Beijing Prepares New Licensing Framework as Global Supply Pressures Persist

China has begun developing a new rare earth export licensing system that could accelerate shipments of the critical minerals, according to industry insiders. However, the reforms fall short of Washington’s hopes for a full rollback of restrictions that have disrupted global supply chains for months.

The move follows last week’s agreement between Presidents Donald Trump and Xi Jinping, in which Beijing pledged to pause some of the export curbs imposed in October for one year. Despite this limited reprieve, the broader controls introduced in April—which require individual export approvals for every shipment—remain largely intact, continuing to restrict the flow of rare earth materials vital to the automotive, defense, and technology sectors.

Officials at China’s Ministry of Commerce have reportedly told exporters that they will soon be able to apply for new “streamlined” permits, according to sources familiar with the matter. These one-year licenses are expected to allow larger export volumes than current permits, but industry participants caution that the process will still involve stringent documentation requirements and security reviews, especially for clients tied to defense or other sensitive industries.

Strategic Leverage in the U.S.–China Trade Rivalry

China’s rare earth sector represents a cornerstone of its economic and geopolitical leverage, accounting for over 90% of global refined rare earth supply and the majority of rare earth magnet production. These materials are essential for electric vehicles, wind turbines, semiconductors, and missile systems — giving Beijing a powerful tool amid ongoing trade frictions with Washington.

The April export restrictions, which expanded in October, have caused significant bottlenecks in global manufacturing. Exporters were required to secure approval for each shipment, a process that took weeks and contributed to shortages in May that forced some European automakers to temporarily halt production. Of roughly 2,000 license applications submitted by EU firms since the new rules were implemented, just over half have been approved, according to industry data.

The U.S. administration, meanwhile, characterized China’s new licensing efforts as an effective end to the restrictions. However, sources close to China’s Ministry of Commerce say the new framework will only moderate—not remove—export controls, reflecting Beijing’s intent to maintain its strategic grip over the supply chain while mitigating international pressure.

Industry Reactions and Outlook

While Beijing’s move to streamline the approval process signals some willingness to ease supply constraints, rare earth producers and importers remain cautious. The new permits are expected to take months to finalize, and uncertainty over implementation details continues to cloud industry expectations.

Some Chinese companies said they had not yet received official notice of any procedural changes. “We’re preparing documentation, but there’s been no clear guidance yet,” one exporter told local media. Others noted that general licenses may remain limited to civilian-use products, with defense-linked buyers likely facing tougher scrutiny.

Economists say the developments reflect Beijing’s strategic balancing act: reassuring trading partners without relinquishing its dominant position in the global rare earth market. “China wants to ease tensions with the U.S. while retaining control over critical mineral exports,” said a Shanghai-based trade policy analyst. “This is a tactical adjustment, not a structural policy shift.”

What’s Next: Waiting for Clarity on Export Policy

Market participants expect further clarity by the end of the year, as China finalizes the new licensing mechanism. If implemented smoothly, the policy could temporarily boost export volumes, offering relief to industries that rely on rare earth materials. However, the continuation of broader controls underscores China’s intention to use its supply dominance as a strategic tool in global trade diplomacy.

The evolution of this policy will remain a key focus for global manufacturers and governments alike, as rare earth security increasingly intertwines with national industrial policy and defense strategy. The coming months will reveal whether Beijing’s recalibration can balance international expectations with its own strategic imperatives.