SwedCham China Insights for the week of 9 June - 13 June, 2025

China and EU near deal on EV tariffs as Beijing opens rare earth green channel

On 7 June, the Chinese commerce ministry (MofCom) stated that pricing commitment consultations with the EU, as an alternative to punitive tariffs, over anti-subsidy tariffs on Chinese electric vehicles (EVs) had entered “final stage,” but emphasized that “continued effort from both sides” is still needed to reach a solution. Earlier on 3 June, MofCom minister Wang Wentao and EU Trade Commissioner Maroš Šefčovič held “focused and in-depth” talks in Paris, advancing negotiations over the EU’s anti-subsidy probe into Chinese EVs.

In a significant conciliatory gesture, MofCom officials said China will establish a “green channel” to expedite rare earth export approvals for qualified European end-users, marking the first formal relaxation to Beijing’s April export control measures. MofCom underscored China’s “high regard for EU concerns” and framed the new channel as a goodwill gesture intended to “facilitate, safeguard, and promote” high-tech trade with Europe. This development follows the EU’s earlier decision to replace blanket tariffs with minimum price thresholds on Chinese EV imports, and comes amid mounting supply chain disruptions in Europe due to rare earth shortages. 

By linking rare earth access to a resolution of the EV tariff dispute, Beijing is strategically leveraging its dominance in critical materials to shape trade outcomes. Establishing a green channel for rare earth export to the EU is a recalibrated Chinese strategy to de-escalate with the EU while preserving long-term leverage over critical material supply chains.

US and China reach provisional trade framework in London to revive Geneva truce

On 11 June, US and Chinese trade negotiators concluded two days of intensive talks in London with a handshake agreement on a “framework” to implement the stalled Geneva trade deal, which will now be up to President Trump and President Xi for final approval. Although the details of the framework have not been revealed, both sides have signaled the framework will restore China’s commitments to supply rare earths and magnets to US industries, while reaffirming Chinese students’ access to US higher education. US Commerce Secretary Howard Lutnick described the rare earths resolution as “fundamental” to the framework and confirmed that US tariffs on Chinese goods will remain at a combined 55% level, while China’s tariffs on US goods will hold at 10%. In later interviews, US Treasury Secretary Scott Bessent insisted the trade framework included “no quid pro quo” on US semiconductors, reinforcing Washington’s position on advanced chip controls.

The US-China trade framework reached in London marks a tactical de-escalation and a move to stabilize fragile trade ties, but it stops short of resolving structural tensions over industrial policy and tech restrictions. With major tariffs and wide-ranging restrictions on trade and investment remaining in place, the risk of renewed trade friction in the near future stays high.

NDRC solicits tech sector input as 15th Five-Year Plan enters drafting phase

On 10 June, Zheng Shanjie, head of China’s macro planner (NDRC), chaired a symposium with leaders of five private tech companies to gather input for China’s 15th Five-Year Plan, covering the nation’s development strategy between 2026 and 2030. Private firms present at the symposium proposed targeted policy measures based on their R&D experiences and sector trends, urging stronger government support in capital, talent, energy, and data infrastructure. Zheng highlighted the private sector’s “strong innovation momentum, great potential and abundant vitality,” describing it as vital to nurturing the new engines for China’s continued economic growth. Zheng reaffirmed that the NDRC will take the private sector’s input to craft more effective policies and institutionalize more feedback channels for soliciting further private sector advice.

The NDRC’s direct engagement with domestic private tech firms signals a pragmatic and positive shift toward integrating private-sector capabilities into state planning, aligned with the spirit of the newly-enacted Private Economy Promotion Law.

China’s new social policy targeting the poor is not broad-based consumption stimulus

On 9 June, the general offices of the Party’s Central Committee and the State Council jointly issued new guidelines to “safeguard and improve people’s well-being,” with an explicit focus on expanding targeted government support for low-income and vulnerable segments of the population. The guidelines emphasize expanding social insurance coverage, raising minimum income thresholds, and strengthening public services in underserved areas, particularly for the unemployed, rural poor, and migrant families. Rather than pursuing an across-the-board cash handout, the guidelines direct government resources to those most in need. At a later press briefing, central government officials reiterated that the purpose of the guidelines is to reinforce the social safety net and improve the wellbeing of the most economically vulnerable.

This initiative is not a macroeconomic stimulus via universal cash transfers, but a strategic redistribution effort grounded in China’s long-held principle of targeted poverty alleviation. Policymakers recognize that broad cash injections often get saved by most households, while income support for the poor has a higher chance for actual consumption – offering both social protection and local demand boost.