The Ministry of Commerce has said that it is willing to establish a so-called “green channel” for eligible export license applications to accelerate the approval process to firms in the European Union and has expressed the hope that the EU will take “reciprocal steps” and adopt measures to promote compliant trade of high-tech products with China.
China has also granted rare earth licenses to suppliers of US auto giants General Motors, Ford and Stellantis, according to media reports.
The news will be a relief for the automotive industry here in Europe and in the US following China’s Ministry of Commerce decision in April to impose export restrictions on several rare earth elements and magnets widely used in the automotive, defence and energy sectors.
The imposition of these curbs was unsurprising and were part of a response to President Trump’s imposition of tariffs on Chinese products.
Some of the affected rare earth elements are critical components to the production of both combustion engines and electric vehicles.
While the announcement has been welcomed whether the fast-track channel applies to large-scale firms or to sectors more broadly remains unclear.
It also doesn’t alleviate the need for the sector to seriously look at improving supply chain diversification.
According to Dunstan Power, Director of ByteSnap Design, “This is an example of both the complexity of international supply chains and a world that has been over-reliant on China. Rare earth minerals are abundant across the planet, however, the processing of these into magnets has been largely left to China, in the same way Taiwan is the world’s epicentre for semiconductor manufacture.
“A by-product of the tariff wars will surely be larger global investment in magnet technology, but this will take time.”
China currently accounts for roughly 60% of the world’s production of rare earth minerals and materials and this dominance has been described as a strategic challenge to the likes of the US and EU.
The announcement couldn’t have come any sooner, as the European Automobile Manufacturers’ Association (ACEA) had warned that some of its members were at risk of production outages as early as this month.
