As Beijing tightens its grip on rare earths that Western countries need for green energy, defense and digital technology, Europe is faced with an unpleasant truth: it will not escape China’s dominance anytime soon.

The Chinese government’s sudden imposition of strict controls on exports of rare earths and the raw materials needed to produce them has sharpens her trade dispute with the US, while it is estimated that it will cause massive and immediate collateral damage and in the European Union, with the issue occupying the agenda of the summit that will take place today, Thursday.

“The supply crisis of critical raw materials is no longer a distant risk. It’s just around the corner”said the president of the European Commission, Ursula von der Leyen, in a speech before the summit.

“Now we must take immediate action. We need faster and more reliable supply of critical raw materials to Europefrom trusted partners. I am ready to propose further measures to ensure Europe’s economic security and will speed up the measures we have already put in place.” noted.

Beijing’s announcements provoked the strong reaction of US President Donald Trump, who has threatened to raise tariffs on Chinese goods to 100%. The US president is expected to hold a high-level meeting with his Chinese counterpart, Xi Jinpingon the sidelines of the Asia-Pacific summit in late October.

The EU, which imports almost all of its rare earths and permanent magnets from China, is in center of controversy. “We have no interest in escalating the tension,” EU trade chief Maros Sefcovic told reporters on Tuesday. “However, this situation casts a shadow on our relations. Therefore, immediate resolution of the issue is necessary».

China and the EU will “intensify contacts at all levels” on the matter, Sefcovic added.

Wang Wentao, China’s Minister of Commerce, accepted invitation to visit Brussels in the coming days in order to discuss limitationsSefcovic said after a two-hour phone conversation between the two sides.

The EU is also consulting with G7 for one coordinated response on mineralsahead of the October 30-31 meeting in Canada.

However, as Politico points out, beyond diplomatic reactions and possible reprisals, the Europe has no other way to escape China’s domination in the rare earth sector, which has been built up over decades by Beijing. At least for now.

“In the short term, there’s nothing you can do except try to negotiate with the Chinese”said Philip Andrew Speed, senior research fellow at the Oxford Institute for Energy Studies.

“Hit where it hurts”

China dominates the entire rare earth supply chain: from the permanent magnets used in electric vehicles and them wind turbinesup to F-35 fighter jets and warships.

Under the new export controls, importers will need permission from the government not only for permanent magnets, but also for the refined metals and alloys used in their construction.

China has already capitalized on its leadership in production and the refining of critical raw materials and specifically of rare earths such as scandium, yttrium and dysprosium in response to tariffs imposed by Trump in April. Eventually, the White House relented.

And this time, Chinese export controls are “retaliation for US policy,” a source in the Chinese business sector told Politico.

However, the EU is also affectedwith the effects being immediate and huge, especially in her field defenseas reported by the European Council on Foreign Relations.
“The EU’s defense industry risks being paralyzed, as the lack of stock may make it difficult production and her delivery of sufficient weapons for him war in Ukraine», is emphasized.

According to the International Energy Agency, China represents the 61% of rare earth mining and 92% of their refining. It provides nearly 99% of the EU’s supply of the 17 rare earthsas well as about 98% of rare earth permanent magnets.

Diplomacy of the underdog

In addition to a monopoly on minerals, Beijing has create one legal framework to exploit itthrough a set of export control measures, similar to what the US has done to limit high-tech exports to China.

OR EE does not have however corresponding “arsenal” to correspond with him same way. While export controls are now a key option in Washington and Beijing’s trade negotiation strategies, for Brussels the protection her national security remains the only legal justification for the implementation of such measures.

“The EU will have to find a way to live in this new reality,” said Antonia Hmaidi, senior analyst at think tank Merics, adding that the EU may have to abandon its faith in trading system based on the rules used after World War II.

“This could also mean that the E.U will choose not to play this gamebut then he will need to find something different»he said, adding that access to the European market could be a strong alternative.

Ahead of today’s summit, calls for the enable anti-coercion mechanism (ACI), the only trade policy tool the EU can use against economic bullying.

Operating primarily through deterrence, the so-called “commercial bazooka» of the EU aims to prevent foreign forces from to exert pressure in European countries, providing for measures to be taken only as a last resort.

“These are the usual threats from the usual suspects, but activating ACI is not being seriously considered at this stage”said an EU diplomat who asked to remain anonymous.

Asked whether the EU executive consider enabling ACIthe Commission’s Deputy Chief Spokesperson, Olof Gill, said: “Right now we’re focusing on diplomatic involvement and we are not going to speculate about any other possibility.”

Diplomacy, however, yields minimal results.

In June, Beijing agreed to create a “green stripe» for the European companiesin order to accelerate the approval of export licenses. However, according to Sefcovic, only half of the 2,000 priority applications submitted by European companies to the Chinese authorities “were properly considered.”

In the future, the EU must drastically intensify its efforts to become as independent as possible from China. In a meeting with industry leaders on Monday, the Industry Commissioner, Stéphane Cezournetstated that the EU’s response should is based on two pillars: a diplomatic solution and a more resilient supply chain. However, the latter requires a lot of efforts, partnerships and funding.