US, China confirm their agreement on rare earth exports
The US and China say they have reached an understanding to expedite rare earth exports to the US.
On Friday, the Ministry of Commerce (MofCom) said:
- "China will examine and approve applications for the export of eligible Controlled Items in accordance with the law."
The White House had hailed the breakthrough a day prior without details, saying China would "accelerate" approvals.
Some context: China has already agreed to this. Multiple times.
MofCom also confirmed the flip side:
- "The US will lift a series of restrictive measures against China accordingly."
As of writing, it's unclear what the US agreed to.
Get smart: China's position remains fundamentally unchanged.
- Since the talks in Geneva, its stance has been that the license requirements will remain in place, and MofCom will review applications, per the law.
The bottom line: China has already been issuing licenses, including to the US. MofCom continues to review applications. More will be approved.
- Approvals may accelerate (from a low base), as MofCom streamlines its procedures, but we anticipate that the process will remain slow due to risk aversion and bureaucracy.
The big question: Will the upcoming acceleration be fast enough to placate the US?
Our take: There's a high likelihood that both sides' expectations are, once again, misaligned.