Bureaucracy, a weapon in the economic war. The world car chain, controlled by several Chinese officials

The bureaucracy in Beijing blocks access to magnets from rare lands, indispensable for electric cars, wind turbines and fighters, affecting the global supply chain and tensioning for the US.

The fate of the global car industry is decided by a small group of bureaucrats from China photo shutterstock

In a massive gray building located east of the Tiananmen Square in Beijing, a small team from the China Ministry of Commerce decides the fate of the global auto industry-an export permit for rare earth magnets, one by one, writes Reuters.

China owns almost a monopoly on rare earth magnets – an essential component for electric vehicles – and added to a list of export control in April, during the commercial war with the United States, thus forcing all exporters to apply for licenses from Beijing.

The responsibility of revising these export permits rests with the Industrial Security and Control Import-Export-part of the Ministry of Commerce-and magnets are essential not only for car engines, but also for wind turbines or F-35 American fighter aircraft.

Although dozens of licenses have been issued since the end of April, directors, lobbys and diplomats say that they are only a small part of the requests from car builders, semiconductor companies and aerospace companies around the world, since the new controls were introduced.

Washington states that delays in issuing licenses show that Beijing does not comply with the commitments made during the commercial discussions in Geneva last month, and has responded with export restrictions for plane engines and other equipment.

When the new magnets were introduced, the responsible office had a total of only 30 employees, although this number later doubled, reaching about 60, according to two informed sources about a recent meeting between Chinese and European companies in the semiconductor industry.

According to the register of personnel published on the website of the Ministry of Commerce in June 2024, only three senior office officials have the authority to approve the export permits.

On the same site, the work schedule of the office is displayed as follows: on the working days, between 8: 30-11: 30 and 14: 00-17: 00. Reuters failed to determine if several officials were employed or if more officials can approve the applications.

Strangulation point

The global concern on the shortage highlights the immense influence acquired by China through its close monopoly on the production of rare lands. At the same time, it reveals a complicated bureaucratic process that has passed from a simple control to a real blockage.

“The process for our suppliers to apply for export licenses for various types of rare lands … Since Aprus, it is a complex and time -consuming, partly because of the requirements to gather and provide a lot.”said a Bosch spokesman, the German giant from engineering and technology last month.

A guide in Chinese published by the Ministry at the end of March has almost 14,000 characters. The official guidelines of the ministry require information such as technical descriptions of the product, signed contracts, descriptions of production facilities and even photos with the products.

China's stated purpose is to make sure that double use products do not reach military equipment, but officials are often overly cautious, even when the demands clearly specify, says Dunnett.

“Another concern expressed by some companies is that they are requested sensitive and excessive information, which are part of their intellectual property, which leads to delays in processing applications.”he said.

Although theoretically applications should be processed in 45 working days, the ministry states that applications involving national security will take longer – without defining exactly how much.

“Strategic pretext”

Some representatives of the American industry believe that bureaucratic block is a “Strategic pretext”.

“China can supplement the staff as soon as he wants, if he really wants to.”said a source in the American Rare Earth Industry, who wanted to retain anonymity for reasons of sensitivity.

Officially, Chinese representatives say that export restrictions apply to all countries, which means they are not a specific countermeasure against the US, according to the Geneva Agreement. The spokesman of the Ministry of Foreign Affairs, Lin Jian, said on May 30 that the restrictions on the export of rare lands are “non -discriminatory and do not concern any specific country”.

However, during the Geneva negotiations, China would have recognized in private that these checks qualify as non -retarified countermeasures, according to an informed source about discussions.

Rare lands continue to be a central point in US-China's discussions, the same person said.

The Chinese Foreign Ministry did not respond immediately to the clarification requests. Certain Chinese researchers open openly that restrictions are a form of reprisals against US chips.

“It is a temporary form of pressure that does not affect China, because the rare lands in question have a relatively small monetary value.”said Zhu Junwei, researcher in international relations at the GrandView Institution, a Chinese think-tank.