China’s Rare Earth Campaign Against Japan

Critical Questions by Gracelin Baskaran and Meredith Schwartz

Published January 13, 2026

On Tuesday, January 6, China targeted Japan with new export restrictions on dual-use technologies, including rare earth elements, permanent magnets, and other critical minerals required for the production of defense technologies. The move is widely seen as a response to comments made in November by Japanese Prime Minister Sanae Takaichi, who stated that an attack on Taiwan could constitute an "existential threat" to Japan and justify a military response. These retaliatory measures underscore rising tensions between Beijing and Tokyo and serve as a pointed warning from China to countries that take explicit positions on cross-strait relations. While previous Chinese export controls have largely been in response to trade disputes, this latest iteration ties export restrictions to the Taiwan issue, underlining that Beijing's critical minerals strategy is closely intertwined with its broader military objectives.

Q1: How have tensions between Japan and China escalated in the period leading up to the most recent export restrictions?

A1: Tensions between Japan and China have sharply escalated following remarks by Japanese Prime Minister Sanae Takaichi in the National Diet linking a potential Chinese attack on Taiwan to a serious threat to Japan's own security-a formulation that Beijing saw as justification for Japanese military involvement in a Taiwan contingency. Tensions continued to escalate in November and December, marked by a series of incidents near disputed islands along the East China Sea and the Philippine Sea between Japan and Taiwan. The most serious episode occurred when Chinese J-15 fighter jets locked their radar onto Japanese aircraft near Japan's Okinawa islands in the East China Sea-a move widely interpreted as a direct threat and a potential signal of imminent attack.

In the final days of 2025, the People's Liberation Army (PLA) completed its "Justice Mission 2025" exercises simulating the seizure and blockade of Taiwan. Taiwan's Ministry of National Defense detected 130 PLA aircraft, 14 PLA navy ships, and 8 Chinese coastguard ships off the coast of Taiwan between December 29 and December 30. The drills took place just days after the United States announced the sale of a large weapons package to Taiwan worth $11 billion. Several countries voiced their opposition to China's aggressive posture, with Japan, Australia, and the United Kingdom calling for restraint.

The clashes over territorial and security issues, including disputes over the Senkaku/Diaoyu Islands and earlier diplomatic rows in 2010 and 2012, show a pattern of recurring tensions in China-Japan relations. However, the current context differs: Shifts in domestic politics in both countries, especially Japan's evolving security posture and China's heightened emphasis on Taiwan as core to its national strategy, make de-escalation more difficult and meaningful bilateral trust harder to restore.

Q2: What is distinctive about the latest iteration of Chinese export controls?

A2: China's latest export restrictions apply to a wide range of products, prohibiting the export of any dual-use item that could contribute to Japan's military capabilities. Beijing's expansive definition of dual-use materials encompasses critical inputs such as rare earths, gallium, germanium, graphite, advanced manufacturing equipment, and magnets. It remains unclear how Beijing intends to implement such broad restrictions; however, the rare earth and critical minerals sector is one sector Beijing has effectively tightened in the past.

While China has repeatedly imposed and tightened critical mineral export controls in recent years-primarily as a coercive tool in trade disputes with the United States-this most recent round marks a shift in both scope and justification. Previous measures, including new restrictions in December 2024 following U.S. semiconductor export controls and in April 2025 in response to President Donald Trump's tariff increases on Chinese imports, were framed largely as trade retaliation. In contrast, the current restrictions are explicitly tied to China's foreign-policy signaling, with Beijing asserting that Japan violated its core national security and sovereignty interests. The recent restrictions are most reminiscent of China's use of rare earth export controls during the 2010 Japan-China crisis, which resulted from a maritime sovereignty dispute near the disputed Senkaku/Diaoyu Islands in the East China Sea.

Q3: How reliant is Japan on Chinese rare earth and magnet imports?

A3: Since 2010, Japan has made meaningful progress to fortify its rare earth supply chains against Chinese coercion through investments in both domestic refining and recycling capabilities as well as mining and processing operations abroad. Japan invested $250 million into Australia's Lynas Rare Earths in 2011. Over the last 15 years, Lynas has expanded its geographic footprint from the Mount Weld mine in Australia to processing, refining, and magnet manufacturing facilities in Malaysia and the United States. However, claims that Japan has successfully de-risked its rare earth supply chains and reduced reliance on China are misguided.

Japan is the largest importer of rare earth metals in the world. In 2024, Japan imported over 5.2 million kilograms of rare earth metals from China, equivalent to 63 percent of its total imports of rare earth metals. According to World Bank data, Japan imports 32 percent of its rare earth metals from Vietnam. However, there's a heavy interdependence between Japan, Vietnam, and China for mining rare earths, processing them, and manufacturing them into permanent magnets.

For example, the Dong Pao mine in Vietnam is a joint venture between Toyota Tsusho and Sojitz. Although it is one of the world's largest rare earth element deposits and has repeatedly attracted foreign interest, it has struggled to enter consistent production. In 2022, Vietnam produced 3,800 tons of rare earth oxides, all of which were imported by China for its own processing and downstream industries. Nonetheless, there is new pressure that could change the supply chain. Vietnam recently passed a law to ban the export of unprocessed rare earths effective January 1, 2026.

