By The Straits Times | Created at 2026-06-24 00:08:31 | Updated at 2026-06-24 01:11:21
1 hour ago
BEIJING/TOKYO - China is choking shipments of some critical minerals to Japan, a slowdown that’s hurting companies and prompting calls for Prime Minister Sanae Takaichi to find a diplomatic off-ramp with Beijing.
The world’s No. 2 economy has stopped nearly all supplies of some forms of tungsten in 2026, while magnet flows in May fell to their lowest since May 2025 when shipments collapsed as China rolled out its export-control regime globally. The throttling of goods began after Takaichi angered Beijing last November with comments about self-ruled Taiwan.
The curbs appear calculated to inflict targeted pain on Japan without escalating to a level that could spark pushback from the US. While the measures aren’t as severe as sweeping Chinese restrictions that threatened Japanese industry in 2010, they’ve forced firms to eat into stockpiles and scramble for alternatives.
“If this situation continues, of course, we need to have talks with the Chinese government,” Masayoshi Matsumoto, chairman and chief executive officer at Sumitomo Electric Industries Ltd. – a major tungsten buyer – told Bloomberg News on June 22 at an industry exhibition in Beijing. “If we’re shut out by China, it’s definitely going to cause problems for Japanese manufacturing.”
Takaichi doesn’t want to meet President Xi Jinping on the sidelines of a leaders’ summit this November due to frustrations over personal attacks China has directed at her, despite growing pain from the export curbs, according to a person familiar with the discussions. Both leaders are expected to attend the Asia-Pacific Economic Cooperation forum in Shenzhen, although it’s unclear if Beijing would entertain such a sitdown.
Japan’s ambassador to China has repeatedly requested meetings with Chinese Foreign Ministry officials without success in 2026, according to people familiar with the discussions, who asked for anonymity to speak about private matters. Diplomatic contact between Asia’s biggest economies ground to a near halt in 2026, as Takaichi refuses to retract her remarks and China restricts trade spanning tourism to seafood.
China’s Foreign Ministry and Japan’s Ministry of Foreign Affairs didn’t reply to requests for comment. Earlier in June, Takaichi said at a press conference that Japan remains open to dialogue with China, adding that such talks were taking place at “various levels”.
Tokyo’s public response, so far, has been to join a Group of Seven pledge to reduce reliance on any one country for rare earths to no more than 60 per cent by 2030. Recycling initiatives, price floors and trade measures are all under consideration, according to Japanese Finance Minister Satsuki Katayama.
The question is whether Japan can fill the immediate supply gap while it works on further reducing its dependence.
Exports of some key intermediate forms of tungsten – a metal used in precision tools for car plants – fell to zero in January and have not budged since. That matters because Japan’s auto industry is a pillar of its economy, accounting for about 10 per cent of its total gross domestic product.
Exports to Japan of yttrium, used in LED screens and semiconductor equipment, are currently at 1.13 per cent in last year’s total volume. One broad category of rare earth chemicals that likely includes the restricted heavy rare earths, which are key to military manufacturing, notched its lowest rolling three-month volume since 2023 between March and May.
Chinese exports of dysprosium and terbium, used by Japanese firms to make high-performance magnets for electric vehicles, have now been at zero all year. The last time China exported either metal to its neighbor was in October 2025, just ahead of Takaichi’s remarks.
The measures fall well short of a blanket ban and most clearly impact intermediate forms of tungsten and yttrium. Some rare earths and tungsten in refined metal form have continued to flow, albeit at lower levels. Light rare earths – which are not subject to China’s export controls – do not show any major disruption.
The Japan Chamber of Commerce and Industry dispatched a delegation to the China International Supply Chain Expo in Beijing this week, presenting the chance for in-person dialogue with suppliers. Gaku Hashimoto, a member of Japan’s ruling Liberal Democratic Party, also attended the event with a different group.
Flows of industrial minerals to Japan have been watched more closely since late last year, when Beijing vowed to respond to Takaichi’s suggestion that Japanese forces could become involved in a hypothetical war over Taiwan. In January, China tightened controls and scrutiny of dual-use products – items with civilian and military applications – shipped to its neighbor.
Some of Japan’s biggest tungsten processors – including Sumitomo Electric and Mitsubishi Materials Corp. – have been able to offset China’s actions by relying more on scrap as a feedstock for their plants. Mitsubishi Materials’ current reliance on recycled material is at about 70 per cent, with a goal of 100 per cent by 2030.
“We’ve improved our recycling technology,” said Sumitomo Electric’s Matsumoto. “Recycling is very important for our company and we currently have two factories in the world.”
Boosting the use of recycled metal has been a strategy for Japanese metals companies since the 2010 crisis when China ordered an embargo on rare earths exports to Japan. That prompted Tokyo to make substantial efforts in reducing reliance on Beijing, but it still remains exposed to cut-offs.
China accounts for around 60 per cent of global mined production of rare earths used in permanent magnets that are integral to making everything from iPhones and electric vehicles to fighter jets and missiles, according to the International Energy Agency. Its dominance is even starker in midstream and downstream segments, accounting for above 90 per cent of the refining process and almost 95 per cent of permanent magnet production, the IEA said. BLOOMBERG
