China Restricts Critical Mineral Exports to Pressure Japan, Forcing Japanese Firms to Draw Down Inventories
Miles Bennett
China has cut exports of tungsten, dysprosium, terbium and other critical minerals to Japan to zero or record lows this year, hitting the auto, semiconductor and EV supply chains. This means → Beijing is weaponizing rare-earth permits as a targeted diplomatic lever, and Japanese manufacturers are running on recycled scrap and dwindling inventories.
How steep is the export drop?
Some intermediate tungsten products have seen zero shipments to Japan since January — with no recovery so far.
Dysprosium and terbium — key inputs for high-performance EV magnets — last shipped to Japan in October 2025, then stopped entirely.
Yttrium, used in LED screens and semiconductor equipment, is running at just 1.13% of last year's volume.
This means → It is not one mineral thinning out. Multiple critical materials have gone dark simultaneously, spanning Japan's most vital manufacturing chains.
Why is Japan being singled out?
Bloomberg, citing people familiar with the matter, traces the curbs to remarks by PM Sanae Takaichi on Taiwan last November.
Beijing is using mineral export licenses as a precision pressure tool — not a blanket embargo, but a squeeze on the categories that hurt Japan most.
In plain terms = This is not a broad-front trade war. It is "you said something we didn't like, so we cut what you need most."
Are diplomatic channels still open?
Takaichi, angered by personal attacks from Beijing, is unwilling to hold a sideline meeting with Xi Jinping at the November APEC summit in Shenzhen.
Japan's ambassador to China has requested meetings with foreign-ministry officials multiple times this year — all unanswered.
Takaichi said this month that Japan remains open to dialogue, but in practice bilateral contact has nearly ground to a halt.
This reflects a standoff deeper than trade friction — neither side is willing to blink first, and the diplomatic freeze is feeding the supply freeze.
How are Japanese companies coping?
Sumitomo Electric, Mitsubishi Materials and other major tungsten processors are ramping up scrap recycling to fill the gap.
Mitsubishi Materials currently sources about 70% from recycled feedstock and aims for 100%.
Sumitomo Electric CEO Masayoshi Matsumoto said in Beijing: "If this continues, we will of course need to negotiate with the Chinese government."
In plain terms = Recycling buys time, but it is not a permanent fix — scrap supply has a ceiling, and the capacity gap will eventually show.
What cards does Tokyo have left?
Japan has joined a G7 pledge to cut rare-earth dependence on any single country to below 60% by 2030.
Finance Minister Satsuki Katayama said recycling, price floors and trade measures are all under study.
The Japan Chamber of Commerce sent a delegation to Beijing this week for a supply-chain expo, seeking direct talks with Chinese suppliers.
This means → Japan is running on two tracks at once: restoring supply in the short term and reducing China dependence in the long term — but neither track has produced results yet.
Content is for reference only, not financial advice.