Japan Expresses "Deep Regret" Over China’s Rare Earth Retaliation... Adopts Cautious Stance for Now

China Uses Export Controls in Response to Takaichi's Remarks
Japanese Media: "If China Restricts Rare Earths, Corporate Activity Will Be Greatly Affected"

After Japanese Prime Minister Sanae Takaichi suggested possible intervention in the event of a Taiwan contingency, China, which has been pressuring Japan, has now played the card of banning exports of "dual-use goods" such as rare earths and semiconductors. In response, the Japanese government is focusing on understanding the situation.

Sanae Takaichi, Prime Minister of Japan (left), and Xi Jinping, President of China. Photo by Yonhap News

On January 7, Japanese media analyzed that China had implemented "direct economic sanctions," and predicted that a blow to the Japanese economy would be inevitable. An official from the Ministry of Foreign Affairs told the Asahi Shimbun, "We do not understand why the regulations were tightened at this time." According to the ministry, Masaaki Kanai, Director-General of the Asian and Oceanian Affairs Bureau, conveyed to Xiong, Deputy Chief of Mission at the Chinese Embassy in Japan, that this action, which targets only Japan, is significantly different from international norms, is completely unacceptable, and is deeply regrettable.

Minoru Kihara, Chief Cabinet Secretary and spokesperson for the Japanese government, reiterated at a press conference that morning that the government is "deeply regretful," and revealed that the Ministry of Foreign Affairs had lodged a protest with the Chinese side the previous day and requested a withdrawal of the measures. He said, "There are many unclear aspects regarding the details, including which items are affected, so I will refrain from commenting on the impact on Japanese industry." He added, "We will thoroughly investigate and analyze the details and consider necessary responses accordingly." Kihara also withheld comment on whether rare earths are included in the export restrictions, stating, "The situation is still unclear at this point."

The Asahi Shimbun reported that "imports in a wide range of fields, including important minerals such as rare earths, chemicals, industrial products, and materials, could be affected." The Mainichi Shimbun also noted that "although the specific items and degree of regulation are unclear, if the export ban is expanded, it could include essential goods and have a major impact on the economic activities of Japanese companies."

China's restrictions on rare earth exports are considered one of the most closely watched economic retaliatory measures by Japan since the deterioration of Japan-China relations. The Nikkei highlighted heavy rare earths such as dysprosium, known to be included in China's dual-use goods, and pointed out that "they are essential for a wide range of high-tech products, from electric vehicles to weapons." The paper added that there is a view that China, which has previously succeeded in extracting concessions from the United States, may have implemented "strengthened rare earth export restrictions" as one of its diplomatic cards against Japan.

Although Japan is expected to monitor the situation for the time being, it is also analyzed that the country could consider retaliatory measures to resolve the issue. The Ministry of Foreign Affairs reported that Director-General Kanai had a phone call with Michael DeSombre, U.S. Deputy Assistant Secretary of State for East Asian and Pacific Affairs, to exchange views on the regional situation and reaffirmed that the United States and Japan will continue to cooperate closely. It appears that the two sides may also have discussed China's export ban regulations.