In a surprising pivot, China has extended a rare diplomatic olive branch to U.S. and European auto giants, offering a lifeline amid growing fears of a rare earth supply crisis that threatened to cripple global auto production.
The Ministry of Commerce announced a new “green channel” to fast-track export licenses for qualifying European firms, following urgent trade talks between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic in Paris.
Additionally, Reuters reports that Beijing has granted export licenses to key suppliers of General Motors, Ford, and Stellantis—a significant concession after months of export curbs that stoked production shutdowns across the automotive sector.
The sudden move follows pressure from industry groups like the European Automobile Manufacturers’ Association (ACEA), which warned that member companies were just weeks away from production stoppages due to depleting rare earth magnet inventories.
“We’re gradually coming into a very, very critical moment… We are potentially going to see production stoppages,” said Jonathan O’Riordan, trade director at ACEA.
Rare earth elements, vital to electric and combustion vehicles alike, have been at the center of a growing geopolitical tug-of-war. In April, China imposed restrictions on key rare earth exports in response to escalating U.S. tariffs—moves that reverberated across Europe and Japan.
China currently dominates roughly 60% of global rare earth supply, making its trade decisions a critical bottleneck for the global EV transition. The latest developments, however, suggest a measured de-escalation, at least toward European allies.
“It’s a huge bureaucratic monster… I’m not sure if they can really speed up the process,” said Maximilian Butek of the German Chamber of Commerce in China.
While European automakers may breathe a short sigh of relief, experts stress the urgent need for long-term supply chain diversification to prevent future shocks. For now, the green channel represents a strategic pause in a brewing trade war—but not a resolution.
