[Source/Observer Network, Xiong Chaoyi] As China implements export controls in key mineral fields such as rare earths and cannot quickly find solutions in the short term, some global automobile manufacturers have joined their American counterparts in complaining incessantly.
According to a report by Reuters on June 3rd, following similar complaints from an Indian electric vehicle manufacturer last week, the German automotive industry association has become the latest group to voice concerns due to the impact of China's export controls. On that day, Hildegard Mueller, chairwoman of the German Automotive Industry Association (VDA), stated: "If the current situation does not change rapidly, there is no guarantee that production delays or even interruptions will be avoided."
In a statement sent to Reuters, she said that the automotive industry requires rare earth magnets for everything from windshield wiper motors to brake sensors, and the industry may struggle to maintain smooth operations. She added that China has issued licenses to a few rare earth producers, including suppliers for Volkswagen, but this is not enough to ensure sufficient supply of components needed for smooth production.
The report noted that this is the first time that the VDA, an industry lobbying organization, has clearly stated that China's export controls may pose a risk of production halts, without specifying a timeline. Meanwhile, Robert Bosch GmbH, the world's largest automotive parts supplier, stated in May that new regulations from China had affected suppliers, but declined further comment. Mercedes-Benz said in a written statement that it was "closely monitoring the situation" and that there was currently "no direct impact on Mercedes-Benz." Volkswagen did not immediately comment.
The report also pointed out that China's export controls have caused strong reactions among corporate boards and governments in countries from Tokyo to Washington, with officials urgently seeking limited alternative solutions, fearing that production of new cars and other products could stall before the end of summer. Diplomats, auto manufacturers, and other industry executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to push for faster approval of rare earth magnet exports.
Material photo of Hildegard Mueller, Chairwoman of the German Automotive Industry Association
In April, when former US President Trump imposed exorbitant tariffs on China, China swiftly retaliated by implementing export controls on a series of critical minerals and rare earth magnets. At the time, the Financial Times cited insiders as saying that China was establishing an export licensing system.
Reuters believes that these export controls disrupt the core supply chains of global automakers, aerospace manufacturers, semiconductor companies, and military contractors. This move not only highlights China's dominant position in the critical mineral industry but is also seen as a bargaining chip held by China in its trade博弈 with Trump.
The report noted that rare earth magnets are essential materials for assembling many products ranging from cars, drones, robots, to missiles. Ships loaded with these materials are currently stranded at multiple ports in China awaiting the implementation of a new export licensing system. Once implemented, this system may permanently cut off the supply sources for some companies, including American defense contractors.
In India, Bajaj Auto has warned that any further delays in securing rare earth magnet supplies from China could "seriously affect" India's electric vehicle production. Currently, India is organizing visits by auto industry executives to China within the next two to three weeks.
Meanwhile, in May, the heads of industry associations representing major automakers such as General Motors, Toyota, Volkswagen, and Hyundai also wrote to the Trump administration expressing similar concerns. In the letter, the Automotive Edge Alliance (AAI) wrote: "If reliable access to these elements and magnets cannot be ensured, automotive suppliers will not be able to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, headlights, power steering systems, and cameras."
Frank Fannon, a mining consultant who served as Assistant Secretary of State for Energy Resources during Trump's first term, believes that those paying attention to the situation would not be surprised by this supply disruption.
"I don't think anyone should be surprised by the situation. We face production challenges here in the U.S., and we need to use every means available from our government to secure resources and increase domestic capacity as soon as possible. This work should have been done yesterday," he said.
Material photo: Rare earth magnet, self-provided by social media
On June 1st local time, US Treasury Secretary Bassett told CBS that China was "withholding" some rare earths that were approved for export. The day before, former President Trump ranted on Truth Social, claiming that "China completely violates our agreement."
After Bassett complained about China withholding rare earths, the rebuttal followed swiftly.
According to a Bloomberg report on June 2nd, the issue of critical mineral exports has become a focal point between China and the United States. Michael Hart, president of the American Chamber of Commerce in China, stated that China has not blocked rare earth exports, but the approval process has been slower than expected.
"We see some approvals being granted, although the process is slower than the industry expected," Hart emphasized. "Part of the delay is related to China using its new system to approve exports, rather than them disallowing exports."
According to relevant laws and regulations on export control, the Ministry of Commerce of China released announcements No. 21 and No. 22 on April 4th and 9th respectively, listing 28 American entities on the export control management list.
A spokesperson for the Ministry of Commerce stated last month that to implement the consensus reached at the high-level economic and trade talks between China and the US, it was decided to suspend the aforementioned measures within 90 days starting May 14th. Export operators wishing to export dual-use items to the above 28 entities must apply according to the relevant provisions of the Regulations on the Administration of the Export of Dual-Use Items of the People's Republic of China; the Ministry of Commerce will review applications in accordance with the law, and permits will be issued if they meet the criteria.
According to data from the US Geological Survey (USGS), China accounts for nearly 70% of the world's rare earth production. Due to the U.S.'s extreme reliance on rare earths for many high-end products, from fighter jets to electric vehicles, rare earth control is widely regarded as one of China's trump cards against the U.S.
Huo Yong, spokesperson for the Ministry of Commerce, stated on May 29th at a regular press conference that implementing export controls on items with obvious dual civilian-military attributes is an international practice. As a responsible country, China's implementation of export controls on relevant items reflects its consistent stance of maintaining world peace and regional stability.
After the Geneva trade talks, the Trump administration successively introduced several discriminatory restrictive measures against China, including issuing guidelines for AI chip export controls, stopping sales of EDA design software to China, and revoking visas for Chinese students. These measures severely impacted and undermined the consensus reached.
"The U.S. unilaterally provokes new economic and trade frictions, increasing uncertainty and instability in bilateral economic and trade relations. Instead of reflecting on itself, it blames China unjustly for violating the consensus, which seriously deviates from the facts. China firmly rejects such baseless accusations," the Ministry of Commerce spokesperson stated on June 2nd. We urge the U.S. to work toward the same goal with China, immediately correct the wrong practices, jointly uphold the Geneva trade talks consensus, and promote healthy, stable, and sustainable development of Sino-US economic and trade relations. If the U.S. insists on harming China's interests, China will continue to take firm measures to safeguard its legitimate rights and interests.
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Original source: https://www.toutiao.com/article/7511887631538749971/
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