Last month, Beijing announced a major expansion of its export controls on dual-use items – an expansion that includes rare earth minerals. This action further antagonizes Japan and heightens the already surging bilateral tensions. This adjustment follows a controversial remark made by Japan’s Prime Minister, which appears to have triggered China’s response. The incident represents a deepening antipathy between the two countries, as both the US and China continue to chart the waters of a tense diplomatic relationship.
New signals suggest that China is moving quickly in the opposite strategic direction. They’ve been holding up export applications for rare earths to Japan. This slowdown of the issuance of export permits is perceived as a tactic to apply pressure on Tokyo during an increasingly contentious outburst. The Bayan Obo mine in Inner Mongolia, one of the world’s largest sources of rare earth minerals, plays a crucial role in China’s ability to control the supply chain of these essential resources.
Meanwhile, China has announced more restrictions on rare earth exports. This decision has huge consequences for Japan, which depends on these materials for its electronics and renewable energy sectors. This indefinite stalling of export permits points to a possible future disruption in Japan’s access to these critical materials. America’s advanced manufacturing will be hit very hard by this unfortunate situation.
The diplomatic spat between the two nations has deepened in recent months, with both sides trading barbs over historical grievances and security concerns. China’s recent actions are perceived as retaliation for comments made by Japan’s Prime Minister regarding regional security matters. This quick response neatly illustrates the sensitivity that surrounds economic and geopolitical connections in East Asia.
Beijing and Tokyo remain locked in an impasse over their longstanding differences. At the same time, China’s export controls cross a red line not only with respect to economic competition. They represent a new way forward, a deeper more collaborative approach to trade and diplomacy between both nations. There is some hope among analysts that this can open up room for more discussions. It could increase tensions, depending on how both nations respond.