[By Guancha Observer Network, Wang Kaiwen] China's export control of rare earths has sent shockwaves through the global supply chain. According to a report by the Financial Times, European companies are lobbying China to set up a "special channel" to expedite the approval of rare earth export licenses for "reliable" companies.

Three知情 sources revealed that this proposal was put forward at a meeting last week between European companies and Chinese Ministry of Commerce officials. A European executive familiar with the meeting said that companies proposed opening a "clean channel"—creating a whitelist.

"The Ministry of Commerce takes our concerns seriously," one of the知情 sources said, adding that attending Chinese officials mentioned they were studying 'innovative tools' to expedite the approval process. He also mentioned that officials and businesses discussed the possibility of the government issuing multiple licenses to rare earth export companies so they wouldn't have to apply for each shipment separately.

China dominates the global supply of rare earths. On April 2nd, as U.S. President Trump launched a trade war on what he called "Liberation Day," China swiftly retaliated against the U.S., including imposing export controls on a series of key minerals and rare earth magnets.

Rare earth magnets are essential materials for assembling numerous products ranging from cars, drones, robots, to missiles. The Financial Times reported that China's export control measures not only disrupted America’s supply chain but also affected those in Europe, Japan, India. European officials stated that China's initial measures targeting the U.S. are now putting European factories at risk of closure.

On June 3rd, Hildegard Müller, president of the German Association of the Automotive Industry (VDA), told Reuters: "If the situation does not change quickly, there is no way to rule out the possibility of production delays or even interruptions in Germany."

Müller revealed in a statement to Reuters that China has issued some licenses to a few rare earth producers, including suppliers to Volkswagen, but it is still insufficient to ensure an adequate supply of components needed for smooth production.

On May 14, 2025, Dresden, Germany—Workers assemble cars on the electric vehicle production line at Volkswagen's transparent factory. Visual China.

European Commissioner Maroš Šefčovič, responsible for trade and economic security at the European Commission, said on June 4th that he had communicated with China's Commerce Minister Wang Wentao regarding shortages of critical components.

Another知情 source told the Financial Times that listing well-known enterprises on a "whitelist" is a conventional practice in export and customs regulation. “This is common in customs clearance worldwide, and the same applies in China—if you are considered a reliable company with a good record, your inspection rate will decrease.”

A third person familiar with the meeting said that Chinese agencies have been overwhelmed with applications for rare earth export licenses from all over the world, making it difficult to identify which applications require urgent processing. “That’s why companies want to set up this special channel for them,” the person said.

However, according to someone familiar with the meeting, since that session, this idea has made "little progress."知情 sources revealed that an exporter who usually exports 2,000 kilograms annually has only received permission for 75 kilograms of exports. Some attendees believe that China might use rare earths as leverage to prevent other countries from reaching unfavorable bilateral trade agreements with the U.S.

According to a report by China Daily on May 28, informed sources revealed that at a recent semiconductor upstream and downstream enterprise symposium held in China-Europe, the Department of Industry Security and Export Control of the Ministry of Commerce provided a宣讲on the rare earth export control policy to facilitate enterprises and their relevant suppliers in understanding how to apply for export permits.

Another知情 source said this move indicates that China may loosen its rare earth export controls for the semiconductor industry in China-Europe to better maintain the stability of the global industrial chain.

Reuters reported on June 4th, citing sources, that China has introduced a tracking system for the rare earth magnet industry, which came into effect last week, requiring producers to submit additional information online, including transaction volumes and customer names. The report suggests that this additional scrutiny indicates that China's export controls on rare earths and related magnets may become long-term policies.

As China tightens its grip on rare earth exports, global automakers are seeking ways to cope. The Wall Street Journal reported on June 3rd that some carmakers and their suppliers are considering moving part of their car component production to China to circumvent restrictions on rare earth magnet exports, as China's export controls only cover magnets, not finished components.

If car manufacturers ultimately move some production to China, it would be a boomerang effect of Trump's trade war, as he insisted that raising tariffs was intended to bring manufacturing back to the U.S.

At a regular press conference held by China's Ministry of Commerce on June 5th, a Financial Times journalist asked: Many companies from various countries have begun complaining about the slow pace of China's rare earth export permits, causing their production to face shutdowns, while some Japanese and European companies have already stopped production. What does China think about this?

Commerce Ministry spokesperson He Yongqian responded that rare earths and similar items have clear dual-use attributes, and their export control is an international practice. The Chinese government reviews export permit applications for dual-use items in accordance with the law. For applications that meet the criteria, China will approve them and promote convenient compliant trade.

This article is an exclusive contribution by the Observer Network. Unauthorized reproduction is prohibited.

Original source: https://www.toutiao.com/article/7512668543612224012/

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