China is reportedly considering tightening its export reviews for rare earths to Japan. This appears to be an extension of its move to control exports of dual-use goods (materials that can be used for both military and civilian purposes), taking issue with Japanese Prime Minister Sanae Takaichi's remarks about "intervening in the event of a Taiwan contingency."
Rare earths are mineral raw materials needed for the defense industry as well as advanced technology and green industries. They are mainly used in electric vehicle motors, smartphones, and military semiconductors. Ultimately, since the latest Chinese government measure suggests the possibility of controlling exports of rare earths for civilian use, if implemented, it is expected to have widespread ripple effects across Japanese industry.
On the 7th, the state-run English-language newspaper China Daily, citing a source familiar with the matter, reported that "the Chinese government is considering tightening export license reviews for certain rare-earth-related items to respond to Japan, which has not withdrawn Prime Minister Takaichi's remarks."
The state-run Xinhua News Agency's social media (SNS) account "Niutanqin" also said, "China is reviewing new measures against Japan," adding, "According to sources, considering Japan's malicious wording, the Chinese government is weighing a plan to tighten license reviews for export controls to Japan on medium and heavy rare-earth-related items designated as controlled on Apr. 4, 2025."
Earlier, on Apr. 4 last year, China designated seven medium and heavy rare earths and related items among the 17 rare-earth elements — ▲samarium ▲gadolinium ▲terbium ▲dysprosium ▲lutetium ▲scandium ▲yttrium — as dual-use goods and has been controlling their export. In particular, because these items are dual-use goods that can be diverted for military use, shipments outside China must undergo review and obtain a "special export license."
China accounts for about 70% of the world's rare earth mining and more than 90% of processing. In fact, when rare-earth supplies were disrupted by China's move in Apr. last year, as the U.S.-China trade war intensified, parts of the global industry were thrown into turmoil, with some European auto parts makers temporarily halting factory operations. The "rare earth supply crisis" eased after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a "trade war truce" at a summit in Busan in late Oct. last year, and China introduced a streamlined rare earth export licensing system.
In this context, China's consideration of tightening rare earth export license reviews for Japan is interpreted as signaling an intent to effectively block rare earth exports overall. Citing Japanese think tank Nomura Research Institute, China Daily noted that dysprosium and terbium used in neodymium magnets for EV motors are sourced 100% from China, and said, "If such supplies are restricted in any way, it would be a major crisis for the Japanese economy."
Back in 2010, during the Senkaku (Chinese name Diaoyudao) island dispute with Japan, China effectively halted rare earth exports to Japan. Spurred by that episode, Japan has reduced its dependence on China for rare earths, but it still relies on China for about 60%.
Amid this situation, Japanese media said they fear a direct hit from restrictions on the supply of raw materials, including rare earths, which are a key resource. The Mainichi Shimbun, noting that rare earths could be included among the regulated items, said that given precedents during past diplomatic spats, the latest measure could have wide-ranging ripple effects on Japanese industry. Kyodo News also reported that "rare earths could be included."
On the 6th, the day after the Korea-China summit, the Ministry of Commerce issued its first notice of the year banning exports of dual-use goods that would help enhance Japan's military power. It also signaled a de facto "secondary boycott (secondary sanctions)" targeting third countries that transfer Chinese dual-use items to Japan. A Spokesperson for the Ministry of Commerce said, "A Japanese leader recently publicly made wrongful remarks about Taiwan, implying a possible use of force in the Taiwan Strait," making clear that the export control measure is retaliatory.
On the 7th, the day after announcing the dual-use goods export controls, China also launched an anti-dumping probe into dichlorosilane, a semiconductor process chemical imported from Japan. Dichlorosilane is a key compound used in semiconductor chip manufacturing processes. The Ministry of Commerce said it received Chinese corporations' applications for an anti-dumping investigation that day and, after reviewing the products in question, similar products in China, the impact of the products on China, and the countries those surveyed are from, determined that the conditions for an anti-dumping investigation had been met.
A Spokesperson for the Ministry of Commerce said, "According to the preliminary evidence submitted, imports of Japan-made dichlorosilane from 2022 to 2024 were on an overall upward trend. But prices fell a cumulative 31%," adding, "Preliminary evidence shows that such dumped imports have harmed domestic business."
China's successive pressure on Japan comes two months after Prime Minister Takaichi's remarks on Taiwan. Last year, China issued an advisory for its citizens to refrain from traveling to Japan, delayed the release of Japanese films, and imposed a ban on Japanese seafood imports.