China-based EU firms are suffering under export rules: One-third of EU companies in China may be forced to pivot their supply chain sourcing outside the nation amid tightening export controls from the world’s second-largest economy, Reuters reports, citing a survey by the European Union Chamber of Commerce in China. Some 40% of the 130 companies surveyed — including the likes of BMW, Volkswagen, Nokia, and TotalEnergies — reported the Chinese authorities are processing export licenses for controlled products more slowly than promised.

How bad is it? All respondents to the survey noted that the prevailing conditions negatively impact delivery times, with 40% seeing the rules delaying deliveries by more than two months and 34% expecting delays between one and two months.

The impact: Nearly 70% of companies surveyed rely on Chinese components covered by export controls for their overseas production facilities. About a third of the companies said they are already working to secure other supplies other than China as a result.

Are the great powers backsliding? “These survey results… paint a picture that runs counter to the post-Busan summit optimism,” Beijing’s Ankura Consulting Managing Director Alfredo Montufar-Helu is quoted as saying. The aforementioned Trump-Xi sitdown yielded a larger agreement to de-escalate trade tensions between the countries, with the US saying it will lower tariffs on China by 10%, while China will resume purchases of US soybeans and delay its rare earths export controls regime.

But there is hope that China could be picking up the pace, with the government recently issuing a batch of long-awaited export licenses, Reuters reports. Among those granted export licenses to export to their clients are Chinese magnet maker JL Mag Rare Earth, Ningbo Yunsheng, and Beijing Zhong Ke San Huan High-Tech, all of whom sell products to automotive players. Some of their clients are based in the US and the EU.

REMEMBER- China heightened its export control rules on rare earths earlier this year amid trade tensions with the US, citing national security concerns. The controls covered exports of raw and processed materials, as well as the tech and equipment used in mining, processing, and recycling the critical metals.

An EU-China divorce could cost EUR 3 bn: The EU is looking to earmark at least EUR 3 bn to pivot away from reliance on China-sourced raw materials by 2026, Bloomberg reports, citing a draft proposal it has seen. The plan involves establishing a European Critical Raw Materials Center next year, receiving pledges from the European Investment Bank, and establishing alternative supply chains. The European Commission is expected to present the proposal today.

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