China’s commerce ministry shows signs of loosening rare earth export controls
Beijing is expediting approvals of rare earth element (REE) export licenses.
- On Friday, Reuters scooped that REE suppliers to three major US auto manufacturers have been granted temporary export licenses, covering shipments for the next six months.
- Then, on Saturday, the commerce ministry (MofCom) said it was "willing to establish a green channel" to approve licenses for "qualified applicants," seemingly focused on exports to EU companies.
Some context: China imposed export controls on seven REEs in early April, requiring Chinese suppliers to secure export licenses before shipping them to buyers abroad.
- That put immense pressure on overseas manufacturers of the long list of products that use REEs – from cars and household appliances, to semiconductors, electronics, and medical equipment.
More context: Both the US and the EU have ramped up pressure on Beijing to relax export controls, with Xi Jinping and US President Trump discussing the matter on Thursday.
Get smart: That Beijing has provided exemptions – rather than reversed – its REE export controls is a loud, clear signal that the controls are here to stay for the long haul.
- Given how powerful they've proven as a trade war bargaining chip, it's only a matter of time before they're leveraged again.
What to watch: Another round of trade talks between Beijing and Washington are set to kick off in the UK later today.
- US officials will reportedly push to restore bilateral REE trade to pre-April levels (Bloomberg).