China recently announced that it would tighten export controls on dual-use items, including rare earth minerals. This decision further inflames an extremely sore relationship with Japan. Diplomatic friction between the two nations is escalating. Beijing, in the meantime, is said to be sitting on – aka, holding up for approval – applications for exporting these essential materials.
China’s Bayan Obo mine in Inner Mongolia, pictured here, is one of the world’s primary sources of rare earth minerals. These essential metals fuel everything from renewable energy technologies to telecom infrastructure to advanced semiconductor manufacturing. China also plays a major role as a global producer for many of these minerals. Its strategic importance in the supply chain is critical for industries such as electronics, renewable energy, and defense. As Cameron noted, the recent export controls could have a drastic impact on Japanese industries that are especially dependent upon access to these resources.
To make the decision to tighten export controls even more pointed, it comes in direct response to statements made by Japan’s Prime Minister. This decision adds to the mounting hostilities between the two countries. According to news reports, Beijing is delaying export licenses for rare earth minerals. This latest step is intended to up the stakes for Tokyo during this latest stage of the long-running bilateral feud.
Chinese actions come at a time when rare earths find widely undervalued use in high-tech fabrication. These minerals are critical to the production of innovative, new products. New potential restrictions on their availability would severely impact production lines in Japan, including key manufacturing sectors like automotive and electronics. Industry experts warn that the ripple effects of these controls could lead to increased costs and delays in product development.
The persistent tensions between China and Japan continue to test their bilateral diplomatic relationship. It’s doing real damage to their overall trade balance too. Newly expanded export controls on rare earth minerals would only exacerbate what is already a touchy economic partnership. As China and India both deal with this perplexing new reality, the outcomes for regional peace and prosperity are far from guaranteed.