Ahead of the SCO summit in Tianjin, China has announced it has given clearance for the export to India of rare earths used in electric vehicles. It came at the end of Chinese Foreign Minister Wang Yi’s talks in Delhi.
Indian External Affairs Ministry sources told StratNewsGlobal that “Wang Yi had assured that India’s needs of fertiliser, rare earths and tunnel boring machines” would be addressed.
It now remains to be seen how smoothly the process of China issuing licences for the export of rare earths goes through. That is a separate discussion between the commerce or trade ministries of the two countries, where apart from export licences for rare earths, processing of the same could come up.
Over the past year, supply disruptions and opaque export licensing from the Chinese side had delayed several Indian public and private sector projects, prompting the Indian government to raise the issue at a ministerial level.
Sources confirmed that China’s willingness to resume exports was presented as part of a “confidence-building” gesture ahead of the upcoming SCO summit, which Prime Minister Narendra Modi is likely to attend in person.
The decision may also be part of China’s broader diplomatic play to present itself as a responsible regional actor ahead of the SCO summit — where economic cooperation is expected to be a central theme.
This renewed economic outreach appears to be driven by a combination of geopolitical and strategic economic factors. US President Donald Trump’s trade policies, including proposed 250% tariffs on pharmaceuticals, are pushing both India and China to diversify their export markets and reduce dependence on Western economies.
With global supply chains still reeling from COVID-19-era disruptions, both countries are being urged by their domestic industries to normalize flows of essential materials.
There are at least two Chinese firms that have past contracts for the supply of tunnel boring machines to India. Then there is China Rare Earth Group which has exported neodymium to India in the past while Sinochem Holdings has exported bulk urea and phosphate fertiliser.
Tenders for fertilizer imports from Chinese suppliers have already been floated by Indian state trading companies, according to senior executives in the agriculture ministry.
While the broader economic relationship remains fragile due to geopolitical mistrust, the lifting of export restrictions is seen as a pragmatic move — and possibly the first step in a calibrated re-engagement between Asia’s two largest economies.
