Beijing has recently increased its sanctions against exports of dual-use items, to include rare earth minerals, to Japan. This unexpected step is a stark indication of deteriorating trade relations between the two countries. Amid increasing hostility atop the never-ending bilateral row. This remains the case despite it appearing to be partially driven by Japan’s prime minister. The ongoing situation is just the latest example of Beijing’s continuing strategic uses of leverage against such political disputes with its neighbor.
The Chinese government is already hesitating on export permit applications for rare earths. These resources are essential for almost all advanced industries. This delay is emblematic of Beijing’s increasing impatience with Japan, as officials attempt to use their monopoly over these critical components as a bargaining chip. Rare earth minerals play a significant role in manufacturing electronics, electric vehicles and military equipment. The vast majority of these minerals are sourced from the Bayan Obo mine in Inner Mongolia, China.
Japan’s prime minister’s inflammatory remarks at the end of last week have apparently gotten under Beijing’s skin, inciting a retaliatory firebombing over trade. Export controls As analysts have widely pointed out, the main selling point of export controls—particularly in their newly expanded U.S. They are convinced that these controls react to real or imagined diplomatic insults. Neither country has successfully managed this unique bilateral relationship. China’s actions may deepen divides already weighted down by historical resentment and clashing priorities in regional security.
Japanese companies are understandably anxious, given the precarious state of play with these minerals. They worry that future shortages would choke off their supply chains and slow down the development of new technologies. All of these moves above are being closely monitored by stakeholders. Plenty are now calling upon the Japanese government to invest in alternative sources for rare earths to avoid exposing its economy to this increasingly unpredictable trade landscape.
With China and Japan still at odds, the future of rare earth exports hangs in the balance. Political dynamics and self-serving economic dependencies are afoot. Together they will define the trajectory of this complex bilateral relationship in the months ahead.