China's Rare Earth Exports Stall, Japan Scrambles for Alternatives from Australia and India
China's tightened rare earth export controls have led to an 88% and 82% year-on-year drop in exports to Japan in March and April 2025, respectively. Japanese companies are urgently seeking alternative sources from Australia and India and investing in recycling technologies to avoid supply chain disruptions.
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- 📰 Published: June 8, 2026 at 19:42
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(Central News Agency, Tokyo, June 8, Special Correspondent Dai Yazhen) China has designated rare earths as strategic resources and strengthened export controls. Amid deteriorating Japan-China relations, China's rare earth exports to Japan have recently declined sharply. An analysis of data by the Nikkei found that China's rare earth exports to Japan in March and April of this year plummeted 88% and 82% year-on-year, respectively. Japanese companies are accelerating their search for alternative sources in countries such as Australia and India.
The report indicates that since January, China has further tightened export reviews for Japan based on regulations for the export control of dual-use items. China is dissatisfied with remarks made by Japanese Prime Minister Takayuki Sanae in the Diet last November regarding a "Taiwan contingency" and is leveraging its advantage of controlling about 70% of global rare earth production to exert greater economic pressure on Japan.
As early as April 2025, China's Ministry of Commerce imposed export controls on seven rare earth products, including Dysprosium and Terbium. Statistics show that from January to April this year, total exports of these seven types of rare earths to Japan decreased by 34% compared to the same period last year. The decline was particularly steep in March (88% year-on-year) and April (82% year-on-year), even exceeding the drop in May 2025 (42%) immediately after China imposed the export restrictions.
By item, exports of Dysprosium and Terbium, which are indispensable for electric vehicle (EV) motors, have been completely zero to Japan since January this year.
The reduction in exports of another important rare earth element, Yttrium, is also severe. Yttrium is widely used in laser medical equipment, semiconductor manufacturing equipment, and the aviation and aerospace industries, and is considered difficult to substitute. From January to April this year, Japan's imports decreased by more than 90% compared to the same period last year.
According to a source from the Japanese Chamber of Commerce in China, which is composed of Japanese companies operating in China, China slightly relaxed export restrictions after the Japan-China summit meeting last October. However, as intergovernmental exchanges stalled from 2026 onward, exports were interrupted again.
In addition to rare earth raw materials, exporting high-performance magnets containing regulated rare earths has also become difficult. A senior executive of a Japanese company revealed, "It is currently almost impossible to obtain export permits for high-performance magnets that add rare earth elements such as Dysprosium."
China not only controls most of the world's rare earth mineral resources but also holds a global market share of over 90% in rare earth smelting and processing, making it difficult for countries to completely break away from dependence on the Chinese supply chain in the short term.
Japanese companies are actively seeking alternatives outside of China. JX Metals has invested in rare earth mining areas in Australia. Proterial (formerly Hitachi Metals) is evaluating the construction of a neodymium magnet factory in India that does not use heavy rare earths. Australia is currently the world's third-largest rare earth producer, while India ranks sixth.
Recycling is also an option. Mitsubishi Materials recently decided to invest in a US company with rare earth recycling technology to enhance its resource recycling capabilities.
However, finding alternatives is not easy. A senior executive of a major Japanese manufacturer stationed in China warned, "If the current situation continues, domestic production in Japan will be affected, and it could even lead to factory shutdowns." To avoid this, some companies have begun to change their supply chain models, such as assembling electronic components like motors in China first before exporting them to Japan.
The Japanese government is also closely monitoring whether companies will move their production bases to China due to difficulties in securing raw materials. The concern stems from the 2010 dispute over the Diaoyu Islands (called Senkaku Islands in Japan), when China suspended rare earth exports to Japan, forcing some Japanese magnet manufacturers to set up factories in China, which ironically spurred the rise of China's domestic magnet industry. The Japanese government now fears a similar scenario could repeat itself. (Editor: Zhang Zhixuan) 1150608
The report indicates that since January, China has further tightened export reviews for Japan based on regulations for the export control of dual-use items. China is dissatisfied with remarks made by Japanese Prime Minister Takayuki Sanae in the Diet last November regarding a "Taiwan contingency" and is leveraging its advantage of controlling about 70% of global rare earth production to exert greater economic pressure on Japan.
As early as April 2025, China's Ministry of Commerce imposed export controls on seven rare earth products, including Dysprosium and Terbium. Statistics show that from January to April this year, total exports of these seven types of rare earths to Japan decreased by 34% compared to the same period last year. The decline was particularly steep in March (88% year-on-year) and April (82% year-on-year), even exceeding the drop in May 2025 (42%) immediately after China imposed the export restrictions.
By item, exports of Dysprosium and Terbium, which are indispensable for electric vehicle (EV) motors, have been completely zero to Japan since January this year.
The reduction in exports of another important rare earth element, Yttrium, is also severe. Yttrium is widely used in laser medical equipment, semiconductor manufacturing equipment, and the aviation and aerospace industries, and is considered difficult to substitute. From January to April this year, Japan's imports decreased by more than 90% compared to the same period last year.
According to a source from the Japanese Chamber of Commerce in China, which is composed of Japanese companies operating in China, China slightly relaxed export restrictions after the Japan-China summit meeting last October. However, as intergovernmental exchanges stalled from 2026 onward, exports were interrupted again.
In addition to rare earth raw materials, exporting high-performance magnets containing regulated rare earths has also become difficult. A senior executive of a Japanese company revealed, "It is currently almost impossible to obtain export permits for high-performance magnets that add rare earth elements such as Dysprosium."
China not only controls most of the world's rare earth mineral resources but also holds a global market share of over 90% in rare earth smelting and processing, making it difficult for countries to completely break away from dependence on the Chinese supply chain in the short term.
Japanese companies are actively seeking alternatives outside of China. JX Metals has invested in rare earth mining areas in Australia. Proterial (formerly Hitachi Metals) is evaluating the construction of a neodymium magnet factory in India that does not use heavy rare earths. Australia is currently the world's third-largest rare earth producer, while India ranks sixth.
Recycling is also an option. Mitsubishi Materials recently decided to invest in a US company with rare earth recycling technology to enhance its resource recycling capabilities.
However, finding alternatives is not easy. A senior executive of a major Japanese manufacturer stationed in China warned, "If the current situation continues, domestic production in Japan will be affected, and it could even lead to factory shutdowns." To avoid this, some companies have begun to change their supply chain models, such as assembling electronic components like motors in China first before exporting them to Japan.
The Japanese government is also closely monitoring whether companies will move their production bases to China due to difficulties in securing raw materials. The concern stems from the 2010 dispute over the Diaoyu Islands (called Senkaku Islands in Japan), when China suspended rare earth exports to Japan, forcing some Japanese magnet manufacturers to set up factories in China, which ironically spurred the rise of China's domestic magnet industry. The Japanese government now fears a similar scenario could repeat itself. (Editor: Zhang Zhixuan) 1150608
FAQ
What is the background of China's rare earth export controls?
China has designated rare earths as strategic resources and, amid deteriorating Japan-China relations, has strengthened export controls as economic pressure on Japan.
Which Japanese companies are affected?
A wide range of manufacturers that require rare earths, including JX Metals, Proterial, and Mitsubishi Materials, are affected.
What is the Japanese government's response?
The Japanese government is monitoring moves by companies to shift production bases to China, wary of a repeat of the 2010 situation.