By Laurie Chen and Lewis Jackson

BEIJING (Reuters) -In a hulking grey building just east of Tiananmen square in Beijing, a small team in China's Ministry of Commerce is deciding the fate of the global auto industry, one rare earth magnet export permit at a time.

China holds a near-monopoly on rare earth magnets - a crucial component in electric vehicle motors - and it added them to an export control list in April as part of its trade war with the United States, forcing all exporters to apply to Beijing for licenses.

It falls to the Bureau of Industrial Security and Import and Export Control - which is part of China's Ministry of Commerce - to review export permits for the rare earth magnets, which are vital for car motors, wind turbines and even U.S. F-35 fighter jets.

While dozens of licences have been issued since late April, executives, lobbyists and diplomats say they are only a small fraction of the applications that have flooded in from automakers, semiconductor companies and aerospace firms around the world since the tougher export controls were introduced.

Washington says delays in issuing export licences show China is reneging on commitments made during trade talks in Geneva last month and it has retaliated with export curbs on plane engine parts and other equipment.

U.S. President Donald Trump and Chinese President Xi Jinping held talks by phone on Thursday as the escalating dispute over China's rare earth stranglehold threatened to derail the fragile trade truce agreed between the two superpowers.

When the new rare earth magnet measures came in, the export control bureau had a total of just 30 staff, though this has since been doubled to around 60, according to two sources who were briefed on a meeting between the ministry and Chinese and European semiconductor firms last week.

Shortly after Thursday's call, Trump posted on Truth Social that "there should no longer be any questions respecting the complexity of Rare Earth products," without elaborating on what had been agreed.

China's readout did not specifically mention rare earths, but said Beijing "implemented the (Geneva) agreement in a serious and earnest manner," state media reported.

"We appreciate that MOFCOM has increased its resources to address demand and they're working hard and long hours on these issues," said Adam Dunnett, Secretary General of the European Chamber of Commerce in China, referring to the ministry.

"But the reality is this is having a huge impact on a wide variety of sectors. It's something that could have been better planned and rolled out," he said.