China Clears Limited Rare Earth Exports to Japan

China has approved a limited number of rare earth export licences to Japan under its newly tightened “dual-use” export control regime. The move eases immediate supply pressures on Japanese manufacturers but underlines Beijing’s expanding strategic leverage over critical minerals. The approvals come amid heightened political tensions and signal a calibrated shift rather than a full relaxation of controls.

Selective approvals under tighter scrutiny

Chinese authorities have begun clearing select shipments of rare earth elements for civilian end-use, following new rules that require exporters to obtain government permission. Japanese firms confirm that approvals have been granted for certain categories, but the process is slower and less transparent than before. Export volumes remain below historical levels, reflecting continued regulatory caution. Beijing has stressed that materials with potential military applications remain tightly restricted.

Dual-use controls and strategic signalling

The new framework differentiates sharply between civilian and military end-use. Chinese commerce officials have stated that while exports linked to defence remain prohibited, “compliant” civilian applications will be processed. Japan remains around 72 per cent dependent on Chinese rare earth supplies for its automotive and electronics sectors. By allowing limited flows, Beijing appears keen to avoid the perception of a blanket embargo similar to the 2010 Senkaku Islands episode, while retaining leverage through licensing.

Impact on Japanese industry and supply chains

Heavy rare earths such as dysprosium and terbium face the strictest checks due to their role in high-performance magnets used in electric vehicles and advanced weapons systems. Japanese importers must now submit detailed documentation on downstream users and re-export destinations. Analysts at the Nomura Research Institute warn that prolonged delays could cause annual production losses exceeding ¥2.6 trillion, potentially reducing Japan’s GDP by 0.43 per cent.

Important Facts for Exams

• Rare earth elements are critical for electronics, EVs, and defence technologies.
• China dominates global rare earth processing and refining capacity.
• “Dual-use” items have both civilian and military applications.
• Japan is among the world’s largest importers of rare earth materials.

Japan’s diversification push and long-term outlook

The uncertainty has accelerated Japan’s efforts to diversify supply. The deep-sea drilling vessel Chikyu recently retrieved rare-earth-rich mud near Minamitorishima Island, marking a global first. Although commercial production is unlikely before 2027, Tokyo is also strengthening partnerships with the US and the EU to build resilient supply chains. For now, limited Chinese exports provide a temporary bridge as Japan works to reduce strategic vulnerability.