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European companies are reporting renewed delays obtaining Chinese rare earth export licences, less than two months after EU leaders won commitments to address the issue during a visit to Beijing.
The EU Chamber of Commerce in China said on Wednesday that member companies had sought its help with more than 140 applications for rare earth export licences since the controls were introduced in April, of which only about one quarter had been resolved.
“We have a number of members who are right now suffering significant losses because of these bottlenecks,” said Jens Eskelund, president of the chamber.
The problems had eased briefly after European Commission president Ursula von der Leyen and European Council president António Costa visited Beijing in July, where they met China’s President Xi Jinping, but then worsened again, Eskelund said.
“This has not gone away,” he said.
China expanded its export controls on critical minerals, particularly on medium and heavy rare earths, after US President Donald Trump announced hefty “liberation day” tariffs in April.
The restrictions, along with other controls such as on exports of germanium, a metal crucial for the defence industry, have also created a supply crunch beyond the US, including Europe.
During the July summit with Xi, von der Leyen agreed to establish an “upgraded” dialogue on export controls. This was intended to increase transparency and allow the EU to mediate if European companies faced delays in accessing permanent magnets and rare earths.
But Eskelund, speaking ahead of the launch of the EU Chamber’s annual position paper on doing business in China on Wednesday, said large and small companies were again struggling to get licences.
“I think it’s fair to say we have not sort of seen a material shift since the summit in the way that this has been handled,” he said.
The position paper listed a record number of recommendations from European companies, mainly calling for China to resolve barriers to entry to its market.
Among these, the chamber called on China to address long-running structural imbalances between demand and supply in the economy.
With policymakers in Beijing currently putting together the country’s next economic blueprint — the 15th five-year plan — the chamber urged China to include more measures to stimulate consumption.
“While the country accounts for about 30 per cent of all manufactured goods, its share of global consumption is only 15 per cent, which is even below its 18 per cent share of world GDP,” the paper said.
The paper pointed to China’s medical industry as an example of barriers to entry — a European Commission investigation in 2024 of 380,000 Chinese government medical industry tenders found that 87 per cent severely restricted bids from non-Chinese bidders.
“Localisation requirements are impacting public, and even private, procurement of network equipment and telecommunications services; and ‘buy China’ policies in areas such as healthcare have also led to discrimination against foreign firms in government procurement processes,” the paper said.
Eskelund warned that China’s barriers to entry coupled with its soaring trade surpluses were ratcheting up trade tensions, with countries around the world taking action against Chinese imports.
“I think for many countries that’s where we are getting to now: . . . ‘You know, we believe in free trade, we see all the value being created by free trade. But for free trade to make sense, there needs to be a more equitable distribution of these benefits’,” he said.
