Japanese Industries Worried over China’s Export Controls

Tokyo, Jan. 8 (Jiji Press)–Japanese industries are on high alert over China’s ban on exports of dual-use goods to Japan, amid Chinese media reports that rare earths crucial for the high technology sector could be among items subject to the measure. This is not the first time that China has put political pressure on Japan over rare earth supplies. Japan’s public and private sectors have prepared for such a circumstance by diversifying supply chains and increasing stockpiles. Still, the inclusion of rare earths in the ban would certainly deal a blow to the Japanese economy. China on Tuesday banned Japan-bound exports of goods that can be used both for civilian purposes and for enhancing defense capabilities. While the scope of the measure is not yet clear, it is feared to include semiconductors and rare earths. The measure came at a time when Sino-Japanese relations have been strained due mainly to Japanese Prime Minister Sanae Takaichi’s remark last November regarding a possible contingency over Taiwan, which China regards as a renegade province and aims to integrate with its mainland. A Japanese government official said it is uncertain whether the ban applies to products or minerals, while an official at a trading house said that the company does not know how to deal with the situation. China controls about 70 pct of global rare earths in terms of mining and about 90 pct in refining, and uses export restrictions as a tool to exert pressure on countries with which it is at odds. Beijing suspended rare earth exports to Japan in 2010 amid a bilateral row linked to a collision in the same year between a Chinese fishing boat and Japan Coast Guard vessels near the Japanese-administered Senkaku Islands in the East China Sea, which are claimed by China. At the time, Japan had been relying on China for 90 pct of its rare earth imports. The proportion has declined since then as a result of efforts by both the public and private sectors and stood at some 60 pct in 2024. An official of Sumitomo Metal Mining Co. said that the company already has “a certain level of rare earth stockpiles.” The government-affiliated Japan Organization for Metals and Energy Security, or JOGMEC, has also boosted its inventories. However, Takahide Kiuchi, executive economist at Nomura Research Institute Ltd., estimates that possible rare earth export restrictions by China would cause an economic loss of about 660 billion yen in Japan in three months and push down the country’s annual gross domestic product by 0.11 pct. Samarium and dysprosium, for which Japan relies heavily on supplies from China, are used in electric vehicle motors. Koji Sato, chairman of the Japan Automobile Manufacturers Association and president of leading Japanese automaker Toyota Motor Corp., emphasized the need for the automobile industry to work together in coping with a possible rare earth crisis, saying, “There is a limit to what each company can do individually.” END [Copyright The Jiji Press, Ltd.]