A central question hanging over the summit
this week is whether China will agree to extend a temporary postponement of even
tougher rare-earth export controls.
·
The
United States, European Union and Japan are concerned over China’s restrictions
on exports of rare-earth materials critical for advanced manufacturing and defense industries.
·
China
halted most rare-earth exports in April last year, causing severe global
shortages.
·
Prices
of some rare-earth metals reportedly surged up to 100 times due to supply
disruptions.
·
On
October 9, China announced broader export restrictions covering rare earths and
products containing even trace amounts of Chinese-origin rare earth materials.
·
Later
in October, Xi Jinping agreed to postpone the expanded restrictions for one
year after discussions with Trump.
Rare earths are essential for:
·
Commercial
aircraft
·
Semiconductor
manufacturing equipment
·
Electric
vehicles
·
Electronics
·
Missiles
and military systems
·
Drones
and jet engines
·
Samarium
o Used in aircraft, fighter jets and
missiles.
o China has nearly halted exports.
o Prices abroad have risen sharply compared
to domestic Chinese prices.
·
Yttrium
o Used as a heat insulator in semiconductor
manufacturing equipment and jet engines.
o Limited shipments to the U.S. have
reportedly resumed recently.
·
Dysprosium
o Essential for automotive magnets, electric
motors and military drones.
o China continues to tightly restrict
exports.
·
Manufacturers
worldwide are warning of severe disruptions to supply chains.
·
Airbus said it is closely monitoring rare-earth
supply risks through its suppliers.
·
Boeing stated it is coordinating with suppliers
and currently sees no immediate impact.
·
The American Chamber of
Commerce in China
warned that China is increasingly using critical supply chains as geopolitical
leverage.
·
Ministry
of Commerce of the People's Republic of China said export licensing is needed
because rare earths have both civilian and military applications.
·
However,
critics note that the restrictions followed U.S. tariff actions and were also
linked to disputes with Europe and Japan.
·
MP Materials, which operates the only U.S. rare-earth
mine at Mountain Pass, California, has started expanding refining capabilities.
·
Western
companies remain hesitant to invest heavily in alternative supply chains
because China’s production costs remain significantly lower.
·
U.S.
officials expect discussions on extending the one-year postponement of tougher
restrictions during the Trump-Xi summit.
·
China
may avoid escalating restrictions before upcoming Asia-Pacific leaders’
meetings in Shenzhen later this year.
·
Officials
are also discussing a possible future visit by Xi Jinping to the United States.
[ABS News Service/13.05.2026]
As
President Trump prepares to meet China’s top leader at a summit in Beijing this
week, one of the most pressing issues facing the United States, the European Union
and Japan lies in China’s restrictions on exports of rare-earth metals and magnets
essential to advanced manufacturing.
Manufacturers
of commercial aircraft, electronics, cars, semiconductor manufacturing equipment
and military hardware are facing acute shortages of rare earths, many of which are
refined almost exclusively in China. Prices for some of these metals have soared
as much as a hundredfold since Beijing halted most exports in early April last year.
China
announced on Oct. 9 that it planned to impose sweeping new restrictions on exports
of rare earths and products containing even trace amounts of Chinese rare earths.
Three weeks later, Xi Jinping, China’s top leader, agreed at a meeting with Mr.
Trump to postpone those measures for a year, though the restrictions issued in April
remained in place.
A
senior administration official said Sunday that the United States was in frequent
contact with China about rare earths, and that it remained unclear whether this
week’s summit would produce an agreement to extend the one-year reprieve. But the
official, speaking on the condition of anonymity before the diplomatically sensitive
meeting, said he was confident the two sides would reach an extension before the
postponement expired.
Beijing
has offered few hints about its intentions. Asked about rare earths at a news briefing
last month, Mao Ning, a Chinese Foreign Ministry spokeswoman, said that “the two
sides need to jointly deliver on the important common understandings between the
two presidents, and provide greater stability to China-U.S. economic and trade cooperation.”
Business
groups are pressing for immediate clarity, warning that Beijing’s restrictions are
already disrupting manufacturing outside China and that companies need time to get
ready for any tougher measures.
