China has offered a reprieve to US and European auto giants by establishing a “green channel” for eligible rare earth export license applications, aiming to expedite the approval process for European Union firms. The move comes as industry groups warned of increasing production threats over a rare earth shortage.
The breakthrough follows trade talks between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic in Paris, France last week. Beijing has also granted rare earth licenses to suppliers of US auto giants General Motors, Ford, and Jeep-maker Stellantis.
China’s Ministry of Commerce stated that the “green channel” would help European firms overcome bureaucratic hurdles, but Maximilian Butek, executive director of the German Chamber of Commerce in China, expressed doubts about the effectiveness of the fast-track process. He noted that large-scale firms might not be eligible and that the EU needs to improve supply chain diversification.
The rare earth shortage has sparked concerns among industry analysts, who compare it to the global semiconductor crisis during the coronavirus pandemic. European car lobby group ACEA warned that some members were at risk of production outages starting as soon as next month due to depleted stocks of rare earth magnets.
China’s dominance in critical minerals supply chain, accounting for 60% of global rare earth production, poses a strategic challenge amid the pivot to more sustainable energy sources. The EU and US have been engaged in trade talks, with Beijing expressing hope that the EU would take “reciprocal steps” to promote compliant trade of high-tech products.
The breakthrough is seen as a diplomatic win for Europe, but Butek stressed that it’s not enough to announce relief; concrete actions are needed. As demand for rare earths and critical minerals grows exponentially in the coming years, companies must navigate complex global supply chains to meet growing demands for sustainable energy solutions.
Source: https://www.cnbc.com/2025/06/09/rare-earth-shortage-china-extends-olive-branch-to-western-auto-giants.html