EU Chief Considering All Options Over China Rare-Earth Threat

European Commission President Ursula von der Leyen said Brussels is considering all options to react to China’s rare-earth threat. 

“In recent weeks and months China has dramatically tightened export controls over rare earths and battery materials,” she said at the Berlin Global Dialogue conference on Saturday, adding that this poses a “significant risk.”

In her most explicit comments since China’s announcement earlier this month of plans to restrict rare earth exports, von der Leyen said that in the short term, Brussels was focusing on finding solutions with our Chinese counterparts. 

“But we are ready to use all of the instruments in our toolbox to respond if needed. And we will work with our G-7 partners on a coordinated response,” she added. 

Her remarks come days after French President Emmanuel Macron told European Union leaders to consider using the so-called anti-coercion instrument — the bloc’s most powerful trade tool — against China if they aren’t able to find a resolution to Beijing’s planned export controls on critical raw materials.

The tool, known as ACI, has never been used. It was designed primarily as a deterrent, and if needed, to respond to deliberate coercive actions from third countries that use trade measures as a means to pressure the policy choices of the EU or its members.

Von der Leyen also warned that while China’s move on rare earths is part of “wider economic friction” between the US and China, it has a “big impact” on Europe, noting that 90% of the region’s consumptions of rare earth magnets are China imports. 

Europe is becoming increasingly worried about China’s restrictive trade measures. The EU is scrambling to protect its industries from a glut of subsidized Chinese competition. Beijing also recently announced strict new export controls on rare earth minerals that could imperil Europe’s industry – accelerating its mounting restrictions on foreign firms.