The European Union and Beijing are set to hold talks in Brussels this week, focusing on issues such as rare earth exports control and the dispute involving Nexperia semiconductor company.
Beijing’s restrictions on the exports of key minerals and Nexperia chips have raised concerns about the stability of the European automotive industry’s supply chain.
On Monday (October 27), officials from the EU and China held preliminary talks to prepare for the high-level technical meeting scheduled for Thursday (30th).
The spokesperson for the European Commission, Olof Gill, stated that the EU and China will discuss the issue of rare earth export controls.
Earlier this month, Beijing announced a significant tightening of export controls on rare earths and other key materials. The new regulations stipulate that even if overseas exporters use only trace amounts of Chinese minerals, they need to obtain export permits from authorities.
In addition, Beijing has prevented the Dutch semiconductor company Nexperia from shipping chips out of its Chinese subsidiary. This move was seen as retaliation for the Dutch government’s takeover of the company based in Nijmegen. The Dutch government was concerned that Nexperia’s parent company – China’s Wingtech Technology – would transfer chip technology back to the mainland, so it prohibited Nexperia and its subsidiaries from adjusting assets, intellectual property, business, and personnel within one year.
The EU-China delegation’s talks on Thursday will coincide with the summit between U.S. President Trump and Chinese Communist Party leader Xi Jinping in South Korea. U.S. Treasury Secretary Scott Bessent stated that China has agreed to delay the implementation of expanded mineral licensing by a year for further review.
Brussels and European countries are exploring solutions to the rare earth shortage.
The EU is developing an emergency plan, which includes increasing domestic mineral production, diversifying supplier networks, and recycling materials.
The European Commission also plans to establish a joint procurement and strategic reserve center.
According to a source cited by Bloomberg, EU and Chinese officials have preliminarily discussed allowing temporary export of chips by Nexperia’s Chinese company to ensure continuity of supply and negotiation for a long-term solution.
The source added that the automotive industry sees this as the most feasible way to avoid large-scale production shutdowns.
EU Trade Commissioner Maros Sefcovic posted on social media on Monday that he had an important conversation about Nexperia with Dutch Minister of Economy, Carremans.
“Restoring and safeguarding the semiconductor supply chain is crucial for Europe and our global partners. Thanks to the Netherlands for their efforts in protecting our common economic security,” he wrote.
A spokesperson for the German Ministry of Economics, Luisa-Maria Spoo, stated at a government press conference on Monday that Germany highly values the challenges faced by companies and is concerned about potential supply chain risks. She said Germany is working with China to safeguard German economic interests. The automotive industry is the lifeblood of Germany’s industrial economy.
German Foreign Minister Waldvorr has postponed his planned Sunday visit to China. According to Reuters, as China only agreed to one of his meeting requests, Waldvorr decided to cancel his scheduled trip at the last minute.
Waldvorr called for “fair” trade with Beijing in terms of chips and rare earth minerals on Monday. He added that the EU must diversify its key mineral and component suppliers to reduce the risk of future supply interruptions.
The European Union institutions have been preparing trade countermeasures to counter Beijing’s restrictions, thereby seeking the initiative in negotiations.
EU Commission President Ursula von der Leyen stated over the weekend that all options are on the table. Earlier, French President Emmanuel Macron called for the use of retaliatory tools in the dispute with Beijing, which is the EU’s strongest trade tool.