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International diplomats and automotive executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to accelerate approval processes for rare earth magnet exports, as severe shortages threaten to halt global supply chains, sources told Reuters.
According to Reuters sources, a Japanese business delegation is scheduled to visit Beijing in early June for discussions with China’s Ministry of Commerce (MOFCOM) regarding the export restrictions. European diplomats from countries with significant automotive industries have also requested “emergency” meetings with MOFCOM in recent weeks, a European official informed Reuters.
India, where automakers warned last week they were approaching potential shutdowns, is organizing a trip for automotive executives within the next two to three weeks, Reuters reported.
“This is an extremely urgent and critical time for the auto and electronics industry,” Adam Dunnett, secretary general of the European Chamber of Commerce in China, told Reuters, warning that some firms could cease production as early as this week.
The potential for widespread shutdowns across the global automotive industry highlights the significant leverage Beijing has established through its decades-long dominance in the rare earth sector, as noted by Reuters. China controls over 90% of global processing capacity for these specialized magnets, which are essential components in automobiles, fighter jets, and home appliances.
On April 4, China imposed export restrictions on seven rare earth elements and several types of magnets, requiring exporters to obtain licenses from Beijing authorities, Reuters reported.
While Beijing agreed to suspend or remove non-tariff countermeasures imposed on Washington since April 2 as part of the Geneva truce, Reuters reports there has been only a slow trickle of approvals since then. Chinese government officials have declined to address the issue publicly.
U.S. Trade Representative Jamieson Greer accused Beijing last week of “slow-rolling” the removal of non-tariff countermeasures, according to Reuters.
South Korea’s industry ministry has requested that China issue more export licenses, with an official telling Reuters that only a handful of companies had received approval. European firms alone have thousands of applications awaiting approval, a source familiar with the matter told Reuters.
The impact has been substantial – Reuters reported that rare-earth magnet exports from China halved in April due to the lengthy and opaque application process for export permits.
State media reported last week that China was considering relaxing some restrictions for European semiconductor firms, and the Ministry of Foreign Affairs indicated it would strengthen cooperation with other countries regarding its export controls, Reuters noted.
However, the controls are widely viewed as a key source of diplomatic leverage because there are virtually no alternatives outside China, as reported by Reuters.
When contacted by Reuters, China’s foreign ministry did not respond Tuesday to questions about whether Beijing would accelerate processing of export license applications. The Ministry of Commerce did not immediately reply to queries sent after business hours, Reuters reported.
The European Union and Japanese missions in Beijing did not immediately respond to Reuters’ requests for comment.
“China won’t blink but it will slowly and strategically provide exemptions,” a U.S. business figure briefed on the matter told Reuters, speaking on condition of anonymity due to the sensitive nature of the topic.
“It’s a painful stress test of an already fragile relationship,” the source added, as quoted by Reuters.
The crisis underscores the critical vulnerability of global supply chains to China’s rare earth policies. With automotive and electronics manufacturers worldwide dependent on these materials, the export restrictions demonstrate how China’s control over rare earth processing can impact industries far beyond its borders.
The situation particularly affects the automotive sector, where rare earth magnets are essential components in electric vehicle motors and various electronic systems. As global automakers continue their transition toward electrification, dependence on these materials has only intensified.
This article first appeared on Autocar
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