Summary:
China restricts rare-earth and magnet exports to Japan
Move linked to Japan PM’s Taiwan-related remarks
Restrictions extend beyond defence sector
Nomura estimates $17bn potential annual impact
Japan raises issue with G7, Washington meetings planned
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China tightens rare-earth exports to Japan
China has begun restricting exports of rare earths and rare-earth magnets to Japan, escalating a diplomatic and economic dispute and again demonstrating its willingness to use critical minerals as geopolitical leverage, according to reporting by the Wall Street Journal (gated).
The measures are expected to weigh on Japanese firms supplying components to global chipmakers, automakers and defence contractors. The restrictions target so-called “heavy” rare earths and the high-performance magnets that contain them — materials that are scarce, costly and difficult to substitute.
The Journal reported that the move is retaliation for remarks made late last year by Japanese Prime Minister Sanae Takaichi, who suggested Japan could become involved in a potential conflict over Taiwan. Beijing has repeatedly pledged to bring Taiwan under its control, by force if necessary.
According to people familiar with the matter, China has effectively halted the review of export licence applications to Japan, with the restrictions extending across multiple industries rather than being limited to defence-related firms. Earlier this week, Beijing also announced a broader ban on exports of “dual-use” goods with potential military applications to Japan.
If maintained, the rare-earth curbs could inflict around $17 billion in economic losses over a year, according to estimates from the Nomura Research Institute. The action follows a similar move against US companies last year, underscoring China’s dominance in critical minerals and its readiness to weaponise supply chains in response to geopolitical disputes.
Japan responds, seeks coordination
Japanese officials responded by urging China to ensure smooth trade flows and signalling that the issue will be raised with international partners. Finance Minister Minoru Katayama said Tokyo is “very concerned” about China’s export controls and plans to explain Japan’s position during meetings in Washington next week.
Katayama said G7 finance ministers have been sharing strong concerns about China’s practices around rare earths and confirmed he will discuss supply-chain resilience with counterparts during talks scheduled for January 11–14. He declined to comment on the full details of the meetings, noting the host has yet to announce participating countries.