While Japan has invested in the midstream in Vietnam, China remains part of the supply chain. Between 2013 and 2017, Japan's Shin-Etsu Chemical invested $117 million in a rare earth magnet plant and a rare earth refining facility in Hai Phong Province in northern Vietnam. The facilities have a combined annual capacity of approximately 2,000 metric tons. Shin-Etsu operates a rare earth refining operation as part of a closed-loop facility, where the separated feedstock feeds its magnet manufacturing plant rather than being exported. Still, it's unclear if it is dependent on rare earths from China as feedstock. Greater supply-chain transparency in the region will be key going forward.

Q4: Which strategies are strengthening Japan's critical mineral resilience?

A4: Japan is increasingly pairing policy discipline with technological innovation to shore up rare earth security. Beyond reshoring magnet manufacturing and tightening supply-chain partnerships, Tokyo is now moving into frontier extraction. In January 2026, Japan will begin deep-sea rare earth mining tests in the Pacific Ocean near Minamitori Island, targeting deposits at depths of roughly 6,000 meters.

The government of Japan has frequently employed a strategy of joint investment in critical mineral projects with long-term offtake agreements to secure supply for rare earths and other critical minerals. Japan Organization for Metals and Energy Security's (JOGMEC) financing comes with offtake requirements that are designed to ensure stable access to energy and mineral resources for Japan-including oil, natural gas, and critical minerals. When Japanese state funding is provided, a portion of the project's production must be allocated to Japanese companies; in the case of equity investments, it is typically proportionate to their equity stake in the project.

Japanese auto manufacturers have also been entering long-term offtake agreements to diversify critical mineral and rare earths sourcing: Toyota partnered with Canadian Matamec Exploration to develop rare earth deposits in Quebec, Mitsubishi entered a binding agreement with Frontier Lithium for lithium development in Ontario, and Hyundai signed a seven-year offtake agreement with Arafura for its Nolans rare earths project in Australia.

Nonetheless, Japan's continued reliance on China's rare earth industry became apparent in April of 2025, when China cut off U.S. and Western original equipment manufacturers and auto-part manufacturers from seven heavy rare earth minerals and vital magnet inputs. U.S., European, and Japanese car manufacturers reported supply disruptions and even production pauses due to the restricted exports. Japanese automakers Nissan and Suzuki Motor reported supply disruptions due to China's rare earth restrictions, with Suzuki suspending production of its Swift model.

Q5: What are the broader implications of the minerals export controls for the security of Taiwan?

A5: China's rare earth export restrictions on Japan should be understood as a warning shot to countries contemplating a more active role in regional politics or greater solidarity with Taiwan. By selectively leveraging its dominance over critical mineral supply chains, China is signaling that political alignment carries material consequences. The message is not limited to Tokyo: States that voice support for Taiwan or take steps perceived as interference in Beijing's core interests risk exposure to economic retaliation framed as regulatory or commercial action. This approach allows China to deter political behavior it opposes without resorting to military force, reinforcing a form of coercive diplomacy in which access to critical inputs becomes a tool to shape regional decisionmaking and constrain the space for collective support of Taiwan.

A number of countries that have shown support for Taiwan in recent years, including the United States, Japan, Australia, Canada, the United Kingdom, and members of the European Union, remain particularly reliant on China for rare earths. China's willingness to weaponize access to these materials introduces a powerful constraint on its strategic calculus. Faced with the prospect that export restrictions could directly undermine their own industrial bases, energy security, and economic growth, these governments may be forced to reassess how far and how visibly they are prepared to intervene in a Taiwan contingency. Mineral dependence has become a deterrent lever, shaping political behavior well before any military conflict occurs.

Q6: What are the takeaways for the United States?

A6: First, China's rare earth restrictions underscore that economic statecraft is now a central element of deterrence and coercion, not a peripheral tool. Beijing is demonstrating that it can shape allied behavior and crisis dynamics through supply-chain leverage well before any military move against Taiwan. For the United States, this means Taiwan deterrence cannot rest on military posture alone; it should also account for how economic pressure could constrain allied decisionmaking in a crisis.

Second, the United States should view this as confirmation that supply-chain resilience is a national security imperative, not an industrial policy add-on. Diversifying rare earth and critical mineral supply chains through domestic production, allied sourcing, stockpiling, and processing capacity directly strengthens deterrence by shrinking Beijing's coercive tool kit. Without this groundwork, U.S. commitments risk being tested by economic pressure rather than military confrontation. Building supply-chain resilience takes time; after over a decade of strategic investment and supply-chain diversification, Japan is still working to eliminate its reliance on Chinese materials. Achieving U.S. critical minerals security requires long-term reindustrialization-there are no short-cut solutions.

And finally, China's actions highlight the need for pre-crisis coordination with allies, not ad hoc responses after restrictions are imposed. China's recent escalation in the Taiwan Strait, coupled with coercive export controls, is a sobering reminder that reunification is a near-term military goal for Beijing, not a hypothetical scenario. Now is the time for Washington to work with partners to establish shared contingency planning, mutual support mechanisms, and clear signaling around economic coercion, so that export controls do not fracture allied unity as tension heats up in the Indo-Pacific.

Gracelin Baskaran is director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Meredith Schwartz is an associate fellow for the Critical Minerals Security Program at CSIS.

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