China Weaponizes Rare Earths for the First Time in 16 Years...Japan Left Powerless [Sisa Show]

6 Trillion Won Loss for Japan Every Three Months Under Rare Earth Controls
Prime Minister Takaichi Refuses to Retract Taiwan Remarks

■ Broadcast: The Asia Business Daily 'So Jongseop's Current Affairs Show'

■ Host: Political Specialist So Jongseop

■ Director: PD Ma Yena

■ Guest: Reporter Lee Hyunwoo

China has finally played its rare earth card against Japan. The Chinese Ministry of Commerce announced a comprehensive export control measure on dual-use materials, including rare earths, destined for Japan. This is the first time in 16 years, since 2010, that China has used rare earths as a diplomatic weapon. The Japanese stock market plummeted immediately after the announcement, sending shockwaves through Japan's business community.

Japan relies on China for 70% of its rare earths..."6 trillion won loss every three months under export controls"

Reuters Yonhap News

Japan relies on China for about 70% of its rare earth supply. Rare earths are essential minerals for manufacturing electronics, semiconductors, and advanced weaponry. If China's measure continues for three months, Japan is expected to incur losses exceeding 660 billion yen, or more than 6 trillion won. In effect, China has precisely targeted a critical vulnerability in the Japanese economy through its rare earth restrictions.

Stronger than 2010, with secondary boycotts included. This latest action by China is far more stringent than the 2010 rare earth restrictions. In 2010, the export controls targeted only rare earths, but this time, all dual-use materials that could be diverted for military use are included. Not only rare earths, but also semiconductor materials and equipment, and any items with potential military applications, are subject to the controls. It is reported that more than 1,000 items are now regulated.

What is particularly noteworthy is that a 'secondary boycott' measure has also been introduced. Third countries selling dual-use materials imported from China to Japan will also be subject to sanctions. This is a tactic the United States has often used against China, but now China is employing it in reverse. This measure was not part of the 2010 restrictions. It is being assessed that China is mobilizing every available means to pressure Japan.

In a statement, the Chinese Ministry of Commerce said, "The Japanese leader made inappropriate remarks regarding Taiwan, which constitutes a blatant interference in China's internal affairs," and "Because this seriously violates the One China principle, we have taken this measure." The direct trigger was Prime Minister Sanae Takaichi's comment that Japan would intervene in the event of a Taiwan emergency. China has made it clear that unless Prime Minister Takaichi retracts her statement, it will continue to escalate the sanctions.

Japan has no countermeasures...Prime Minister Takaichi, ahead of general election, refuses to retract Taiwan remarks

AFP Yonhap News

The Japanese government currently has no effective card to play in response to these restrictions. Even within Japan, there are voices saying that unless Prime Minister Takaichi retracts her statement about intervening in Taiwan, there is no practical solution. Prime Minister Takaichi has said she will reflect on her remarks, which were more hardline than those of the previous administration, but she continues to refuse to retract them.

Prime Minister Takaichi also finds herself in a position where backing down is not easy. The policy of treating a Taiwan emergency as a national crisis and intervening is directly linked to the US-Japan alliance. Considering relations with the United States, it is difficult for her to retract her statement. Moreover, her core support base-the conservative right-wing forces in Japan-are united by anti-China sentiment. With Prime Minister Takaichi preparing to dissolve the lower house and call a general election, showing any sign of yielding to China could put her at a political disadvantage.

The Japanese right-wing's view of the Taiwan issue is fundamentally different from that of the Chinese government. The Japanese right argues that Taiwan was never Chinese territory. Their logic is that Taiwan was under Japanese rule and became independent after Japan's defeat in World War II, but was never part of China. This perspective is similar to that of Taiwan's ruling Democratic Progressive Party. It directly contradicts the One China principle asserted by China, which is why the Chinese government continues to react so strongly.

Even the US government officially recognizes the One China principle, so if the Japanese government continues to reject it, China is expected to maintain sanctions by any means necessary. Although Chinese companies will also be affected, there are concerns that the rare earth export controls will persist. If Japan continues to resist, China may announce specific rare earths to be restricted and further escalate the situation.

After the 2010 rare earth restrictions, Japan reduced its dependence on China from 84% to 57%, but last year it climbed back up to 69-70%. The continued high demand is due to the low prices of Chinese rare earths. Japan is in a difficult position to respond immediately.

A warning message for Korea and neighboring countries as well

Yonhap News Agency

The timing of China's rare earth export control announcement is also notable. The announcement came during President Lee Jaemyung's visit to China. This is being interpreted as a strong warning to the Korean government. Korea also relies on China for more than 80% of its rare earth supply. The message is clear: if Korea finds itself in conflict with China, it could face the same situation as Japan. By showing what is happening to Japan, China is warning that Korea could suffer even greater consequences if it pursues policies that go against China.

During President Lee Jaemyung's visit, sensitive topics such as the West Sea structure issue and the exclusive economic zone between the two countries were discussed. China is seen as openly demonstrating its ability to take tough measures to apply pressure in these negotiations, using rare earth export controls as a bargaining chip.

The West Sea structure issue is also a matter of concern for the United States. The US has emphasized the strategic flexibility of US Forces Korea, stating that if a military conflict breaks out in Northeast Asia, some US troops in Korea could be redeployed elsewhere. The area where the West Sea structures are concentrated is on the route from the US Forces Korea headquarters in Pyeongtaek to Taiwan. While the structures are currently used as fish farms, in an emergency they could block naval passages or be converted into drone landing bases, which is why the US is opposed to them.

There is analysis that when President Lee Jaemyung tried to discuss the West Sea structure issue with China during his visit, China played the rare earth card first to assert its leverage. At a time when the Korean government is focusing on lifting the ban on Korean cultural content and strengthening economic cooperation, China has brought out the sensitive rare earth export control card.

Ultimately, the weaponization of rare earths is not just an issue for Japan and Korea. China is also engaged in territorial disputes over maritime boundaries with Southeast Asian countries. There are growing concerns that almost every country in East Asia could become a target of pressure, diplomatic isolation, or economic blockade using rare earths as a weapon.