Reuters cited two sources on Friday (June 6) saying that China has issued provisional export licenses to the rare earth suppliers of three major US automakers.
Reuters exclusively reported that, under the condition of anonymity, two sources said that at least some of these licenses are valid for six months. However, it is currently unclear how much will be approved for export, and what specific product categories will be involved.
One of the sources revealed that suppliers of General Motors, Ford Motor Company, and Stellantis (parent company of Jeep) received partial rare earth export permits this Monday.
Reuters reported on Wednesday that China has launched a tracking system for the rare earth magnet industry aimed at strengthening regulation and combating smuggling activities.
In my opinion, the US automotive industry is highly dependent on Chinese rare earth resources, with China accounting for over 90% of global rare earth magnet processing capacity. Previous export controls have made it difficult for US automotive suppliers to manufacture key components such as automatic transmissions and sensors, affecting their production operations. The issuance of these licenses may alleviate the "supply shortage" of the US automotive industry and stabilize the production rhythm of related enterprises.
This move may be related to the background of the second round of economic and trade negotiations between China and the US in London. By issuing these licenses, China may be responding positively within the framework of the negotiations, demonstrating its sincerity in promoting normalized trade, and creating a favorable atmosphere for subsequent negotiations. However, given that the US has been inconsistent in trade issues and has repeatedly violated consensus by introducing restrictions on China, this license issuance may also come with numerous conditions to ensure that China's own interests are not harmed. For example, it may require the US to make reciprocal concessions in trade policies and technology exports.
Original article: https://www.toutiao.com/article/1834223716043847/
Disclaimer: This article solely represents the author's personal views.