BEIJING — A high-stakes call between the U.S. and Chinese presidents on Thursday has yet to resolve a global shortage of rare earth exports that businesses say could halt production of cars and other industrial parts this summer.

Rare earths, along with a broader group of critical minerals, are used in weapons, cars and other high-tech products. China has come to dominate the mining and production of those metals, and over the last two years has gradually started to restrict international sales.

In early April, China announced new export controls on seven rare earth elements. Unlike other measures, Beijing did not specify whether they were a response to heightened U.S. tensions.

After both sides reached their breakthrough trade agreement on May 12, China’s Commerce Ministry said on the same day that it held a meeting to strengthen export controls on critical minerals.  There was no broad rollback of the restrictions on seven rare earths.

This development came as a surprise to many in Washington, who had expected a repeal of the rare earths restrictions, since the trade agreement had said both countries would suspend most tariffs and roll back countermeasures for 90 days.

But so far, only some Chinese suppliers of U.S. companies have received six-month export licenses for rare earths, the American Chamber of Commerce in China said Friday, citing a survey of members from May 23 to 28.

Among respondents affected by rare earths controls, 75% said their existing supplies would run out within three months, the survey said. The controls mostly affected sectors involving research and development, resources, industrial and tech, but not consumer or services companies, the survey showed.

While China did not mention rare earths in its readout of Chinese President Xi Jinping’s call with U.S. President Donald Trump, the long-awaited conversation itself signaled that both countries would continue to talk, following accusations from both sides of violating the trade agreement.

“I think we’re in very good shape with China and the trade deal,” Trump told reporters following Thursday’s call. “We have a deal with China, as you know, but we were straightening out some of the points having to do mostly with rare earth magnets and some other things.”

He did not elaborate. But Trump said U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer would meet their Chinese counterparts at an unspecified time.

Further trade talks will likely bring the U.S. and China back to where things stood earlier this year, with limited tariffs, Jianwei Xu, senior economist at Natixis, said Friday. He said China could accelerate some rare earths export approvals for commercial use, in return for the U.S. easing its restrictions on some tech exports to China.

“I think both China and the U.S. have figured out that each other’s immediate weaknesses are not so much about tariffs, but more about non-tariff issues, especially in tech and rare earths,” Xu said.

Several European auto parts companies have already had to stop production, industry association CLEPA said Wednesday. It warned of more widespread impact in coming weeks, and said China has only approved about 25% of “hundreds of export license applications” that were submitted.

China has recently appeared to ease some export controls, albeit to some European companies, the European Union Chamber of Commerce in China said Friday. But it warned that it was insufficient to “prevent severe supply chain disruptions for many companies.”

“Our members are still struggling with the export licence approval process, due to both the time it takes and the lack of transparency, and this is now negatively impacting production lines in Europe and other countries,” European Chamber President Jens Eskelund said in a statement.

Japanese automaker Suzuki Motor briefly suspended production of its Swift car due to China’s rare earth curbs, Reuters reported Thursday, citing two unnamed sources, with manufacturing expected to partially resume on June 13. A Suzuki Motor spokesperson was not immediately available to comment when contacted by CNBC.

“China’s export control measures are consistent with universal practices. Such measures are non-discriminatory and not targeted at any particular country,” China’s Foreign Ministry Spokesperson Lin Jian said in response to a question about the Japanese automaker on Thursday, according to an official English-language transcript.

That echoed Ministry of Commerce Spokesperson He Yongqiang’s response to a question last week on Chinese companies restricting sales of a critical mineral stored outside the country at the Netherlands’ Rotterdam port.

She added during a separate press conference Thursday that China would approve applications for export licenses in line with its regulations, and to “promote convenient and compliant trade.” That’s according to a CNBC translation of the Chinese.

Following export controls in Aug. 2023 on gallium and germanium, two metals used in chipmaking, China, a year later, then announced similar restrictions on exports of antimony, which is used in bullets, nuclear weapons production and lead-acid batteries. It can also strengthen other metals.

A few months later, China released a broader policy that tightened restrictions on exports of products that could have both civilian and military use. The export controls cover metals such as tungsten that the U.S. has deemed critical.

Tungsten is nearly as hard as a diamond, and is used in weapons, semiconductors and industrial cutting machines. 

