China Eases Rare Earth Export Rules Partially, Short of US Expectations

China has embarked on a regulatory overhaul of its rare earth export policy, seeking to streamline shipments through new licensing mechanisms. While the changes hint at looser controls, they stop short of the full-scale rollback anticipated by the United States as part of ongoing trade discussions.

New Rare Earth Licensing Regime Underway

According to the news reports, China’s Ministry of Commerce has started work on a rare earth export licensing framework that could simplify shipment approval and enable exporters to apply for general permits valid for 1 year. 

These new licenses are expected to support higher shipping volumes and offer predictability to foreign buyers. However, industry insiders confirm that restrictions, especially those rooted in an April policy expansion, still apply.

Shortcomings in Meeting US Expectations

Despite agreements between US President Donald Trump and Chinese President Xi Jinping, China's latest move falls short of Washington’s hope for an end to rare earth export controls. 

The US declared that general licenses symbolised the end of controls, but sources close to the matter revealed that comprehensive restrictions remain in place. Officials in Beijing reportedly insisted that processing the new permits could take months.

Impact on Global Supply Chains

China processes over 90% of the world’s rare earth elements, materials critical for the manufacturing of electronics, vehicles, and defence equipment. The April controls created shortages across industries, especially auto manufacturing. In May 2025, slow approvals caused operational halts in some sectors. Out of 2,000 export applications filed by EU firms since then, barely over 1,000 have received approval.

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General Licenses and Their Limitations

Though promising, the general licenses will not be uniformly granted. Applications linked to defence-related industries or sensitive technologies are likely to undergo stricter scrutiny. Many rare earth companies in China have yet to be formally notified of the changes, indicating that the policy shift remains in its early stages.

Conclusion

China's partial easing of rare earth export rules indicates a shift towards regulatory flexibility for exporters. However, the move does not yet satisfy the broader expectations of the US or completely roll back the extensive measures enforced earlier. The coming months may bring greater clarity as exporters and governments adjust to the developing system.

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