China Develops New Rare Earth Export Licensing System Following US-China Agreement
China is reportedly creating a streamlined rare earth licensing regime to accelerate shipments, following a recent US-China agreement. The new system, while not completely removing export restrictions, could ease the export process for rare earth materials. Licenses would be valid for one year and likely allow larger export volumes. China has paused restrictions imposed in October for one year, but broader controls from April remain. This move comes as China's export sector faces challenges, with overall exports declining by 1.10% and US-bound exports dropping by 25%.
*this image is generated using AI for illustrative purposes only.
China has reportedly begun developing a streamlined rare earth licensing regime that could accelerate shipments, although it falls short of completely removing export restrictions. This development comes in the wake of a recent agreement between US President Trump and Chinese President Xi, and amid ongoing trade challenges.
According to sources, the Ministry of Commerce has informed exporters that they can apply for new permits and has outlined the required documentation. This new system could potentially ease the export process for rare earth materials, of which China produces over 90% of the world's processed supply and magnets.
Key Points of the New Licensing System
- Licenses would be valid for one year
- Likely to allow larger export volumes
- May be more difficult to obtain for defense-related users
Following the US-China agreement, China has paused restrictions imposed in October for one year. However, broader controls implemented in April remain unaddressed publicly.
The current restrictions require licenses for every cargo, creating an onerous process that has caused shortages and even halted parts of the auto industry. Of the 2,000 EU applications since April, just over half have been approved.
This move comes as China's export sector faces headwinds:
Trade Performance Overview
| Metric | Performance | Previous Period |
|---|---|---|
| Exports | -1.10% | N/A |
| Imports | +1.00% | +7.40% |
| US-Bound Exports | -25.00% | N/A |
The export decline can be partially attributed to a high comparison base from the previous year when exports had surged by over 12.6%.
Despite these challenges, the potential easing of rare earth export restrictions signals a possible shift in China's approach to controlling exports of these critical minerals used in various high-tech applications.
Related Development: Thorium-Based Nuclear Energy
In a related development, China has made a significant breakthrough in thorium-based nuclear energy. The country has successfully developed a two-megawatt liquid-fuelled thorium-based molten salt reactor (TMSR) in the Gobi Desert after nearly 15 years of research. This technology offers several advantages, including reduced radioactive waste and improved fuel utilization.
As China navigates these trade challenges and technological advancements, the implementation of the new rare earth export licensing system and its ability to stimulate domestic demand will be crucial in shaping its economic trajectory in the coming months.
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