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In a grey government building near Tiananmen Square, a small team within China’s Ministry of Commerce is quietly shaping the future of the global auto, aerospace, and tech industries—one export permit at a time. With rare earth magnets now under strict export control.
In a hulking grey building just east of Tiananmen Square in Beijing, a small team within China’s Ministry of Commerce is quietly shaping the future of the global auto and technology sectors—one rare earth magnet export permit at a time.
China holds a near-monopoly on rare earth magnets, a critical component used in electric vehicle motors, wind turbines, and even U.S. F-35 fighter jets. In April, these magnets were added to Beijing’s export control list as part of its ongoing trade dispute with the United States. Under the new rules, all exporters must apply for a government-issued license before shipping rare earth magnets abroad.
The Bureau of Industrial Security and Import and Export Control, a division under the Ministry of Commerce, is responsible for reviewing these applications. While dozens of licenses have been issued since late April, executives, lobbyists, and diplomats say they represent only a small fraction of the total applications submitted by automakers, semiconductor firms, and aerospace companies around the world.
Trade Dispute Intensifies
Washington claims that the delays in export license approvals indicate China is backtracking on commitments made during trade talks held in Geneva last month. In response, the U.S. has imposed its own export restrictions on aircraft engine components and other high-tech equipment.
U.S. President Donald Trump and Chinese President Xi Jinping held a phone call on Thursday to address the rare earth export issue, which threatens to unravel the fragile trade truce between the two powers.
At the time the new controls were introduced, China’s export control bureau reportedly had just 30 staff members. This number has since doubled to around 60, according to sources briefed on a recent meeting between the ministry and Chinese and European semiconductor firms.
Shortly after the call, President Trump posted on Truth Social, saying:
“There should no longer be any questions respecting the complexity of Rare Earth products,”
without providing further details.
China’s official readout of the call did not directly mention rare earths but stated that Beijing is "implementing the Geneva agreement in a serious and earnest manner," according to state media.
Delays and Bureaucracy
Adam Dunnett, Secretary General of the European Chamber of Commerce in China, acknowledged the Ministry's increased efforts but said the rollout has caused disruptions.
“We appreciate that MOFCOM has increased its resources and is working hard and long hours. But the reality is this is having a huge impact across a wide variety of sectors. It’s something that could have been better planned and rolled out,” Dunnett said.
As of June 2024, only three senior officials within the bureau are authorized to approve export permits, according to personnel records on the ministry's website. Office hours for the export license bureau are limited to weekdays from 8:30–11:30 a.m. and 2:00–5:00 p.m.
Reuters could not verify current staffing levels or whether additional officials are now empowered to process applications. However, the growing concern around supply chain disruption underscores China’s leverage through its near-monopoly on rare earth production. It also exposes the complexity—and sluggishness—of the export permit system.
A Bosch spokesperson described the process as “complex and time-consuming,” noting that it requires applicants to collect and submit a significant amount of documentation. A guide to the process published by the Ministry in late March is nearly 14,000 Chinese characters long.
Industry Concerns Over Sensitive Data
European auto suppliers alone have submitted hundreds of requests since early April, with only about a quarter approved. Applications reportedly range from dozens to hundreds of pages, often requiring detailed technical descriptions, signed contracts, facility information, and product photographs.
Although China says the aim is to prevent dual-use items from reaching military applications, many companies state their use is purely commercial. Despite this, Dunnett noted that many firms feel pressured to disclose sensitive intellectual property, which has caused additional delays.
While the official processing time is 45 working days, the Ministry notes that applications involving national security may take longer—without specifying a timeline.
Strategic or Bureaucratic?
Cory Combs, head of critical mineral and supply chain research at Trivium China, said it's unclear whether the holdup is due to bureaucracy or strategic intent.
“We do expect applications to U.S. end-users to be treated the same as others and approved when they’re not military-related. The question is whether this will be fast enough to convince the Trump administration that Beijing is honoring the Geneva agreement,” Combs said.
Some U.S. industry representatives believe the delay is a "strategic excuse."
“China can staff up as fast as they want, if they wanted to,” said a source from the U.S. rare earth sector who requested anonymity.
Publicly, China maintains that the export rules apply equally to all countries. Foreign Ministry spokesperson Lin Jian said on May 30 that the measures are "non-discriminatory and not targeted at any specific country."
However, a source familiar with the Geneva negotiations said that China privately acknowledged the export controls as non-tariff countermeasures—implicitly linked to U.S. restrictions on semiconductor technology.
Rare Earths as Leverage
Rare earths remain central to the ongoing trade and technology dispute between the U.S. and China. Chinese scholars have openly acknowledged the export restrictions as retaliation for American chip curbs.
“It’s a short-term form of leverage which doesn’t hurt China, as the rare earths in question have relatively low monetary value,” said Zhu Junwei, an international relations expert at the Grandview Institution, a Chinese think tank.
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