The European Union and China are set to hold high-level talks in Brussels this week to defuse growing trade tensions following Beijing's imposition of new restrictions on exports of rare earths and semiconductors, which threatens to disrupt the European automotive and technology industries, Bloomberg reports.
China recently announced stricter export licensing rules for critical minerals, according to which even products containing small amounts of materials of Chinese origin must receive a permit, which has caused concern among EU governments and manufacturers. The move coincides with China's blockade of chip exports from Nexperia's Chinese subsidiary, in response to the Dutch government's takeover of the company over security concerns related to its Chinese owner Wingtech.
While the United States and China are preparing parallel talks in South Korea, Washington has secured a one-year postponement of the expansion of the licensing regime in China. Meanwhile, Brussels is developing an emergency plan to reduce supply risks by increasing domestic mining, diversifying suppliers, and creating a joint procurement and inventory creation mechanism. Temporary exceptions for Nexperia exports are being considered to prevent major production disruptions in the European automotive sector. Germany expressed particular concern, calling for cooperation to protect its economy, and EU leaders, in particular Ursula von der Leyen and Emmanuel Macron, warned that retaliatory trade measures, such as the EU's instrument against coercion, are possible if negotiations fail.
