China offers ‘green channel’ for rare earth exports to EU amid mounting tensions

China has announced its willingness to establish a ‘green channel’ to expedite export licences for rare earth shipments to the European Union (EU), in a move aimed at alleviating severe supply chain disruptions across European industries.

The announcement follows mounting criticism from European businesses and officials who say China’s licensing regime, imposed in April, has led to costly production delays in critical sectors such as electric vehicles, aerospace, and semiconductors.

According to a statement from China’s Ministry of Commerce released on June 7, qualified EU firms could benefit from faster approvals under the proposed mechanism. Commerce Minister Wang Wentao conveyed this willingness during a meeting with EU Trade Commissioner Maros Sefcovic in Paris last week.

"China attaches great importance to Europe's concerns and is willing to establish a green channel for eligible applications, fast-track the examination and approval, and instruct the working level to maintain timely communication," the ministry stated in the release.

The Chinese government has maintained that its rare earth export controls are in line with international practices, particularly in response to Western export bans on advanced technology products to China.

However, business groups such as the European Union Chamber of Commerce have warned that the current system lacks transparency and is hampering operations.

Brandy, EVs, and bilateral bargaining

The rare earth issue is just one of several flashpoints in the growing economic tensions between China and the EU. Another contentious topic is the ongoing trade investigation into European brandy imports, particularly French cognac, on which China had imposed tariffs of up to 39 per cent, interpreted widely as retaliation for the EU’s tariffs on Chinese-made electric vehicles (EVs).

France’s President Emmanuel Macron publicly criticised the move, calling it “pure retaliation”. China’s Ministry of Commerce announced that it would deliver a final decision on the brandy duties by July 5. It added that French producers and associations had submitted applications on price commitments and that the two sides had reached a consensus on core terms, pending final review.

Meanwhile, consultations over a price commitment mechanism for Chinese EV exports to Europe have reached an “advanced stage”, although both sides have acknowledged that further effort is needed.

The European Commission has suggested setting minimum prices for Chinese-made EVs instead of imposing outright tariffs, a proposal Beijing is evaluating along with possible new technical cooperation in the electric mobility sector.

Pressure from the US and global backlash

The EU is not alone in its concerns. The United States has also raised alarms about the implications of China’s rare earth controls. Following a phone call between US President Donald Trump and Chinese President Xi Jinping, both countries agreed to resume trade talks in London, though no clear commitments were made regarding the rare earths issue.

While China has issued more export licences in recent days, American and European industry leaders say the pace remains too slow and supply chains remain vulnerable.

Chinese companies are reportedly hesitant to apply for large-volume export licences, especially for shipments that could end up with US military contractors, amid growing national security concerns.

Beijing’s strategic use of rare earths as leverage has triggered broader concerns among Western policymakers.

Cooperation or confrontation?

The next few weeks may prove pivotal. China is set to host a summit with the EU next month, marking 50 years of diplomatic relations with Brussels. While the rare earth green channel signals a potential thaw in trade relations, the broader dynamics of technology restrictions, reciprocal tariffs, and geopolitical distrust remain unresolved.

As discussions continue, both sides appear to be balancing the need for cooperation against the realities of a rapidly fracturing global trade environment. Whether the latest moves by Beijing will be enough to rebuild trust and prevent further escalation remains to be seen.