China and Rare Earth Export Controls

Background

• Despite a 90-day trade truce with the United States, China maintains tight control over its rare earth exports.
• Rare earth elements are crucial for manufacturing electronics, electric vehicles, and military weapons, with China dominating the supply.

Recent Developments

• Trade Agreement: In Geneva, China agreed to temporarily roll back tariffs but has made no promise regarding rare earth export controls.
• US Assertion: US trade representative Jamieson Greer claimed China would remove rare earth countermeasures.
• Current Situation: There is limited evidence suggesting China is easing these controls.

Export Control Details

• China’s system requires government approval for each shipment, causing significant delays for industries reliant on these materials.
• Licensing Policy: The policy is dynamic, providing Beijing leverage in trade negotiations.
• Recent Actions: China removed some American firms from its control list but upheld rare earth controls.

Industry Reactions

• Export Licensing: China has issued limited export permits under a one-batch, one-license rule.
• Volkswagen: One of the first to receive a permit, indicating China's strategic geopolitical communications.
• US Defense Industry: Faces potential delays and scrutiny in acquiring necessary materials.

Strategic Implications

• China's control over rare earths serves as a geopolitical tool.
• Past actions include halting shipments to Japan in 2010 and bans on extraction technologies.

Conclusion

• China's rare earth policies are likely to remain as a strategic measure against the US.
• The licensing system offers China visibility into global supply chains, enhancing its strategic positioning.

Key Figures

• Jamieson Greer: US Trade Representative
• Gracelin Baskaran: Director of Critical Minerals Security Program, CSIS
• Thomas Kruemmer: Director, Ginger International Trade and Investment
• James Kennedy: President, Three Consulting

Additional Information

• The rare earth industry is vital for technological and defense sectors, making China's role significant in global politics and economics.