China Chokes Critical Mineral Exports to Japan Over
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- China has restricted critical mineral exports to Japan since late 2025, with intermediate tungsten shipments falling to zero in January 2026 and dysprosium and terbium exports — used for high-performance EV magnets — at zero all year after Beijing retaliated for PM Takaichi's Taiwan remarks
- Yttrium exports to Japan are running at 1.13% of last year's volume, and one broad category of rare earth chemicals notched its lowest rolling three-month total since 2023 between March and May 2026, though light rare earths outside China's export controls remain unaffected
- Japan's auto industry, which accounts for about 10% of GDP and relies on tungsten for precision tools, is eating into stockpiles; Sumitomo Electric CEO Masayoshi Matsumoto warned that being shut out by China would 'definitely' cause problems for Japanese manufacturing
- Japan has joined a G7 pledge to cap reliance on any single country for rare earths at no more than 60% by 2030, with Finance Minister Satsuki Katayama citing recycling, price floors, and trade measures as options under consideration
- Mitsubishi Materials has shifted to roughly 70% recycled feedstock, targeting 100% by 2030, while Sumitomo Electric operates two recycling factories globally — strategies Japan first built up after China's 2010 rare-earth embargo
- Diplomatic channels between Asia's two largest economies have ground to a near halt in 2026, with Japan's ambassador repeatedly denied meetings at China's Foreign Ministry, and Takaichi reportedly unwilling to meet Xi Jinping at November's APEC summit in Shenzhen over personal attacks Beijing has directed at her
Why it matters: Japan's auto sector — about 10% of GDP — faces immediate supply disruption for tungsten and heavy rare earths with no diplomatic off-ramp: Takaichi won't retract her Taiwan remarks or meet Xi at November's APEC summit, and Japan's long-term fixes (G7 60% reliance cap by 2030, 100% recycling by 2030) don't solve the current gap, while China controls over 90% of global rare-earth refining.
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