China’s firm hold on rare earth minerals is causing substantial financial losses for foreign companies, with the European Chamber of Commerce in China (ECCC) reporting that one member has lost millions of euros. Many others still face unclear processes for accessing these vital resources.
Rare earth elements are essential for technologies including electric vehicles and semiconductors. China dominates this sector, producing over two-thirds of the world’s supply in 2024 and holding nearly half of global reserves, according to the U.S. Geological Survey.
Beijing has tightened export controls, requiring proof that shipments will not support military use and issuing single-use export licences since a trade deal with the U.S. in May.
Although Volkswagen reports a stable supply of parts containing rare earths, the ECCC notes growing difficulties obtaining export licences, which do not ensure steady access. Nearly half of the EU’s rare earth imports last year came from China, with few alternatives available due to the specialised nature of mining and processing.
This supply squeeze adds to challenges faced by international companies amid trade tensions and China’s slowing economy, affected by a property slump and industrial overcapacity. A recent survey by the American Chamber of Commerce in Shanghai found business confidence at a five-year low, with many firms redirecting investments towards Southeast Asia.
Warnings of a rare earth shortage have intensified calls for policy changes in China and for global efforts to develop alternative sources and recycling. The ECCC plans to update EU officials in Brussels and urges Beijing to address overproduction and allow greater private sector participation in key industries.
Jens Eskelund, ECCC president, said recent talks with China’s Commerce Ministry have focused on rare earth access. China’s leaders are set to finalise their 2026–2030 five-year plan in October, a strategy that “certainly sets the direction” for future economic and trade policies.
With bilateral trade reaching €732 billion in 2024, European businesses will closely watch China’s next moves on resource policy and market openness.