China Hints at Easing Rare Earth Export Curbs, Global Markets React

WTS Capital
June 5, 2025

China has signaled a potential softening of its stance on rare earth export restrictions, a move that could alleviate global market anxieties and impact prices. This development comes after widespread concerns from major industries, including automotive and semiconductor manufacturers, who faced significant supply chain disruptions due to the earlier curbs.

China's Initial Export Curbs and Global Impact

In early April, China, which controls over 90% of the world's rare earth processing capacity, imposed strict licensing requirements for rare earth exports. This decision sent shockwaves through global supply chains, particularly affecting industries reliant on these critical minerals for components ranging from electric vehicles and consumer electronics to defense systems.

  • Automotive Industry Hit Hard: German, Indian, and other global automakers reported production delays and potential outages due to the scarcity of rare earth magnets essential for various vehicle components. Some European auto parts plants even suspended operations.
  • Semiconductor and Defense Concerns: The restrictions also impacted semiconductor companies and military contractors, highlighting the broad reach of China's dominance in this sector.
  • Trade War Leverage: The export curbs were widely seen as a strategic move by China in its ongoing trade disputes, particularly with the United States.

Signs of a Softer Stance

Recent statements from Chinese officials and state media reports indicate a shift towards greater cooperation and potential relaxation of the export controls.

  • Dialogue and Cooperation: Chinese foreign ministry spokesperson Lin Jian stated a readiness to "strengthen dialogue and cooperation in the field of export control with relevant countries and regions" to maintain global supply chain stability.
  • Potential Relaxation for Chipmakers: Reports suggested China might relax curbs for Chinese and European semiconductor firms following industry discussions with the Ministry of Commerce.
  • Ongoing Negotiations: The issue of rare earth export curbs is expected to be a key topic in upcoming discussions between Chinese President Xi Jinping and US President Donald Trump.

Key Takeaways

  • China's initial rare earth export restrictions caused significant global supply chain disruptions.
  • Industries like automotive and semiconductors were particularly vulnerable.
  • Recent signals from China suggest a potential easing of these restrictions.
  • The move is likely influenced by international pressure and ongoing trade negotiations.
  • The long-term impact on rare earth prices and global market stability remains to be seen, but a softer stance could bring relief to affected industries.

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