China Eases Rare Earth Export Restrictions: What It Means for India and Global Supply Chains

China's New Export Policy on Rare Earth Metals

Beijing: On Friday, China announced it would permit the export of its rare-earth metals for civilian applications, responding to India's ongoing requests for the lifting of restrictions on these essential materials used in various modern technologies.

During a media briefing, Foreign Ministry spokesperson Guo Jiakun clarified that China's export controls on rare earth materials are not aimed at any particular nation, addressing India's appeals for the resumption of exports where China holds a significant market share.

"The Chinese government will process applications for civilian use exports promptly, provided they adhere to regulations," he stated, emphasizing that these metals would not be available for defense manufacturing.

Guo also expressed China's willingness to enhance dialogue and collaboration with other nations to maintain stability in global industrial and supply chains.

However, he reiterated that permits would be strictly for civilian purposes, given the potential dual-use nature of these materials.

"Implementing export controls aligns with international standards and reflects China's commitment to global peace and regional stability, as well as its active role in non-proliferation efforts," Guo added.

On Thursday, China confirmed the resumption of rare-earth metal exports, lifting earlier restrictions.

He Yadong, a spokesperson for the Commerce Ministry, announced that the ministry had approved several applications from Chinese exporters for general export licenses related to rare earth items.

China dominates the global rare earth market, accounting for approximately 70% of mining and nearly 90% of processing, making it a crucial supplier for electronics, automotive, renewable energy, and defense sectors.

The United States, European Union, and India are the primary importers of China's rare earth metals.

In light of the ongoing trade tensions with the US, China had previously implemented export controls on these vital materials.

Reports from India indicate rising concerns over potential shortages of rare earth metals, particularly affecting the automotive industry, prompting New Delhi to address these issues in various bilateral discussions.

Following an agreement with the US to allow the export of semiconductor chips essential for China's growing AI sector, Beijing began to relax its export controls.

India has been actively urging China to resume rare earth exports, raising the matter in multiple bilateral dialogues, including recent consultations between foreign ministry officials on December 12.

During discussions in Beijing, the Ministry of External Affairs (MEA) highlighted the urgency of resolving outstanding export control issues, while also touching on regional and global matters of mutual interest.

In addition to rare earths, India has also requested China to allow the export of heavy boring machines for mining purposes.