Europe can’t pivot from its rare earth dependency on China

Breaking free from China’s dominance of rare earths will not be a simple feat for the European Union, even though both sides reached a tentative deal to ease Beijing’s limitations on their exports.

Considered one of the few breakthroughs of the 24 July summit in Beijing, Commission President Ursula von der Leyen announced an “upgraded export supply mechanism” that will “immediately check and solve problems or issues if there are bottlenecks”.

Beijing’s ironclad restrictions, introduced in early April against the backdrop of escalating tensions with the United States, triggered alarm across Europe, as rare earths are essential components in advanced technologies and defence.

Highlighting the “significant” strain on European companies caused by these export controls, von der Leyen underscored the need for “reliable and secure supplies” of critical raw materials from China to maintain trust in “our trade relationship”.

Overwhelming dominance

China’s grip on the sector is astounding from a European risk perspective; it controls 85 per cent of global rare-earth processing and more than 90 per cent of magnet production.

The export restrictions exposed the EU’s vulnerability to Beijing’s supremacy over the elements.

Although June saw a 245 per cent surge in China’s exports of rare-earth magnets to the EU compared to May, the figure remained 35 per cent lower than the level reported a year earlier.

The one-day summit in Beijing, marking half a century of diplomatic relations between China and the EU, placed the issue high on the agenda. But despite the newly agreed mechanism, experts see little room for optimism.

Europe’s ‘I want to break free’ moment

Writing for Foreign Policy, Christina Lu argues that Europe will have a hard time escaping China’s grip on these elements. Decades of Chinese investment has created an industry with unmatched expertise, infrastructure and pricing power.

According to Lu, an energy and environment reporter, replacing this system demands more than just new mines – it requires end-to-end supply chains with technical know-how and capital.

Unlike the US, the EU must also overcome internal divisions among its member states. Current trade tensions do not help the bloc’s case. On the one hand, Trump’s trade policies loom; on the other, China is demanding recalibrated ties.

China, not the problem?

In Beijing, the issue is viewed differently. President Xi Jinping boldly stated that Europe’s problems do not stem from China, urging the bloc to uphold “openness and cooperation, properly managing differences”.

Reporting for the South China Morning Post, Finbarr Bermingham notes that this blockertion only underscores the stark divide in how each side perceives the state of their relationship.

The summit was, however, presented as a necessary exercise in high-level dialogue. Xi described China and Europe as “big guys” in the international system, with a responsibility to strengthen communication and mutual trust.

No united front

Beyond sugar-coated descriptions or wishful thinking of what the summit should have been, the high-level dialogue did little to genuinely bring the EU and China into a united front against Trump’s tariff war.

For its part, the EU is focused on achieving a negotiated solution to avoid the 30 per cent levy Trump has threatened to impose on products imported from the 27-nation bloc from 1 August.

Meanwhile, Chinese officials are preparing for a meeting in Stockholm to discuss a deadline extension for negotiating a trade deal with the US. Treasury Secretary Scott Bessent stated that these talks would focus on rebalancing US-China trade relations.

Missed chance

Deep-seated mistrust, a refusal to walk in each other’s shoes, hawkish stances followed by efforts to soften rhetoric – none of it helps either side. Another shot at meaningful reconciliation may now be harder to come by.

The tentative rare-earth agreement reached during the summit may not suffice this time. Vulnerabilities and insecurities are running high, and the consequences of inaction will become increasingly difficult to ignore.

There is a saying that when two fight, a third one wins. But when three fight… Well, may the best one win!

[Edited By Brian Maguire | Euractiv’s Advocacy Lab ]