Japan condemns China’s dual-use export ban, rare earth risks loom
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While Japan has sought to diversify its supply of rare earths, around 60 per cent of its imports still come from China.
PHOTO: REUTERS
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TOKYO – Japan said on Jan 7 that China’s ban on exports of dual-use items
Dual-use items are goods, software or technologies that have both civilian and military applications, including certain rare earth elements that are essential for making drones and chips.
Japanese Prime Minister Sanae Takaichi touched off the dispute with Beijing late in 2025 when she said a Chinese attack on democratically governed Taiwan could be considered an existential threat to Japan. China regards Taiwan as part of its territory, a claim the island rejects.
Beijing has demanded that Ms Takaichi retract the remarks, which she has rejected
“A measure such as this, targeting only our country, differs significantly from international practice, is absolutely unacceptable and deeply regrettable,” Japan’s Chief Cabinet Secretary Minoru Kihara told a daily press conference on Jan 7.
Japan’s Nikkei share index fell around 1 per cent on Jan 7, bucking a trend of record highs in US and European benchmarks.
Stocks of major military contractors Kawasaki Heavy and Mitsubishi Heavy were among the biggest losers, down about 2 per cent.
Rare earth curbs next?
Beijing is considering further clamping down on rare earth exports to Japan, China Daily, a newspaper owned by the ruling Communist Party, said on Jan 6, citing sources with knowledge of the matter.
Such a move could have sweeping implications for the manufacturing powerhouse, including its key automotive sector.
Japan has sought to diversify its supply of rare earths since China last throttled exports of the minerals in 2010, but still relies on China for about 60 per cent of imports.
For some heavy rare earths, such as those used for magnets in electric and hybrid vehicle motors, for example, Japan is almost totally dependent on China, analysts say.
Japanese automaker Subaru said it was closely monitoring the situation, while Toyota and Nissan did not immediately comment.
A three-month curb on Chinese exports of rare earths, like that seen in 2010, could cost Japanese businesses 660 billion yen (S$5.4 billion) and shave 0.11 per cent off annual gross domestic product (GDP), Nomura Research Institute economist Takahide Kiuchi said in a note on Jan 7.
A year-long ban would knock 0.43 per cent off GDP, he added.
Tokyo is unlikely to sit by idly if Beijing’s bans start to target Japanese business more broadly, said Mr Cameron Johnson, a senior partner at supply chain consultancy Tidalwave Solutions in Shanghai.
“If there are Japanese civilian or commercial entities targeted, you could see the Japanese retaliate,” he said.
Such responses could target areas such as semiconductors or other high-end manufacturing materials China needs for its own supply chain, he added.
Separately on Jan 7, China launched an anti-dumping probe into imports from Japan of dichlorosilane, a key chemical for the semiconductor industry, the Commerce Ministry said on its website.
Since Ms Takaichi’s offhand remark on Taiwan in early November, Beijing has urged its citizens not to travel to Japan, halted imports of Japanese seafood and cancelled meetings and cultural events.
US President Donald Trump, who brokered a fragile trade war truce with Chinese President Xi Jinping in late 2025 and plans to travel to Beijing in April, has asked Ms Takaichi not to further escalate the dispute, sources told Reuters.
The quarrel does not, however, appear to have damaged Ms Takaichi’s robust popularity at home, opinion polls show.
Analysts liken the rift to one triggered by Tokyo’s 2012 decision to nationalise disputed islands that set off mass anti-Japan protests in China and halted meetings of the two countries’ leaders for 2½ years.
“I think this will drag on for quite a while,” Mr Keita Ishii, president of Itochu Corp, one of Japan’s biggest trading houses, said in a television interview on Jan 6.
Asked about the export curbs on Japan at a regular press briefing on Jan 7, China’s Foreign Ministry spokeswoman reiterated Beijing’s anger over Ms Takaichi’s Taiwan comments.
“We urge the Japanese side to confront the root cause of the issue, reflect on its mistakes and retract the erroneous remarks,” Ms Mao Ning said. REUTERS
