After Trump and Xi’s meeting, China eases restrictions on exporting rare metals economy

China has begun developing a new licensing system for rare earth minerals that will speed up shipments, but Beijing is unlikely to go so far as to completely roll back export restrictions as Washington hopes, sources said.

Two sources said that the Ministry of Commerce has informed some rare earth exporters that they will be able to apply for new, simplified permits in the future, and that it has issued a list of documents that will be required in industry briefings.

Export restrictions have given Beijing the upper hand in the trade competition with Washington, as China produces more than 90% of the world’s processed rare earth metals and magnets, materials that are vital in products ranging from cars to missiles.

Following the agreement reached by Presidents Donald Trump and Xi Jinping, China said last week that it would temporarily suspend for one year the restrictions it imposed last October.

However, China’s Ministry of Commerce has not said anything publicly about a broader series of controls imposed last April that has shaken global supply chains.

The White House said last Saturday that China had agreed to provide general licenses, and described these permits as the effective end to China’s export controls on rare earth metals.

Three other sources familiar with the discussions said that Chinese officials said privately that they were working on issuing the licenses, although one of them said it could take months.

However, other industry sources said the new licenses do not mean the abolition of wide-ranging Chinese controls on the export of rare earth metals imposed last April.

Thus, Beijing officially acknowledges the commitments it made during the summit held by US President Trump and his Chinese counterpart Xi Jinping on October 30 in South Korea with the aim of putting an end to months of tension that negatively affected the global economy.

China’s decision comes after Trump signed a decree reducing from 20% to 10% the strict customs duties imposed on a number of Chinese products, accusing China of not taking action to combat the smuggling of fentanyl and other opioids that are causing a serious health crisis in the United States.

One-year facility

The new licenses will be valid for a year and will likely allow for larger export volumes, the first two sources said, adding that companies are preparing documents that will require more information from customers.

The two sources said they expected more clarity by the end of the year.

Some Chinese rare earth companies said they had not yet been informed of the changes.

Some industry sources indicated that it would likely be difficult for customers related to defense or other sensitive areas to obtain general licenses.
All sources requested that their identities not be revealed due to the sensitivity of the matter.

Beijing’s rare earth export rules – imposed last April and expanded in October – require exporters to obtain licenses for each shipment, a cumbersome and lengthy process that customers complain hampers exports.

The restrictions caused a shortage last May, halting some auto industry activities.

Of the two thousand applications submitted by European Union companies since last April, more than half of the applications submitted were approved.