【By Guan察者网, Yuan Jiaqi】

After China's new regulations on rare earth exports were introduced on October 9, the United States reacted strongly, and Europe also became restless.

According to "Politico.eu", the European edition of Politico, on the 14th, the European Union (EU) joined the Group of Seven (G7) to hope for a joint response to China's new regulations. On Tuesday, Maros Sefcovic, the EU Commissioner for Trade and Economic Security, said that in coordination with G7 partners, the EU will not shy away from taking strong measures against China's new regulations.

Rare earth-related items have dual-use properties, and implementing export controls on them is a common international practice. However, before the EU trade ministers meeting held in Horsens, Denmark, Sefcovic classified the issue as a "core concern" and complained at length that when China implemented similar controls on graphite, germanium, and gallium last year, it "only properly handled half of the export applications," and said that this move has "significantly expanded the range of controlled raw materials, exacerbating an already serious situation."

According to the report, Sefcovic revealed that he had consulted with US Commerce Secretary Randal Quarles, and both sides agreed that "after the first discussion, it would be best to hold a G7 video conference as soon as possible."

European Commissioner for Trade Sefcovic, screenshot from EU official video

The report mentioned that when China's new regulations were first released, former President Trump resorted to the same tactics, restarting tariff blackmail, which resulted in another "Black Friday" for the stock market, with major indices plunging and Wall Street in despair. Soon after, Trump, Treasury Secretary Mnuchin, and others had to soften their tone, saying that imposing a 100% tariff on Chinese goods "was not necessarily going to happen."

However, Sefcovic still stated that although the U.S. is trying to ease trade tensions with China, the EU will not completely rule out the possibility of following the U.S. in taking tough measures. He told reporters that currently, they hope to first collect preliminary assessments from EU ministers.

"For us, the key is to safeguard the overall interests of the EU and find a solution that does not harm European industries. Therefore, we will first conduct consultations and assess the situation," he added.

Sefcovic also said that he "may request a video conference with the relevant Chinese trade officials next week."

According to Bloomberg, as the rotating chair of the EU, Danish Foreign Minister Rasmussen also urged the EU to take a firm response in a press conference. However, he did not further call for implementing similar tariff measures.

"We are the largest trading bloc in the world, with strong power," he added, "we need to demonstrate this power."

Rasmussen mentioned that he believes the EU will not impose retaliatory tariffs on China alone, but he and other officials emphasized that the EU should explore joint response plans with the U.S.

Unashamedly leaning towards the U.S., he claimed, "In this area, we share common interests with our American allies. That's why we should avoid a trade war with the U.S. If we stand united, we can more effectively pressure China to change its approach."

Danish Foreign Minister Rasmussen (right)

The EU trade ministers' meeting held that day, in addition to discussing China's new export regulations, also involved tariffs, export controls, and other issues of abuse of trade tools. According to Bloomberg, the EU has felt the potential chain effects of China's measures, such as ASML, the Dutch giant that is the only one capable of producing the most advanced semiconductor equipment, is preparing for supply chain disruptions.

Repeating the old rhetoric of "weaponizing rare earths," Michal Baranowski, Deputy Minister of Development and Technology of Poland, complained to Bloomberg, "I am very concerned, even more than just concerned. In a way, this is the worst-case scenario of our dependence on rare earths being 'weaponized.'"

Baranowski said that EU officials must think about how to free Europe from this vulnerable situation, "although we all know this is by no means easy."

"Before China withdraws its measures, we should take this matter seriously as recommended," he added.

According to the new regulations published by the Chinese Ministry of Commerce on October 9, China will implement export controls on certain rare earth-related items that contain Chinese components and on rare earth-related technologies. The Financial Times reported that this means any foreign company exporting magnets produced using Chinese rare earth components or Chinese rare earth mining, smelting, and magnet production technology must obtain approval from China.

Foreign media generally interpret that China's move has hit the U.S. automotive supply chain, forcing the Trump administration back to the negotiating table. Since then, the rare earth issue has repeatedly appeared in multiple rounds of U.S.-China trade negotiations, and the timing of the new regulations coincided with the speculated time for a formal meeting between the leaders of the two countries.

The Financial Times also pointed out that China's new restrictions are similar to the U.S. "Foreign Direct Product Rule" (FDPR) export control system, which the U.S. uses to prevent third countries from exporting semiconductor-related products to China.

The Wall Street Journal also analyzed that China's latest rare earth measures are considered an "almost unprecedented" export control, giving China greater leverage in trade negotiations.

While the U.S. is uneasy, the EU, which also relies on Chinese rare earth supplies, is also anxious: At the end of September, the European Central Bank (ECB) released a report stating that China supplied 70% of the rare earth imports into the eurozone. Moreover, the suppliers of secondary products containing rare earths purchased by the eurozone from countries outside China are also highly dependent on Chinese rare earth raw materials.

The report noted that these intermediaries are mostly American tech companies, whose production still relies on Chinese companies for rare earths.

"Although only 157 American companies act as direct intermediaries between eurozone companies and Chinese rare earth exporters, these companies provide products for many eurozone partners," the report stated, "including well-known American tech companies like Microsoft, Apple, and Intel, which are active in strategic industries such as semiconductor manufacturing, precision magnet production, and chemical processing, and whose material procurement depends on China."

Chinese rare earth producers and eurozone companies. ECB report screenshot

On October 9, the spokesperson for the Ministry of Commerce of China responded to inquiries regarding the strengthening of export controls on rare earth-related items, stating that rare earth-related items have dual-use properties, and implementing export controls on them is a common international practice. Therefore, the Chinese government has legally imposed controls on certain rare earth-related items that contain Chinese components, with the aim of better safeguarding national security and interests, and better fulfilling international obligations such as non-proliferation.

As a responsible major country, China's implementation of controls on related items reflects its consistent position of firmly safeguarding world peace and regional stability, actively participating in international efforts against proliferation. China is willing to strengthen communication and cooperation with all parties through multilateral and bilateral export control dialogue mechanisms, promote compliant trade, and ensure the safety and stability of the global supply chain.

This article is an exclusive article of the Observer, and it is not allowed to be reprinted without permission.

Original: https://www.toutiao.com/article/7561253084677095972/

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