BEIJING - China has begun to loosen its grip on rare earth exports, a move that could ease global supply chain tensions but falls short of resolving the ongoing trade dispute with the United States [1]. The Chinese Ministry of Commerce has started issuing more export licenses for rare earth magnets, though the pace remains slow and the licensing requirements introduced two months ago are still in place [1].

Rare earth elements, crucial components in various high-tech products including electric vehicles, drones, and missiles, have become a focal point in the trade tensions between China and the United States. China currently produces 90% of the world's supply of these essential magnets [1].

The recent developments come in the wake of a phone call between Chinese President Xi Jinping and U.S. President Donald Trump on Thursday. While President Trump mentioned that rare earths were discussed during the call, he did not indicate whether any decisions had been made regarding China's strict export licensing requirement [1].

Industry executives and analysts suggest that while China is showing signs of approving more exports, it is unlikely to dismantle its new licensing system entirely [2]. This system, modeled after the United States' own export controls, gives Beijing unprecedented insight into supplier chokepoints in various industries [2].

"China originally took inspiration for these export control methods from the comprehensive U.S. sanctions regime," said Zhu Junwei, an expert quoted by Reuters [2].

The current situation stems from China's gradual restrictions on international sales of rare earths and other critical minerals over the past two years [4]. In early April, China announced new export controls on seven rare earth elements, a move that came without specifying whether it was in response to heightened U.S. tensions [4].

Despite a breakthrough trade agreement reached on May 12, China's Commerce Ministry announced on the same day that it would strengthen export controls on critical minerals [4]. This development surprised many in Washington and other capitals, as it appeared to contradict the spirit of the trade deal [4].

As the situation continues to evolve, businesses worldwide are grappling with the potential impact of these restrictions. Many factories in the automotive sector and other industries in Europe and the United States, and some in Japan, are already running low on these crucial magnets [1].

The presidents have agreed that their senior aides will meet soon for further discussions [1], signaling that negotiations on this complex issue are ongoing. As the global community watches closely, the outcome of these talks could have far-reaching implications for international trade and technological development.