2LT International News

BEIJING, China: A little-known office inside China’s Ministry of Commerce has become a powerful chokepoint in the global auto and tech supply chain. With Beijing tightening export rules on rare earth magnets—vital for electric vehicle motors and military tech—a small team of bureaucrats now holds sway over what reaches automakers, chip firms, and aerospace giants worldwide.

Rare earth magnets were added to China’s export control list in April amid rising U.S.-China trade tensions. Since then, every exporter has had to apply for government approval to ship them abroad. The responsibility lies with the Bureau of Industrial Security and Import and Export Control, housed just east of Tiananmen Square.

Though dozens of licenses have been approved, diplomats and industry insiders say that’s a fraction of the flood of applications from around the world. The U.S. government has accused China of slowing approvals and recently announced retaliatory curbs on aircraft engine parts and related equipment.

On Thursday, President Donald Trump and Chinese President Xi Jinping spoke by phone as the rare earth dispute threatened to upset a fragile trade truce.

When the new rules came into effect, the bureau had only 30 staff members. According to sources familiar with a recent meeting between the ministry and Chinese and European semiconductor firms, this number has since doubled to 60.

“We appreciate that MOFCOM has increased its resources to address demand, and they’re working hard and long hours on these issues,” said Adam Dunnett, Secretary General of the European Chamber of Commerce in China. “But the reality is this is having a huge impact on a wide variety of sectors. It’s something that could have been better planned and rolled out.”

According to ministry records, only three senior officials are authorized to approve export permits. According to the Ministry’s website, office hours are limited to weekday mornings and afternoons. The ministry did not respond to requests for comment.

The rare earth logjam highlights China’s leverage through its dominance of production and the bureaucracy now determining supply chains. A Chinese-language guide for the new licensing process runs nearly 14,000 characters.

Bosch, the German technology and engineering firm, said in May that the licensing process was “complex and time-consuming,” partly because of extensive documentation requirements.

Sources said European auto suppliers alone have submitted hundreds of applications, but only about a quarter have been approved. Applications range from dozens to hundreds of pages and must include signed contracts, technical descriptions, and often photos of production facilities.

China says the controls are meant to prevent dual-use items from reaching military applications, but Dunnett noted that even clearly commercial-use cases face hurdles. Companies have also expressed concern over being asked for sensitive intellectual property.

While approvals are expected within 45 working days, any application involving “national security” faces longer wait times—without clarity on how much longer.

Cory Combs of Trivium China noted the delays may reflect either bureaucracy or deliberate strategy. “Is it quick enough for the Trump administration to believe Beijing hasn’t reneged on the Geneva agreement?” he asked.

China publicly claims the rules are non-discriminatory, but behind closed doors, it acknowledged during Geneva talks that the restrictions were indeed countermeasures. Scholars in China have called them retaliation for U.S. chip curbs, describing them as “a short-term form of leverage.”