight, which requires many alloy products, and these alloy products require high efficiency and high precision. For instance, the motor of a new energy vehicle uses more than 30 super-hard material cutting tools during processing.

China's recent export control measures have struck a nerve in the U.S. strategy. In August this year, the U.S. Department of Energy announced plans to allocate nearly $1 billion to promote the development and production of critical minerals and materials in the United States.

At that time, U.S. Energy Secretary Chris Wright directly stated, "For a long time, the United States has relied on other countries for the supply and processing of key materials that are particularly important for modern life and national security." However, the efforts made by the United States are nothing compared to the complete industrial chain that China has already established. China not only controls the raw materials, but also has set up a barrier in processing technology and production capacity that is difficult for the United States to cross.

Take the U.S.'s only relatively important Mountain Pass mine, for example. The ore it produces can only be transported to China at a price of $300 per ton for processing, and then sold back to the United States at a price of $2,500 per ton. Even though the Trump administration imposed a tariff of up to 245% on imported rare earth materials from China, the price of the products manufactured by the United States is still 40% higher than that of similar Chinese rare earth products.

Now, the competition between China and the United States in fields such as rare earths and super-hard materials is gradually shifting from purely comparing technology to competing for the dominance of the supply chain.

In the past two years, the United States has always acted as a "rule-maker," constantly demanding that China open its market and imposing export restrictions on China. But this time, China clearly stated: it will no longer just wait to be constrained by "rules," but will actively participate in the process of "setting the rules for the contest."

The careful selection of timing and scope of this export control announcement indicates that it is a coordinated action involving inter-departmental mechanisms and long-term drills. The purpose is not "to vent anger," but to clearly set negotiation boundaries and lock in the power of bargaining. Bloomberg commented in a related report: "The Chinese move is not intended to cut off exports, but to force the U.S. government to realize the chain reaction of its policies — putting pressure on Chinese capital is not cost-free."

As a new battlefield in the Sino-U.S. rivalry, the strategic value of super-hard materials has been verified in the capital market. After the opening on October 10th, multiple stocks in the super-hard materials sector surged. Four Directions was immediately sealed in the morning, Huifeng Diamond rose by more than 10%, and An Tai Science and Technology, Huanghe Xuanfeng also surged. Power Diamond, Zhongbing Hongjian, and other super-hard materials sectors were all rising.

Central Securities' research report mentioned that China, the United States, and Japan have been paying attention to the field of functional diamonds, continuously making technological breakthroughs, and implementing export control measures. These situations indicate that functional diamonds have a very promising application prospect and market demand.

Now, the demand for such materials from the downstream high-end manufacturing industry is increasing, and with the support of national policies, the industry will accelerate the elimination of backward enterprises. Enterprises with advanced technology and comprehensive industrial layout are likely to further expand their advantages.

China's super-hard materials industry is transforming from a "country with a large volume" to a "technological power." In future international competitions, our country may gain more say. Now, the global industrial structure is changing, and those who set the rules are quietly changing.

You see, the F-35 fighter jet of the United States has been affected in production due to a lack of key materials; and the most advanced chip manufacturing has also been halted due to a lack of diamond cutting tools. At this point, the White House truly feels that the key to modern technological competition is not only hidden in code, but also in the microstructure of materials.

China's super-hard materials, like a "industrial tooth" that has been sharpened for many years, are quietly changing the balance of world power.

Original article: https://www.toutiao.com/article/7560685159492174371/

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