China has begun issuing its first wave of streamlined rare earth export licenses, creating a bifurcated market for Western automakers. While the move restores critical supply lines for companies like Ford Motor Co., it leaves others, notably Volkswagen, in a state of uncertainty. This development signals a strategic pivot in the global critical minerals trade, serving as both a stabilization measure and a reminder of Beijing’s leverage in the ongoing economic standoff.
The issuance of year-long “general licenses” comes in the wake of recent diplomatic coordination between Chinese President Xi Jinping and former U.S. President Donald Trump, who met in South Korea earlier this year. Their agreement temporarily suspended China’s stricter rare earth export controls, which were imposed earlier in 2025.
The earlier policy, which began in April, required exporters to obtain individual shipment licenses, creating bottlenecks that halted production in key sectors, from electric vehicles to defense systems. This effectively handed Beijing significant leverage in trade negotiations. In contrast, the new general licenses enable Chinese exporters to send multiple shipments to approved importers without requiring repeated approvals, offering a degree of stability and predictability that was previously absent under the prior system.
Among the first companies to benefit are Chinese rare earth magnet suppliers to Ford. Ford confirmed this week that its suppliers have received approvals under the new general licensing framework, positioning it as the first foreign customer to acknowledge operational benefit from the policy shift. "While we are pleased that some of our suppliers have secured these approvals, we urge the U.S. and Chinese governments to continue their collaboration to fully resolve supply chain issues,” Ford said in a statement to Reuters.
However, the diplomatic cooperation appears so far to be heavily skewed toward U.S. interests. Germany’s Foreign Minister Johann Wadephul noted that German automakers, including long-term players in China’s auto market such as Volkswagen, were excluded from this first round of licenses.“There is still quite a lot of work needed to persuade Beijing to issue licenses to our companies,” Wadephul commented, signaling a growing concern among European manufacturers who face the prospect of prolonged shortages and stalled production lines.
November statistics from China’s General Administration of Customs show the immediate impact of the policy change. Rare earth exports surged 26.5% from October, jumping from 4,342 tons to 5,493.9 tons. This marked the second consecutive month of export increases and suggested sustained momentum following the implementation of the general license system.
Year-to-date export figures through November totaled over 58,000 metric tons, representing an annual growth of 11.6%. Analysts say this rebound helped offset many of the production delays caused by the seven-month disruption earlier in the year.
China controls approximately 90% of the world’s rare earth refining capacity, cementing its role as a strategic gatekeeper for these 17 critical minerals used in manufacturing electric vehicles, smartphones, wind turbines, and advanced weapons systems.
By linking rare earth flows to diplomatic engagement, Beijing has demonstrated how mineral policy can influence broader global trade dynamics. The April-to-October disruptions, brought about by the tight licensing regime, severely affected international supply chains and underscored the sector’s vulnerability to administrative decisions.
The revised general license system granted initially to large Chinese firms such as JL Mag Rare Earth, Ningbo Yunsheng, and Beijing Zhong Ke San Huan High-Tech shows an attempt to normalize exports while maintaining regulatory control.
The automotive sector has been among the hardest hit. The constrained supply of neodymium, praseodymium, and dysprosium used in the production of high-performance permanent magnets caused major disruptions to electric vehicle production cycles from April to October. The move to general licenses provided near-immediate relief.
Consumer electronics companies also welcomed the increased supply of rare earths used in display screens and magnetic components, helping them rebuild depleted inventory.
In the aerospace and defense sectors, where rare earths are critical for guidance systems and propulsion technologies, the export rebound may allow replenishment of strategic reserves. The year-long license duration now offers more reliable procurement planning, particularly vital for military supply chains.
The shift from transaction-based export approvals to standing general permits reflects China’s calculated approach to controlling strategic commodities while engaging with key trade partners. Yet, the selective issuance of licenses favoring U.S. companies like Ford while sidelining European interests raises questions about long-term geopolitical implications.
More granular, country-by-country export data, due later in December, will reveal whether these policy changes are broadly inclusive or serve primarily to strengthen Sino-American ties at the expense of others.
China’s 26.5% month-over-month jump in rare earth exports in November underscores the rapid impact of well-timed diplomacy and administrative reform. For now, companies like Ford are clear beneficiaries of this thaw in trade tensions. However, many others remain on the sidelines, watching closely as Beijing decides how and to whom it grants access to some of the world’s most strategically important materials.
In a landscape marked by technological ambition and geopolitical rivalry, access to rare earths is more than a supply chain issue; it is a question of global competitiveness and strategic resilience. The evolution of China's export policy may have only just begun.