In a significant escalation of trade diplomacy, Chinese authorities are contemplating stricter export permit evaluations for specific rare earth materials destined for Japan. This strategic consideration comes as a direct response to what Beijing characterizes as “erroneous remarks” concerning Taiwan made by Japanese Prime Minister Sanae Takaichi, which Chinese officials assert have severely damaged bilateral relations.
The Ministry of Commerce, in coordination with the General Administration of Customs, had previously established export control mechanisms for seven categories of medium and heavy rare earth elements last April. These regulated materials include samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—all critical components in advanced technological applications.
At a December press briefing, Ministry of Commerce spokesman He Yadong articulated China’s position, emphasizing that Japan bears “unshirkable responsibility” for undermining the political foundation of Sino-Japanese relations. He further stated that China has repeatedly urged Japanese officials to rectify their statements and demonstrate commitment to bilateral relations through concrete actions.
The economic implications of potential export restrictions are substantial. According to analyses by Nomura Research Institute, Japan relies almost exclusively on Chinese sources for heavy rare earth elements such as dysprosium and terbium, which are indispensable for manufacturing neodymium magnets used in electric vehicle motors. The research institute projects that three months of export restrictions could result in economic losses approximating 660 billion yen ($4.2 billion), reducing Japan’s nominal and real GDP by 0.11 percent annually. A full year of restrictions could exacerbate losses to approximately 2.6 trillion yen, triggering a 0.43 percent decline in both nominal and real GDP.
This development represents the latest chapter in the complex economic and diplomatic relationship between Asia’s two largest economies, where trade in critical minerals has frequently intersected with geopolitical considerations.