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The Star
4 days ago
- Business
- The Star
EU pushes China to address ‘alarming' rare earth export controls
The EU has urged China to stop restricting the export of rare earth minerals and magnets, with the bloc's trade chief saying its industries are in an 'alarming situation'. The request was made during a meeting between the sides' top commerce officials in Paris on Tuesday. It comes as sectors across Europe raise the alarm about a shortage of rare earths, which are used to manufacture hi-tech goods ranging from electric cars and smartphones to military tanks and aircraft. 'I informed my Chinese counterpart about the alarming situation in the European car industry, but I would say industry as such because clearly rare earths and permanent magnets are absolutely essential for industrial production,' Maros Sefcovic said on Wednesday, briefing reporters a day after his meeting with Chinese Commerce Minister Wang Wentao. Around 90 per cent of the world's supply of rare earth minerals comes from China, which introduced export controls on their shipments in April in retaliation to US President Donald Trump's 'reciprocal' tariffs. Rare earths consist of 17 elements. On April 4, Beijing added seven of these – dysprosium, gadolinium, lutetium, samarium, scandium, terbium and yttrium – to its export control list, plus several rare earth magnets, two days after Trump announced 'reciprocal tariffs', meaning licenses are now required for their export. While such restrictions were ostensibly intended to punish the US, firms around the world have been caught in the crossfire. Business chambers and industry groups have urged European governments to push for a solution, as mineral stocks run low and some areas of production grind to a halt. European companies have complained that China's commerce ministry seemed incapable of handling the voluminous requests, with licenses being issued slowly and on a piecemeal basis. 'Some applicants are asked for sensitive information that might compromise their intellectual property so they're reluctant to hand that over, but they need to if they want to get approval,' Adam Dunnett, secretary general at the EU Chamber of Commerce in China, said. The chamber has held 'emergency meetings' with Chinese authorities in recent days after an outpouring of anxiety from across European industry. 'I haven't seen anything of this magnitude for a long time,' Dunnett said of the level of concern among EU businesses. Sefcovic said that the two sides had compared figures on the number of applications versus the licenses issued. The figures did not match, Sefcovic said, adding that the EU would supply Beijing with 'all the data and would cover all the companies which are now in an extremely difficult situation'. Sefcovic suggested that Beijing could simplify its system, which now screens all requests for 'dual use' applications, meaning the rare earths could go towards military production. 'Some of the car companies are already announcing that if this issue is not addressed, there might be huge production difficulties in a short period of time,' Sefcovic said. 'His information was a little bit different, and therefore we agreed that he would clarify this as soon as possible, and that we would also address the propositions I made yesterday, and this was that our strong preference here,' he added. The EU's proposals include 'not to cover ... civilian production by this very complex system', Sefcovic said. The bloc would also like to see a 'general application ... to cover it once a year for the whole production', eliminating the need for cumbersome repeat applications. Sefcovic said the EU wanted the changes to avoid 'huge paperwork delays and stress, which this presents for our industry and for our companies. 'We agree that we will come back to this issue relatively soon.' Also on Wednesday, the EU named 13 projects it would initiate beyond its borders to help improve its self-sufficiency in rare earths and critical minerals. 'The export bans reinforce our will to diversify and perhaps even strengthen the relevance of our focus on reducing dependencies,' Stephane Sejourne, the European Commission's head of industrial strategy, said in announcing the projects in Brussels. Two projects will cover rare earth minerals in Malawi and South Africa, while others focus on various raw materials in Britain, Canada, Greenland, Kazakhstan, Madagascar, Norway, Serbia, Ukraine, Zambia, Brazil and New Caledonia, a French overseas territory. The rare earth crisis adds another complication to already tense EU-China trade ties. Earlier this week, the bloc's member states voted to exclude Chinese companies from its lucrative medical devices procurement market after Beijing refused to open its tenders to the EU. In a bid to crack down on a deluge of small packages from Chinese e-tailers Temu and Shein, Brussels plans to add a surcharge of €2 (US$2.28) to small parcels imported. The EU also remains frustrated over Beijing's refusal to acknowledge state subsidies that it claims are leading to market-distorting industrial overcapacity. China, on the other hand, claims that Europe's moves to target its exporters are against the rules of global trade. - SOUTH CHINA MORNING POST
CNBC
28-05-2025
- Business
- CNBC
European businesses have never been this gloomy about China
BEIJING — European business optimism about China has hit its lowest on record – worse than during the pandemic — due to slower growth and geopolitical worries. A record 73% of respondents in the EU Chamber of Commerce in China's annual survey said doing business in the Asian country has become more difficult in the past year, marking a new high for a fourth-straight year. That's just one of the several record lows in sentiment found in the annual survey, which has been published since 2004. The latest study released Wednesday, covered 503 respondents in January and February. "Companies are really feeling the squeeze, being pessimistic, but again finding very compelling supply chains in China that necessitate a continued presence [in] the Chinese market," Jens Eskelund, president of the chamber, told reporters this week. Still, that doesn't mean business confidence is close to returning. "We haven't seen an inflection point yet," Eskelund said. "A lot of it boils down to uncertainty." The survey reflected how challenges for foreign businesses in China have largely increased since the pandemic lockdown in 2022 disrupted supply chains. While local brands have become more competitive, overall consumer demand has remained lackluster amid the real estate slump and uncertainty in the job market. Cosmetics companies were particularly hit. The industry blamed a drop in local demand and reported a 45% drop in revenue in 2024 from a year before — only the second decline in the past decade, according to the chamber's report. On the other hand, aviation and aerospace were the rare industries saying that doing business in China became easier. Slower growth is diminishing China's attractiveness relative to other markets. A record low of only 12% of respondents were optimistic about profitability in China in the coming two years, while the fewest on record ranked the country as a top destination for future investments. Another record low of 38% of respondents said they planned to expand in China over the coming year. And while Beijing has announced efforts to improve conditions for foreign investment, many challenges remain. A record 63% of respondents said they missed business opportunities in China last year due to market access restrictions and regulatory barriers. Medical device businesses who responded said European companies experienced discrimination due to public procurement practices favoring domestic players. The scale of pessimism echoed an annual survey of U.S. companies in China released in late January that showed a record share of American businesses were accelerating plans to relocate manufacturing or sourcing. Meanwhile, 53% of respondents said they would increase their investments in China if more action was taken to improve local market access. China remains dominant in the global supply chain for its ability to offer quality parts at the lowest price — the only way that businesses are able to stay competitive, Eskelund said, citing conversations over the last three weeks with hundreds of companies across the chamber's six chapters in China. When asked about supply chain diversification, more than a quarter of respondents said they were increasing onshoring to China as a way to meet localization requirements and better reach the domestic market. A far smaller share at 10% of respondents said they were establishing overseas alternative supply chains while keeping their existing network in China. The survey also found that nearly half of respondents said their Chinese suppliers were also moving operations to other markets. Chinese and EU leaders are set to hold a summit in Beijing in July as both try to strengthen bilateral ties amid higher U.S. tariffs. The EU is China's second-largest trading partner on a regional basis.
