Core Points - The European Union (EU) is facing significant supply chain threats due to China's upcoming export controls on rare earth materials, which are set to take effect in October 2025, leading to heightened concerns among European industries [1][3] - The EU's trade commissioner, Valdis Dombrovskis, indicated that Europe feels "choked" by these developments, with potential production declines exceeding 30% in key sectors within six months if rare earth supplies remain restricted [3][5] - The EU plans to coordinate with G7 nations to discuss a joint response, covering strategic reserves, foreign investments, and trade balance measures with China [5][19] Industry Impact - Rare earth prices, particularly praseodymium and neodymium, have been rising for three consecutive weeks, reflecting market anxiety over supply disruptions [3][24] - The EU's reliance on China for rare earths is underscored by the fact that China accounts for over 80% of global rare earth production, possessing stable refining and purification technologies [24] - The U.S. is considering reviving old rare earth reserve projects and accelerating mining collaborations with Australia and Canada, but these initiatives will take five to seven years to yield results [7][19] Market Reactions - Despite the EU's concerns, companies in Japan, South Korea, and the U.S. continue to seek new export licenses from China, indicating ongoing procurement activities [3][24] - European and American financial institutions are increasing investments in Chinese rare earth enterprises, signaling confidence in long-term technological advantages despite vocal criticisms of China's policies [21][24] Strategic Responses - The EU's proposed strategic reserve mechanism is seen as a temporary measure that cannot replace the immediate supply needs, with significant time required to establish new production lines [19][24] - Internal divisions within the EU are emerging, with France and Germany favoring dialogue while the U.S. advocates for a more aggressive stance, complicating the execution of a unified response [16][24] - The ongoing dialogue between the EU and China, including planned visits by EU officials, aims to ease tensions and maintain trade channels [16][24]