China Continues to Lead the Global Scene in Base Metals

SadaNews - A clearer picture is now emerging regarding Beijing’s plans to ease restrictions on the export of rare earth metals and other base metals following the meeting between Presidents Donald Trump and Xi Jinping in October in Busan, South Korea.

The pressure seems to have eased currently for consumers of rare earth metals subject to non-military export controls, but the picture is less bright for consumers in the defense sector and new alternative producers who will again face competition from cheap Chinese imports.

China has suspended the latest round of export controls for a year that threatened to choke supplies of rare earth metals and magnets for industrial users. It also suspended its tightest restrictions on gallium, germanium, antimony, and other materials that have been in effect since December 2024 – these were effectively a ban on exports of these products to the United States.

Restrictions on military end-users and U.S. military applications remain in place.

Media reports indicate that Beijing is seeking to adopt a "validated end-user" system that would accelerate export licensing for controlled materials designated for non-defense applications, similar to the general licenses mentioned in the White House statement.

Despite the White House assurances, China has not exempted any minerals or related technologies from export control licensing requirements beyond what it announced suspending on October 9 – nor has it agreed to ease the licensing approval mechanisms and enforcement of the stricter export controls that have developed over many years.

Beijing will also continue to collect data on the end-users of controlled materials that have been in effect since April, which can be used to gain a commercial and strategic advantage.

Export Increases Bring Relief for U.S. Companies

It remains to be seen whether this will satisfy Washington. If this new status quo persists, we expect only minor changes in China’s exports of rare earth metals and magnets, along with an increase in gallium exports and other products that were banned in December.

China’s global gallium exports declined following the U.S. export ban, so this increase is a positive sign for U.S. automakers and other industrial consumers in the United States and elsewhere.

However, the truce may also slow efforts to bolster non-Chinese production capacity across a range of controlled metals, as cheap Chinese options return to the market.

Is This a Lift of Restrictions Imposed by China since 2023?

Following the meeting between Trump and his Chinese counterpart Xi Jinping, the White House issued a statement saying that China would roll back a wave of export control announcements made on October 9 and issue general export licenses that would serve as a "de facto removal of controls (on gallium, germanium, antimony, and graphite) imposed by China since 2023".

On November 7, China’s Ministry of Commerce – the authority responsible for the export control system in China – announced a one-year suspension of the export controls announced on October 9. This confirms the initial claim and avoids what could have led to an effective ban on the export of magnets to the United States.

Two days later, the Ministry of Commerce also announced that it would suspend some restrictions on gallium, germanium, antimony, and superhard materials (including some high-purity graphite products) that had been in effect since December. This would end what was an effective ban on exports of these materials to the United States. However, restrictions on military uses and end-users remained unchanged.

Nevertheless, China did not remove these materials from licensing requirements or address any other restrictions or enhance enforcement mechanisms that have been in place since 2023. Current rules still apply to all controlled items, including those materials referenced by the White House.

It also appears that China has no plans to suspend the collection of detailed information about end-users of controlled materials should trade tensions flare up again.

In short, Beijing does not seem to be turning back the clock to 2023. We may see additional easing from the Ministry of Commerce in the coming days, but the limited scope of the November 9 announcement and reports that China may introduce a "validated end-user" system allowing general licensing for verified customers suggest that Beijing believes it has adhered to the spirit of the Korea agreement.

What is instead emerging is a system that is theoretically closer to that of the United States: where there is a ban on exports of metals and other inputs designated for U.S. defense applications and a more efficient licensing for exports for commercial purposes.

China Remains in the Driver's Seat

Perhaps the challenge of securing alternative sources of critical minerals is the best example of the dilemma facing Washington, Brussels, and allied capitals. While China has relaxed some of its measures, its control over the critical minerals pipeline remains strong, and Beijing could easily tighten it again.

At the same time, Beijing’s easing of those measures might weaken the political will that has built up in recent months to reduce reliance on China.

Relying on China is likely to require serious trade measures or costly economic support. While support may be possible under limited circumstances, trade measures could ignite tensions anew.

As the results of the U.S. trade investigation and G7 initiatives crystallize over the coming months, we will receive some insights into the willingness of Western countries to undertake meaningful political steps that would enable mitigating long-term risks – and whether Beijing will take these steps without hesitation.