“How
do you prepare? We simply don’t know what’s going to happen,” said Jens Eskelund,
president of the European Union Chamber of Commerce in China, at a news briefing
in Beijing last month.
The
American Chamber of Commerce warned in a report released Monday that the rare-earth
restrictions were part of a broader effort by China to tighten its grip on global
supply chains.
“As China’s control over critical inputs and technologies
expands, so, too, does its ability to weaponize this leverage,” the report said.
China’s
Ministry of Commerce has said the export-license requirements it imposed last spring
on seven categories of rare earths and related magnets are not intended as a tool
for leverage in trade or geopolitical disputes, but are necessary because the materials
have both military and civilian applications.
But
Beijing announced the licensing rules just two days after Mr. Trump imposed steep
“Liberation Day” tariffs on China and other countries. China has also linked its
control over rare earths to demands that the European Union ease its tariffs on
imported Chinese electric vehicles. And after a dispute with Japan over Taiwan in
November, Beijing tightened limits on rare-earth shipments to Japan.
Even
without the postponed additional restrictions, China has severely reduced exports
of rare earths such as samarium, yttrium and dysprosium, which are already in critically
tight supply outside China. Samarium, used in commercial aircraft, fighter jets
and missiles, sells for about $2 a kilogram inside China but $50 to $500 a kilogram
abroad, depending on the level of processing.
China
has all but stopped exporting it.
“The
aerospace industry is in critical need of samarium,” said Ilya Epikhin, a senior
rare-earths specialist at the consulting firm Arthur D. Little. ”It can significantly impact the commercial aircraft production.”
In
a statement, Airbus said it “does not buy rare earths or magnets directly, but they
are used in our supply chain and we are closely engaging with our suppliers to ensure
resilience.” Boeing said that it was working with its suppliers and that it did
not see “a near-term impact.”
Yttrium
is also scarce outside China, although industry specialists said Beijing had allowed
a few shipments to the United States in recent weeks. The Chinese authorities have
not explained the decision, which has been interpreted either as a good-will gesture
before the summit or a delayed result of China’s pledge in October to permit some
exports.
Yttrium
is prized as a heat insulator. It is used in semiconductor manufacturing equipment
to prevent excess heat from leaking between the tightly packed lasers that cut computer
chips, and in jet engines and missiles to shield electronics and other systems from
extreme heat.
Dysprosium
is widely used in magnets for automotive systems, including brakes, steering and
electric motors, as well as drones, including military models. China has restricted
exports of dysprosium, which sells for about $200 a kilogram domestically but commands
far higher prices overseas, according to Argus Media, a London-based commodity market
data firm.
MP
Materials, which owns the only rare-earths mine in the United States at Mountain
Pass, Calif., said on its earnings call last week that it had begun work on the
initial stages of refining the types of rare earths that China had restricted. The
company currently produces easier-to-process rare earths at its Mountain Pass mine
and refinery.
James
Litinsky, MP’s chairman and chief executive, said in an interview that the company
would not make the substantial investments needed for the later stages of purifying
rare earths, such as yttrium, without long-term purchase commitments from customers.
Western manufacturers, however, have been reluctant to sign contracts for fear that
China could resume exports of far cheaper material.
Chinese
refineries retain a major cost advantage because they process enormous volumes of
rare earths each year, much of them used for electric car production. This gives
them economies of scale.
Beijing
also has some reasons to continue postponing expanded restrictions, which are slated
to take effect in November and December. Two weeks after the U.S. midterm elections
on Nov. 3, the presidents, prime ministers and other leaders of 21 Asian and Pacific
economies are set to gather in Shenzhen, a Chinese metropolis next to Hong Kong,
for their annual summit. Chinese officials may not want that meeting overshadowed
by global economic difficulties tied to China’s export controls.
If
Mr. Trump and Mr. Xi fail to reach an agreement this week, they may have another
chance in the coming months. Officials have discussed a possible visit by Mr. Xi
to the United States this year to reciprocate Mr. Trump’s trip to China.