China extends pause on rare earth export curbs for two months

China has announced a two-month pause on export controls for critical minerals, extending a trade deal with the United States before an anticipated meeting between Presidents Donald Trump and Xi Jinping next week. This extension, set to last until January 10, comes from China's Ministry of Commerce, formalizing a bilateral trade truce that was set to expire on Tuesday.

Simultaneously, the Chinese finance ministry disclosed that a 24% tariff on US goods will be suspended for two months, while still charging a 10% fee. The Office of the US Trade Representative confirmed the suspension of action in a Section 301 investigation into China's maritime and logistics sectors, along with the extension of 178 current Section 301 tariff exclusions for Chinese goods.

Initially, China imposed export curbs on seven heavy rare earth elements in April, later expanding to include battery supply chain elements such as cathode materials, cathode precursors, and graphite anode materials. This move has exacerbated trade tensions with Washington and raised concerns about potential global supply chain disruptions.

China holds a significant share of global mining and production of magnet rare earths, with 60% of mined production and 91% of refined output in 2024. The US and China agreed to a one-year trade truce in October during their summit in Busan, South Korea, which included pauses on tariff measures, rare earth curbs, and China's commitment to resume importing US soybeans.

However, Treasury Secretary Scott Bessent has urged Chinese Vice Premier He Lifeng to "fully and immediately" adhere to these commitments, while raising concerns about recent Chinese actions. US Trade Representative Jamie B. Greer also emphasized the importance of China's full implementation of commitments, particularly regarding agricultural purchases, rare earths, and other critical minerals.

China has expressed serious concern over recent US restrictions, particularly after Washington imposed sanctions on two Chinese companies linked to the Cuban regime's oil shipping networks supporting the military. The expected meeting between Trump and Xi at the APEC summit in Shenzhen next week will mark the leaders' third encounter this year.