China Rare Earths & Auto Industry: Supply Relief?
- Beijing has approved a limited number of export licenses for rare earths and magnets, potentially offering slight respite to global manufacturers facing supply chain disruptions. However, the European...
- The commerce ministry confirmed Thursday that it greenlit "a certain number" of export applications for these materials, essential in high-tech products like smartphones and jet engines.
- Commerce ministry spokesperson He Yadong stated China will "continue to strengthen the review and approval" process and remains "willing to enhance communication and dialog" on export controls.
China’s partial easing of rare earth export controls offers minimal reprieve to the struggling European automotive industry. Approved licenses for rare earths and magnets provide only a glimmer of hope, as the sector continues to grapple with supply chain disruptions. Export volumes plummeted, with rare earth magnet exports down 74% in May, threatening the production of electric vehicles and other crucial components. The automotive industry’s reliance on rare earth magnets for motors, sensors, and power steering makes it highly vulnerable. This situation underscores the growing importance of secondary_keyword trade dynamics amid ongoing geopolitical tensions,amplified by China’s dominance in both production and processing. At News Directory 3, we analyze how these restrictions and controls affect the market. The upcoming EU-China summit may determine the future. Discover what’s next …
China Eases Rare Earth Export Controls Amid Supply Concerns
Updated June 20, 2025
Beijing has approved a limited number of export licenses for rare earths and magnets, potentially offering slight respite to global manufacturers facing supply chain disruptions. However, the European automotive industry remains at risk due to significantly reduced export volumes and a lack of clarity regarding beneficiary firms.
The commerce ministry confirmed Thursday that it greenlit “a certain number” of export applications for these materials, essential in high-tech products like smartphones and jet engines. Rare earths, including neodymium, dysprosium, and terbium, are critical for producing efficient motors in electric and hybrid vehicles. The move follows tensions stemming from China’s April decision to impose export controls on seven rare earth elements, shortly after Washington’s tariffs on Chinese goods.
Commerce ministry spokesperson He Yadong stated China will “continue to strengthen the review and approval” process and remains “willing to enhance communication and dialog” on export controls. This shift in tone precedes a major EU-China summit in Beijing, scheduled for july 24-25, marking 50 years of diplomatic relations.
Customs data illustrates the impact of the restrictions.Rare earth magnet exports plummeted 74% in May compared to the previous year, marking the most significant drop in over a decade. A Wall Street Journal analysis indicated shipments to the U.S. fell by 93%.Total export volumes for May were 1.2 million kilograms, the lowest since early 2020. April exports also decreased by 45% year-on-year.
JL Mag Rare-Earth, a major Chinese magnet supplier to Tesla, Bosch, and General Motors, reported receiving licenses for shipments to the U.S., Europe, and Southeast Asia. Since April, authorities have received hundreds of export license applications, with only about 25% approved. Some companies faced requests to disclose sensitive information, while others were rejected on unclear grounds.
ING economist Rico Luman noted that with China controlling nearly 70% of global rare earth production and over 90% of processing, the world remains heavily reliant on the nation. While rare earths aren’t geologically scarce, their extraction is costly, and mineable concentrations are rare. Luman emphasized, “It’s not a question of scarcity, but of concentration.” china also supplies over 90% of the world’s rare earth permanent magnets, vital for electric motors and wind turbines.The European automotive supply chain risks paralysis without access to these materials.
The automotive sector relies on rare earth magnets for electric motors, power steering, sensors, and other components in both combustion and electric vehicles. Benjamin Krieger, Secretary General of CLEPA, warned earlier this spring that “China’s export restrictions are already shutting down production in Europe’s supplier sector.” His call for “transparent, proportionate” licensing remains relevant.
The European Chamber of Commerce in China confirmed progress but noted ongoing challenges. Adam Dunnett, the Chamber’s secretary general, said, “The situation is improving, although the percentage of cleared licenses does vary. Additionally, even once the license is given, delays can still be seen in customs clearances.”
Beijing’s recent move offers limited relief to the strained automotive industry. The european automotive industry, already facing competition from lower-cost Chinese electric vehicles, remains vulnerable to material shortages, delays, and discretionary actions from Beijing, reinforcing China’s leverage in global trade negotiations regarding rare earth elements.
What’s next
The EU-China summit in late July could provide further insight into the future of rare earth trade and its impact on global manufacturing.