Lethal weapon: Why Europe can’t afford to blink on China’s rare earth blackmail
China’s export restrictions are bringing European factories to the verge of shutting down. Yielding to Chinese pressure today will only invite more sophisticated threats tomorrow; only a united and assertive EU response can stop the cycle of coercion and protect Europe’s industrial core
Problem
Tariff threats from the United States have been making headlines for months, but Europe faces an even greater danger: China’s stranglehold on rare earth elements and permanent magnets. European companies need these to produce cars, energy technology, and weapons, and they obtain them almost exclusively from China. Beijing is aware of Europe’s predicament and uses export restrictions as a bargaining tool that has the potential to halt production in Europe’s core industries and cripple its economic base. Additional US tariffs are serious, but Chinese export restrictions could be lethal.
At the G7 meeting last week, the president of the European Commission, Ursula von der Leyen, called out China’s behaviour as a strategy of “dominance, dependency, and blackmail.” Beijing is applying just enough pressure to ensure industry compliance, but not quite enough to generate a collective response. As a result, the reactions from member states have been muted, allowing China to continue its strategy unhindered.
Solution
The visit of Chinese Foreign Minister Wang Yi to Brussels, Berlin and Paris this week is an opportunity for European leaders to push back hard against Chinese coercion and assert European power. Strong words from EU leaders alone will not suffice however, French and German leaders will also have to get more vocal and forceful in pushing back against coercion—given that Wang is visiting their capitals.
Support from member states will give von der Leyen and the president of the European Council, Antonio Costa, leverage to negotiate with Chinese leaders on July 24th and 25th, when they will meet their counterparts in Beijing and Hefei for the EU-China Summit, marking the 50th anniversary of bilateral diplomatic relations. They will face an emboldened Chinese leadership, buoyed by its tactical success in the trade negotiations with America in Geneva. China’s rare earth restrictions forced Washington to make concessions. Now Beijing wants the same from Europe: scrap EU electric vehicle tariffs, open doors to Chinese investment and halt probes into Chinese subsidies.
The EU Commission needs to collectively push back against this bullying, but to do so it will need member states, particularly the large ones, to throw their support behind Brussels’ approach of standing firm and not giving in to coercion.
Context
Hopes for a Chinese “charm offensive” toward Europe were overblown. Xi Jinping declined to come to Europe for the anniversary summit and instead insisted on meeting in Beijing. China’s leadership has also ramped up the pressure. It imposed new export controls on critical rare earth elements and magnets on April 4th just days after Trump’s tariff hike—forcing European companies to scramble to adapt and push for exemptions. Under the new restrictions, companies must now hand over sensitive information to the Chinese authorities on customers, products, production methods and even their own structure. The Chinese leadership is thus amassing an extraordinary amount of economic intelligence that can be used to sharpen its ability to inflict highly targeted pain on global supply chains. If Europe gives in now, it will only invite further and more sophisticated bullying.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.