China Slashes Rare Earth Exports to Japan by 51%, Threatening Tokyo

China has drastically cut its exports of key rare earth elements to Japan, signaling a significant shift in trade relations and potentially impacting Japan's high-tech industries. In the first half of 2026, exports of seven regulated rare earth elements from China to Japan decreased by 51% compared to the same period last year. Notably, exports of dysprosium and terbium, crucial for electric vehicle motors and high-performance magnets, have ceased entirely.

This sharp decline is a direct consequence of China's export control measures, introduced in April 2025, which placed restrictions on seven types of medium and heavy rare earth elements. The trend has been downward for months, with June alone seeing an 81% drop in exports to Japan. Furthermore, China's overall rare earth exports have fallen by 16%, with exports to the United States also down by 28%.

Analysts view this move as part of Beijing's broader strategy to exert pressure on Tokyo. Tensions have been escalating since Japanese Prime Minister Fumio Kishida made remarks concerning Taiwan's security in November 2025. China has also tightened export controls on over 1,000 dual-use items, including rare earths, chemicals, and technology, further complicating bilateral trade.

While obtaining export permits for high-performance rare earth magnets remains challenging for Japanese companies, sources indicate that China selectively grants these permits. This tactic appears designed to prevent a complete halt in Japanese procurement while simultaneously encouraging Japanese businesses to lobby their government to improve relations with China. The situation underscores the strategic importance of rare earth elements in global supply chains and geopolitical maneuvering.