Geopolitical radar: Diplomacy gaining ground?
In this month's Editorial, we write about China's leverage in rare earth elements and permanent magnets. China's exports of permanent magnets to the US, Japan and Germany fell dramatically after Liberation Day in 2025 when the country suddenly introduced export restrictions. However, after the Xi-Trump truce, export flows to outside the US quickly recovered.
But then, exports to Japan started a clear decline after PM Takaichi's controversial comments on Taiwan. And this year, Chinese exports of permanent magnets also to Germany has fallen. The reasons are not entirely clear. Inventory adjustments and diversification of suppliers likely explain a part of the decline, but supply side issues - even if not intentional - could play a role. The April 2025 licensing system remains in place, and shipments depend on export approvals and end-use documentation.
In our section on Middle East, we take stock of the US election outcome. We think a renewed US attack on Iran is looking more unlikely now, but prospects for any near-term resolution also seem slim.
In our Russia-Ukraine section, we discuss the outcome from the Abu Dhabi talks. While we think it is positive that direct talks took place for the first time since February, we remain sceptical in the short term that a peace deal can be achieved. US envoys will travel to Moscow later this week to continue talks with Putin.
In our China section, we focus on the US-China relations after the midterm elections and on EU-China trade tensions. The upcoming APEC summit on 18-19 November should also include a meeting between Xi, Trump and Putin.
Author
Danske Research Team
Danske Bank A/S
Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.
