China Says Rare Earth Licenses to Europe Will Keep Flowing Whatever Happens to the U.S. Trade Truce

Since EU trade chief Maroš Šefčovič wrapped up talks in Beijing on Oct. 9, the open question has been how firm China's rare earth promises to Europe really are. Beijing has now given a fresh answer, though not one that changes who holds the switch.

Commerce Ministry spokesperson He Yadong told CNBC that China is willing to keep approving rare earth export licenses to Europe whether or not its trade truce with Washington is extended beyond January. He was asked about the impact of the U.S. deadline.

Why the U.S. deadline matters to Europe

In October 2025, Beijing tightened controls on all rare earth exports, including products containing as little as 0.1% Chinese-sourced material. That followed a U.S. rule extending its entity-list blacklist to majority-owned subsidiaries of listed Chinese firms, a change that could have reached some 20,000 entities.

At a late-October 2025 meeting, Xi Jinping and Donald Trump agreed to suspend both measures for a year. Treasury Secretary Scott Bessent said ahead of the leaders' most recent summit that the truce had been extended by two months, to January.

The risk for Europe was spillover. If Washington and Beijing resumed the fight, European manufacturers could get caught in the crossfire. His comment is meant to say they won't.

What China actually committed to

The EU-China joint statement of Oct. 8 is specific, and narrow. "China is willing to continue facilitating export licenses for the supply of rare earths and permanent magnets to the EU through the fast-track mechanism," it reads. In return, "the EU side will continue to work with Member State authorities to facilitate specific priority licences to China among dual-use sectors."

That is a license channel, not a repeal of controls. Beijing still decides who gets approved and when.

Šefčovič called the outcome "a crucial first step" and said it opens the prospect of cutting Chinese hybrid vehicle exports to the EU by more than half over four years. The EU's deficit with China ran to roughly €1 billion a day in 2025, according to figures cited around the talks.

The critics' read

Not everyone sees a win. Writing in a commentary for The Epoch Times, Anders Corr called the arrangement a "Faustian bargain." His argument: Beijing is trading continued rare earth access for European dual-use technology that has both military and civilian applications.

A Tech Times analysis reaches a similar conclusion on the structure. It says the package gave Europe "access to the licensing system China controls rather than a path out of the dependency that system produces." The same piece notes that China did not eliminate its export controls. It agreed only to keep processing applications through a mechanism it runs at its own discretion.

The EU framed the dual-use language differently. The joint statement describes it as facilitating priority licenses for Chinese buyers in dual-use sectors, not as a technology handover. Neither the Commission nor Beijing has published a list of what that would cover.

The same dependency worries U.S. suppliers. REalloys CEO Lipi Sternheim told Fox News Digital that China's dominance of the rare earth supply chain gives Beijing leverage over American defense and technology industries. He said the goal should be keeping supplies flowing for two to three years while domestic production ramps up.

Europe's own backup plan

Brussels is not relying on promises. On Oct. 9, Industry Commissioner Stéphane Séjourné announced EU backing for 46 strategic critical-materials projects with a combined cost of €21 billion. "We could face a crisis in the coming months," he said. "We're pulling out all the stops to move as quickly as possible."

The €21 billion is the projects' cost, not a check from Brussels. Flagship status brings no direct funds. It brings faster permitting.

Séjourné pointed to three projects. The Carester rare earths plant near Pau, France, is expected to be running in late 2026 and to produce dysprosium and terbium, "two raw materials for which we are almost entirely dependent on China." He said it could account for about 15% of global production of those oxides. A gallium plant in Greece is already operating. So is Keliber, a lithium processing plant in Finland that received €150 million in European Investment Bank support.

This is the second batch of flagship projects since the 2024 Critical Raw Materials Act. The EU points to Japan as the model: it cut its rare earth dependence on China to 60% from 90% since 2011, when Beijing halted exports of about 20 materials to Tokyo. That took 15 years, and Japan is still at 60%.

What comes next

EU leaders are meeting in Brussels on Oct. 15-16 and are expected to review the China negotiations. Also on the table is a proposed trade "diversification tool" that, as described in the Epoch Times commentary, could block Chinese imports within 24 hours if Beijing imposed major economic distortions on Europe. Feedback on that proposal is open until Oct. 27.

The Commerce Ministry's pledge has no expiration date and no enforcement mechanism that the EU controls. The January U.S.-China deadline is the first real test of whether the licenses keep moving once Washington and Beijing stop talking.