UPDATE 1-US gets rare earth reprieve from China, but not rollback

China has agreed to delay the introduction of its latest round of rare earth export controls as part of a deal agreed between Presidents Donald Trump and Xi Jinping, but earlier restrictions on the critical minerals that have upended global trade remain. Rare earths, 17 elements which play tiny but vital roles in cars, planes and weapons, have emerged from obscurity to become China's most potent source of negotiating leverage thanks to export restrictions introduced this year which allow Beijing to cut off foreign customers dependent on Chinese supply.

Trump and Xi met in South Korea for a nearly two-hour summit on Thursday, after which the U.S. president said China had agreed to keep rare earth exports flowing and the issue was "settled". Shortly afterwards China announced it would pause for one year export controls introduced on October 9, when Beijing expanded its rare earth export regime to include new materials and rules, according to a release from the Ministry of Commerce.

However, the pause appears to leave in place restrictions introduced in April which control exports of seven rare earths and, notably, the rare earth magnets crucial to automakers, defence companies and chipmakers. U.S. Trade Representative Jamieson Greer, also speaking on Air Force One on Thursday, said China would not impose its proposed rare earth controls. He did not mention controls introduced in April.

It was the April controls which, within weeks, caused shortages across the auto supply chain, forcing automakers to pause production at some plants. China's statement, which also included a pledge to study and refine plans, provides enough ambiguity and flexibility for Beijing to deliver on a rare earth deal with the U.S., according to Tim Zhang, founder of Singapore-based Edge Research.

"Overall, we would call this a tactical stabilisation at this moment," he said.