China Arrests Two Fuji Electric Workers Over Rare Earths Smuggling Allegations

China has formally arrested two Japanese employees of Fuji Electric who were detained in May in the northeastern port city of Dalian. Sources familiar with the matter reported on July 1 that the arrests are linked to alleged attempts to take rare earth-related products overseas.

Local customs authorities detained the two employees in mid- and late June on suspicion of violating laws concerning the smuggling of prohibited imports or exports. They had initially been detained on May 18 and May 25 for the same case.

The detentions and arrests come as Beijing has intensified its export controls on rare earths. These materials are crucial for manufacturing high-tech products, including electric vehicles and weapons. The move by China occurs amid heightened Sino-Japanese tensions, partly triggered by remarks from Japanese Prime Minister Sanae Takaichi concerning Taiwan.

Sources suggest that Chinese customs authorities may be scrutinizing attempts by the Fuji Electric employees to ship items from which rare-earth magnets could be extracted. Chinese judicial procedures allow authorities up to 37 days from detention to decide on a formal arrest. Once arrested, suspects can be held for up to seven months pending examination for indictment.