Tensions remain high as China and EU prepare Brussels meeting on rare earths

A planned meeting between EU Trade Commissioner Maros Šefčovič and his Chinese counterpart was cancelled on Friday, as the European Commission opted for expert-level talks to defuse tensions over Beijing's rare-earth export controls, which EU leaders are calling economic coercion.

The get-together will be held both online and in person in Brussels, as the Commission has been under pressure since Thursday night from the 27 member states, who have called on it to work on a strong response to the unfair trade practices of international partners — first and foremost, China.

The announcement comes right after a trip to Beijing by German foreign minister Johann Wadephul was also cancelled, as a spokesperson for his ministry said on Friday, without specifying whether it was China or Germany that called off the trip.

Beijing is accused by its European counterparts of weaponising rare earth exports, for which it has imposed a Kafkaesque licensing regime since 9 October.

These minerals are key for EU industries, such as the automotive, defence, Greentech and digital sectors.

“It is economic coercion,” French President Emmanuel Macron said Thursday after a European summit, but without specifically recommending the use of what is considered a trade defence “nuclear option,” the “Anti-Coercion Instrument”.

In response to Chinese trade threats, Europeans adopted in 2023 a toolkit to counter third-country state pressure through measures such as tariffs or restrictions on access to public procurement, licenses, or intellectual property rights.

To trigger it, a qualified majority of the 27 member states is required, which is not guaranteed given their differing views.

Pressure from the EU's 27 members

“We talked about the anti-coercion Instrument, but we did not make any decision,” German Chancellor Friedrich Merz said after the summit.

Not all member states defend the same interests vis-à-vis the Asian giant, given their economic ties with Beijing.

Under pressure from France, however, the 27 leaders agreed in their conclusions of the EU summit on the need for the Commission “to make effective use of all EU economic instruments” to deter or counter external threats.

Because the China issue continues to grow for the EU, Macron pointed to “a Chinese economy that invests heavily, following a logic of dumping.”

Dumping allows China to sell its products cheaply on the European market than on its domestic one.

Europeans, particularly in the steel sector, are experiencing this as they contend with China’s production surplus.

Facing US tariffs, Beijing also redirect its exports toward the European market, Macron said, putting additional pressure on the EU.

“Investigations need to be launched to look into this, and a much more systematic approach to economic security is required,” the French president added.