There are about 300 grams (10.6 ounces) of tungsten in the average car, the majority of which is lost even with recycling, said Martin Hotwagner, market analyst at Austria-based Steel & Metal Market Research. As supplies run low, he expects Western companies will likely run out of tungsten later this summer.

— CNBC’s Sam Meredith contributed to this report.

BEIJING — For all the attention on U.S.-China competition in artificial intelligence, new studies point to China’s rapid rise in biotechnology, especially for drug and agricultural development.

Out of five critical tech sectors, “China has the most immediate opportunity to overtake the United States in biotechnology,” the Harvard Belfer Center for Science and International Affairs said Thursday in its release of a “Critical and Emerging Technologies Index,” covering AI, biotech, semiconductors, space and quantum.

While the U.S. is still the leader in all five, “the narrow U.S.-China gap [in biotech] suggests that future developments could quickly shift the global balance of power,” the report said.

The assessment echoes growing concerns in Washington. In fact, the U.S. National Security Commission on Emerging Biotechnology struck a more urgent tone in an April report, citing two years of research.

“There will be a ChatGPT moment for biotechnology, and if China gets there first, no matter how fast we run, we will never catch up,” the bipartisan Congressional commission said in the report, referring to the transformative chatbot released by U.S.-based OpenAI.

“Our window to act is closing. We need a two-track strategy: make America innovate faster, and slow China down,” the commission said. It recommends that the U.S. government spend at least $15 billion over the next five years to support the domestic biotech sector.

China’s biotech industry has evolved to the point that U.S. and European pharmaceutical giants in the last several months have spent billions to acquire China-developed drugs that could treat cancer if commercialized with regulatory approval. In March, British pharmaceutical giant AstraZeneca announced it will invest $2.5 billion in a research and development center in Beijing.

The Harvard Belfer Center pointed out that China’s biotech strengths stem from its “dominance in pharmaceutical production and manufacturing,” in addition to having more human talent than the U.S.

China also has a “more flexible regulatory regime and the ability to push things out faster,” Cynthia Y. Tong, one of the Harvard report’s authors, told CNBC in an interview Thursday. She noted that the U.S. tends to have a longer approval process, as well as more drawn out research and development period.

And just as China is developing its biotech sector, reports from the U.S. biotech hub of Cambridge and Boston are revealing layoffs and empty labs.

China has long used multi-year plans and preferential state policies to encourage the development of key technologies. Biotech is no different, gaining high-level support back in 2007.

“Currently, the U.S. government has no cohesive, intentional biotechnology strategy, while China is gaining ground thanks to its aggressive and carefully coordinated state-led initiatives,” the U.S. security commission said.

The worry is that just as Chinese restrictions on rare earths start to hit car manufacturers, Chinese dominance in biotech could become yet another form of leverage for Beijing over the U.S. and other countries.

“The likelihood there’s going to be cooperation [between the] U.S. and China on anything is very low, in some ways least likely on biotech and AI” because of the congressional report, said Eric Rosenbach, director of the defense, emerging technology, and strategy program at Harvard’s Belfer Center. He was chief of staff at the U.S. Department of Defense from 2015 to 2017.

He expects more U.S. pressure on China.

It remains to be seen what that would mean in practice for businesses — though some say the future of biotech development is inherently global.

Insilico Medicine, a startup using AI to cut drug discovery costs, relies on a global team spread across China, North America and the Middle East, according to its founder and CEO Alex Zhavoronkov. On Tuesday, the company announced with a paper in Nature Medicine that it was the first to see successful clinical testing with an AI-discovered drug.

While Insilico’s AI work typically happens in Canada and Abu Dhabi, the chemical testing and experiments are done in China, Zhavoronkov said, adding that the head of clinical development is in Boston. He declined to comment on a commercialization timeline in light of conversations with regulators.

Other data shows that China has surpassed the U.S. in the number of clinical trials conducted, seen significant patent growth and boasts the most life sciences construction activity in the world.

China-based Capital O venture partner Yang Fan, who previously worked in the pharmaceutical industry, said he expects the best biotech companies of the future will navigate different countries’ regulations and use resources across the globe, if not benefit from arbitrage opportunities given different requirements and cost of entry in various markets.

“The Chinese market is like a big supermarket for anything that can be commoditized, AI or biotechnology,” he said, adding that new startups in China have to be “really good” to stand out. As AI drives innovation costs down, Fan predicts that in biotech, “the real DeepSeek moment is probably going to happen in five years.”