Will China loosen its control over critical mineral exports?

Will China loosen its control over critical mineral exports?

Analysts at Capital Economics questioned in a client note on Thursday whether China will loosen its control over critical mineral exports after June trade data showed a rebound in rare earth exports.

Despite the increase, the firm added that shipments remain well below pre-Liberation Day levels.

Analysts point out that after pressure from the U.S. and other trading partners, China agreed to increase the pace of export license approvals in June.

June trade data suggests that Beijing met the commitment, with rare earth exports more than doubling between May and June. However, "China's rare earth exports remain weak," Capital Economics stated, noting that they are nearly 40% lower than in June of last year.

Additionally, exports of other critical minerals have continued to decline, according to the firm.

"While the declines in rare earth exports following the export controls in April were particularly pronounced, China's critical mineral exports have been plummeting sharply since the beginning of this year," the firm added.

While Trump announced last month that China had agreed to supply "complete magnets and any rare earths needed... in advance," Capital Economics said that China's signals have been less positive.

"China shows few signs of being willing to loosen its control over the global supply of critical metals," the firm commented.

"The conclusion is that, although China's relationship with the U.S. seems to be improving, Beijing will continue to maintain strict control over critical mineral exports," Capital Economics concluded.

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