Beijing has intensified its export controls on dual-use items, particularly rare earth minerals, in an effort to exert pressure on Japan amidst ongoing diplomatic tensions. This move comes in the wake of a recent remark made by Japan’s Prime Minister, which many analysts interpret as triggering China’s retaliatory actions.
China’s Bayan Obo mine in Inner Mongolia has long been one of the largest producers of rare earth minerals. These materials are necessary for manufacturing across many high-tech industries, from electronics to renewable energy. As the overall relationship between Beijing and Tokyo continues to sour, China is moving to retaliate. Indicating that it is utilizing its strategic dominance over essential inputs to further entrench itself in the growing hostilities.
Specifically, reports from Japan cite Beijing as having intentionally delayed applications for export permits for rare earths to go to Japan. This strategy has been a successful stalling tactic to run out the export clock. As a consequence, Japanese industries that rely on these minerals for their production are left in limbo. The bottleneck in processing applications illustrates deepening tensions between the two countries as they continue to re-purpose diplomatic fallout into economic warfare.
Japan’s Prime Minister Fumio Kishida gave a series of speeches that everyone read as directed at and condemning China. In retaliation, Beijing increased the pressure on its own exports. These newly tightened export controls are being interpreted as China’s attempt to signal its anger and re-establish its global power. Beijing is certainly weaponizing rare earths as a tactic in this Extended Great Game. This action is a blatant indication of their willingness to use economic pressure to achieve political objectives.
Yet the implications of these export controls go well beyond US-China trade relations. Now more than ever, rare earth minerals are critically important to the global supply chain. Any disruptions to their availability could have catastrophic effects on the industries that rely on these irreplaceable resources. Japan’s counterproductive dependence on Chinese rare earths underscores the paradoxical tightrope upon which Japan and China’s economic relationship often walks.
As tensions simmer between Beijing and Tokyo, observers are closely monitoring how these developments will affect bilateral trade and regional stability. This troubling development raises concerns as to whether the two countries will be able to cooperate in the future. This is particularly true in industries where they rely on one another.