A high-level delegation from China plans to meet officials in Brussels this month to discuss tightening restrictions on rare earths and other critical minerals after the bloc flagged the controls as a threat to its key industrial sectors. The European Union has increased pressure on Beijing to restore stable access to materials essential for electric vehicles, semiconductors and defence capabilities while also advancing its own diversification plan to reduce dependency on China.
China’s expanded export-licensing regime, announced earlier this month, added at least five additional elements to its controlled rare earths list and imposed new curbs on technology and companies involved in processing or using these materials. Analysts note that those measures significantly elevate the bloc’s exposure to supply disruption: China processes more than 90 per cent of the world’s rare earth refining and controls much of the upstream supply chain.
Officials in Brussels say the dialogue with Beijing is urgent. Antonio Costa, President of the European Council, told Beijing’s Premier Li Qiang on the sidelines of the ASEAN summit that Brussels expected “smooth, reliable and predictable supply chains” alongside fairer market conditions for Chinese firms in Europe. The European Commission, led by its President Ursula von der Leyen, has already signalled readiness to use the bloc’s so-called Anti-Coercion Instrument if Beijing’s restrictions are viewed as unfair economic coercion.
Germany, France and several other member states have expressed growing unease. Large manufacturers of electric vehicles, industrial motors, and data-centre hardware warn that China’s market dominance and licensing burdens are creating “a significant risk” for European supply chains. Von der Leyen noted that over 90 per cent of the EU’s consumption of magnets used in EVs comes from imports from China.
Beijing, for its part, defends the export controls as measures for national security and international common security. Its Ministry of Commerce said the licensing regime was in response to the global role these materials play in defence, civilian high-tech and dual-use applications. Chinese officials remain keen to portray the dispute as one of market management rather than aggressive trade policy. In discussions with Brussels they pledged “optimised and balanced” cooperation and urged the EU to provide a level playing field for Chinese firms.
Industry commentators flag that the immediate issue is less about luxury goods or consumer electronics and more about the heavy industrial ecosystem: turbine manufacturing, automotive motors, semiconductor machinery, advanced magnets. According to a commentary by the Mercator Institute for China Studies, Europe’s vulnerability lies in “failure to act” on supply-chain diversification and in its relative inexperience in supply-side leverage against China’s dominant position.
The EU’s own strategy has advanced markedly. Brussels is accelerating a plan dubbed “ReSourceEU” to boost mining, refining and recycling of critical raw materials within Europe, and to forge partnerships with non-Chinese suppliers such as Australia, Canada, Chile, Kazakhstan and Ukraine. The plan envisions joint purchasing, strategic stockpiling and investment in clean-materials processing infrastructure.
At the same time, Chinese firms are now subject to heightened scrutiny in Europe. The seizure last month of the Dutch-controlled chip-packaging firm Nexperia in the Netherlands – owned by a Chinese-backed investor – triggered a retaliatory export halt by Beijing and became a flashpoint linking trade, technology and strategic minerals.
Markets have already reacted: stocks of rare-earth-focused companies in the United States fell as investors factored in the possibility of a deal or delay in China’s curbs. The sharp swings underscore how intertwined geopolitics and supply-chain dynamics have become in the rare-earths arena.