European industrial players are again reporting serious disruptions in the supply of rare earth elements from China, reigniting concerns about strategic dependency on the world’s dominant producer of critical minerals.
According to the EU Chamber of Commerce in China, over 140 applications for rare earth export licences have been filed by member companies since April 2025, but only 25% have been resolved. These delays are costing companies millions in losses, affecting production timelines across industries such as automotive, green tech, and defense.
“We have a number of members who are right now suffering significant losses because of these bottlenecks.”
— Jens Eskelund, President, EU Chamber of Commerce in China
Post-summit optimism quickly fades
After a high-profile EU-China summit in July, optimism briefly returned. European Commission President Ursula von der Leyen and European Council President António Costa secured commitments from President Xi Jinping to improve export transparency through a new dialogue mechanism.
However, by September, the situation had worsened again. Eskelund confirmed that no significant procedural change had followed the diplomatic overtures.
Beijing’s strategy: Control the full value chain
China’s dominance over the rare earth supply chain is no accident. It is the result of decades of state-backed planning, strategic acquisitions, and domestic consolidation. The country now controls:
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Over 60% of global rare earth mining,
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Nearly 90% of rare earth refining capacity,
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And a substantial portion of the global magnet manufacturing sector.
The April 2025 expansion of export controls, introduced in response to renewed US tariffs, has added to a broader trend of resource nationalism. Alongside rare earths, China has also restricted germanium exports, a metal critical to the defense and semiconductor sectors.
European Chamber urges market reforms
The newly released 2025 Position Paper from the EU Chamber contains record-breaking recommendations to Beijing. The document highlights:
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Persistent market entry barriers for foreign firms,
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Discriminatory policies in government procurement,
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And the need to rebalance China’s economy from production to domestic consumption.
For example, China accounts for 30% of global manufactured goods but only 15% of global consumption, well below its 18% share of global GDP. The Chamber argues that stimulating domestic demand must be a key pillar in the upcoming 15th Five-Year Plan.
One industry highlighted is healthcare: in a 2024 EC investigation of 380,000 Chinese tenders, 87% severely limited or outright blocked bids from non-Chinese firms.
“Buy China” procurement rules and localisation mandates are severely impacting even private market access for European firms.
Trade tensions likely to rise
The lack of licensing transparency and the widening trade imbalances are causing growing global friction. With China’s trade surplus soaring, governments around the world, including in Europe, are reassessing their reliance on Chinese supply chains.
The risk is clear: if rare earth disruptions continue, European industries could face significant technological delays, especially in the rollout of electric vehicles, renewable energy systems, and advanced defense technologies.
“We believe in free trade. But for it to make sense, the benefits need to be more equitably distributed,” Eskelund warned.