China-EU trade talks make positive progress

Details of trade negotiations between China and the European Union have started to emerge and the reaction from companies has been largely positive.

Chinese Minister of Commerce Wang Wentao met with his EU counterpart Maroš Šefčovič in Paris to discuss a range of key issues - from the export of electric vehicles to the exploitation of China's rare earth reserves.

China holds approximately 90 % of the world's rare earth reserves - such as allanite, brockite and titanite - as well as various types of magnets. These raw materials are essential for the production of cars, aircraft, wind turbines, fighter jets and many other technologies.

After US President Donald Trump imposed tariffs on imports as part of his well-known "Liberation Day" initiative, governments around the world began frantically searching for new avenues for successful international trade - and especially new partners.

In response to these tariffs, Beijing has decided to restrict exports of a wide range of rare earths and minerals. Companies wishing to continue to source them had to apply for an export licence.

According to China's Ministry of Commerce, rare earth-related products are dual-use - they can be used for both civilian and military purposes. According to the Ministry, the introduction of export controls is in line with international practice. A ministry spokesman said the measures are aimed at better protecting national security and interests while meeting international non-proliferation commitments - reflecting China's commitment to world peace and regional stability.

China's Ministry of Commerce subsequently significantly strengthened the licensing approval process, but as the weeks passed it became increasingly apparent that delays were occurring and that production chains were beginning to suffer.

German carmaker BMW has predicted serious problems. Many other car and aircraft manufacturers began to experience rare earth shortages.

It was against this background that the negotiations in Paris between China and the EU took place, which Wang Wentao and Maroš Šefčovič conducted in an atmosphere described as friendly and constructive.

Several agreements have already been reached. China has promised a "green light" for the processing of export licence applications - and some have already been granted. Beijing has committed to speeding up the approval process and significantly accelerating rare earth exports.

Since US tariffs shook global financial institutions, countries and regions around the world have been forming new strategic partnerships.

These negotiations are seen as a "reset" of relations between China and the EU - a reset that is described as fitting and timely as the world's second largest economy and the world's largest trading bloc celebrates 50 years of friendship and cooperation.

CMG