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Beijing has agreed to promptly approve rare earth export licenses for some European companies after China’s strict control over shipping of global supply chains where critical minerals are shaking.
European officials and industry groups complain that the new licensing system for rare earth and associated magnets introduced in the wake of Donald Trump’s “liberation day” tariffs in April could lead to factory shutdowns.
However, according to a statement released by China’s Commerce Ministry on Saturday, Beijing is “willing to establish a green channel for eligible applications to increase approval.”
No details were given on how fast the process would be or which European companies would be included. One European executive in Beijing who asked not to name it warned that manufacturers could be late in receiving short- to medium-term rare earth and magnet shipments given the “huge backlog” of license applications.
The announcement followed a meeting in Paris last week between Chinese Commerce Minister Wang Wetoao and Malos Schiffchovich.
Wang urged the EU to “take effective measures to promote, protect and promote high-tech products-compliant trade to China.”
Beijing is increasingly concerned that Europe is following US-led restrictions on the sale of semiconductors and chip-making equipment to China.
On Friday, Trump said a new high-level trade talk between the US and China will take place in London on Monday, paving the way for further emissions of the trade war between the two biggest economies in the world.
Rare earth is just one of many conflicts between Beijing’s Brussels. There were also talks about China’s opposition to block tariffs on China’s electric vehicles and Beijing’s tariffs on French cognac.
The debate over the price of Chinese electric vehicles sold in the block has entered the “final stage,” but “required further efforts from both sides.” China is scheduled to release the results of its investigation into brandy imports in Europe on July 5th.
Beijing has been trying to improve relations with Brussels since Trump took office, but EU officials have said that despite his warm words, they have made little compromise on issues of concern up until now.
Sifchovich said Wednesday he pushed his Chinese counterpart against the rare earth delay. This was slowing down the manufacturer’s delivery of a wide range of items, from cars to washing machines.
EU officials said on Saturday that they welcomed the move but viewed it as a first step into a simpler system, as Sifchovich proposed during consultations with the King. Sifchovich said that the control of products for private use should be lifted or an annual license to import them to businesses.
The Financial Times reported on Thursday that European companies had lobbyed to Beijing officials to establish special channels to quickly track rapid export licenses for “trusted” businesses.
On Friday, the European Chamber of Commerce, a Beijing lobby group, warned that despite Beijing’s approval of urgently needed shipments, it was “not enough” to prevent serious supply chain disruptions for many businesses.
Chamber of Commerce President Jens Eskelund said member companies are “still struggling” with both delays and lack of transparency.
Additional Reports by Cheng Leng in Hong Kong
