Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Beijing has agreed to expedite approvals for rare earth export licenses for select European companies following concerns over disruptions in global supply chains caused by China’s stringent controls on these critical minerals.
European officials and industry groups had raised alarms over China’s new license system for rare earths and magnets, which was implemented in response to tariffs imposed by the Trump administration in April. They feared widespread factory shutdowns due to delays in receiving essential materials.
However, a statement from China’s commerce ministry indicated that Beijing is now willing to fast-track approval for qualified applications through a designated process. The speed of this process and the specific European companies included in this arrangement remain undisclosed. A European executive in Beijing cautioned that despite this development, manufacturers may still face delays in receiving their shipments due to a backlog of license applications.
The announcement came after a meeting between Chinese commerce minister Wang Wentao and EU commissioner Maroš Šefčovič in Paris. Wang urged the EU to facilitate trade of high-tech products with China and emphasized the importance of compliant trade practices.
The ongoing trade tensions between the US and China have also impacted the EU, with Beijing expressing concerns over European restrictions on semiconductor sales and tariffs on Chinese goods. The upcoming trade talks between the US and China in London signify a potential de-escalation in the trade war between the two economic giants.
In addition to rare earths, Brussels and Beijing are also at odds over Chinese electric vehicle tariffs and European tariffs on French cognac. Efforts to resolve these disputes are ongoing, with discussions on Chinese electric vehicle prices nearing completion and an impending decision on European brandy imports.
Despite recent diplomatic efforts to improve EU-China relations, issues such as rare earth delays continue to impact European industries. Commissioner Šefčovič has advocated for a systematic solution to address these challenges and has proposed measures to expedite the import process for civilian use products.
European businesses have been lobbying for a streamlined export license approval process, with some progress reported by a Beijing lobby group. However, challenges persist in ensuring smooth supply chain operations for companies reliant on these critical minerals.
Additional reporting by Cheng Leng in Hong Kong