Volkswacht Bodensee - EU business lobby head says China rare earths snag persists

China dominates the global industry for extracting and refining the strategic minerals, giving it vital leverage in a renewed trade war this year with Washington.

Since April, Beijing has required licences for certain exports, sending ripple effects across worldwide manufacturing sectors.

Following a tense summit in July hosted by Beijing, European Union chief Ursula von der Leyen said that leaders had agreed to an improved mechanism for Chinese exports of rare earth minerals to the bloc.

But in its annual position paper released Wednesday, the European Union Chamber of Commerce in China said that "many companies -- particularly small and medium-sized enterprises (SMEs) -- are still experiencing significant supply chain disruptions".

"No long-term, sustainable solution has been put forward," it said, adding that the Chamber is in "regular contact" with Chinese authorities on the matter.

"We have a number of members who are right now suffering significant losses because of these bottlenecks," Chamber president Jens Eskelund told journalists.

"We have raised with our members more than 140 applications and it's a fraction of these so far that have been resolved," he said.

"So this has not gone away."

In its latest publication, the lobby representing over 1,600 member companies put forward 1,141 recommendations to Chinese policymakers, aimed at smoothing over various obstacles faced by European firms in the country.

Chief among those hurdles this year, Eskelund said, is a wavering Chinese economy that has struggled to mount a robust rebound since the end of the Covid-19 pandemic.

Sluggish consumption, a manufacturing glut and prolonged woes in the country's vast property sector are among the main challenges now vexing Beijing policymakers and businesses.

In a sign of entrenched woes facing the world's second-largest economy, data released this week showed factory output and consumption rising in August at their weakest pace in around a year.

"I actually see a greater convergence in terms of the challenges Chinese companies have and the challenges foreign companies have," said Eskelund.

"The big enemy here -- that's the state of the domestic economy and supply-demand balance," he said.

"I think we see completely eye-to-eye with the vast majority of Chinese companies."

J.Sauter--VB