China's Rare Earth Curbs Unsettle Japanese Firms
ThomasJapanese businesses press Beijing for assurances on new rare earth controls, fearing supply chain disruption amid rising tensions.
A major group of Japanese companies operating in China is pressing Beijing for clear assurances that new export controls on critical materials will not disrupt legitimate civilian business.
In a statement, the Japan Chamber of Commerce and Industry in China highlighted recent comments from He Yadong, a spokesman for China's Ministry of Commerce. The spokesman had stated that the new rules would not affect civilian applications and that companies involved in normal trade had no reason for concern.
The business group is now calling on Chinese authorities to formally reaffirm this position. "We request that this statement be reaffirmed and thoroughly communicated to relevant parties both within and outside China," the Chamber said, adding that it would share the ministry's explanation with its member companies.
The group also noted it would report any difficulties experienced by Japanese firms directly to the ministry.
What's Behind the New Export Controls?
The request follows China's recent announcement banning the sale of over 800 dual-use items to any end-user that could potentially support Japan's military capabilities. The list includes rare earths—a group of minerals essential for manufacturing everything from electric vehicles and smartphones to advanced missile systems.
This move has ignited concerns that Beijing could be tightening its control over the global supply of these critical minerals.
China's Dominance in the Rare Earths Market
China's influence over the rare earths market is immense. According to the Japan Organization for Metals and Energy Security, the country holds the world's largest reserves and controls more than 90% of global refining capacity.
Adding to the uncertainty, the state-run China Daily recently reported that Beijing is also considering stricter export license reviews for certain medium and heavy rare earth products.
Geopolitical Tensions and Supply Chain Risks
The new trade measures come amid rising friction between Asia's two largest economies. Tensions escalated in November after Japanese Prime Minister Sanae Takaichi suggested that Japan might use its military if China were to use force against Taiwan.
Japan remains highly dependent on China for rare earths, despite previous efforts to diversify its suppliers. Those efforts began over a decade ago when Beijing restricted the flow of these minerals during an earlier diplomatic dispute, revealing just how vulnerable Japan's supply chain was.
The issue has now captured global attention. This week, Japanese Finance Minister Satsuki Katayama met with international finance officials in the United States to discuss the challenge, emphasizing that strengthening supply chains is a critical priority.
