Tensions between China and Japan have heightened as China hinted at limiting rare earth material exports to Japan, causing concerns among Japanese businesses and policymakers. China’s Ministry of Commerce announced a potential ban on exporting “dual-use” items to Japan, citing national security reasons. These items have both civilian and military applications, with reports indicating that rare earth elements might be affected by the restrictions.
Chinese authorities are contemplating stricter export license checks for medium and heavy rare earths, crucial for various modern technologies like electric vehicle motors, electronics, and advanced defense systems. Following the announcement, a former editor of the state-affiliated Global Times cautioned that halting rare earth shipments could impact a wide array of industries, fueling market anxiety.
The warning from China evokes memories of 2010 when China suspended rare-earth exports during a territorial dispute with Japan, causing disruptions in Japanese industries and economic shockwaves. While experts suggest China may not enforce a complete ban this time, they speculate that exports could be slowed through rigorous screening processes to prevent military use.
Yoshikiyo Shimamine, a senior fellow at the Dai-ichi Life Research Institute, highlighted the economic risks posed by rare earths under China’s dual-use controls, particularly for Japan’s automobile sector. He warned that prolonged restrictions could severely affect the Japanese economy. China’s previous actions to tighten rare-earth export controls have already disrupted global supply chains, prompting countries like the US and EU to seek alternative sources and reduce reliance on China.
Japan has been striving to decrease its reliance on Chinese rare earths over the past 15 years, reducing dependence to around 60–70% from nearly 90% in 2010. Despite this, China remains the primary global producer, leaving Japan heavily reliant on China for crucial heavy rare earths essential for high-performance motors and advanced technologies.
