Japan has urged China to revoke tougher new export controls on products with potential military uses, possibly including vital rare earth minerals, in a further escalation of diplomatic tensions between Beijing and Tokyo.
China’s commerce ministry said on Tuesday that authorities had “decided to strengthen export controls on dual-use items to Japan”, with immediate effect.
The move comes as China ramps up pressure on Tokyo after Japanese Prime Minister Sanae Takaichi suggested in November that Japan might react militarily to any attack on Taiwan.
Beijing claims the self-ruled island as part of its territory and has not ruled out seizing it by force. China has also been highly critical of Japan’s military build-up.
While the Chinese statement did not specify affected items, it fuelled concerns in Japan that Beijing could restrict supplies of rare earth minerals, some of which are listed by China as dual-use goods.
China is by far the world’s largest supplier of rare earths, which are crucial for a wide range of technology products, from smartphones to fighter jets.
Hours after the Chinese announcement, Masaaki Kanai, secretary general of the Asian and Oceanian Affairs Bureau of the Japanese Foreign Ministry, “strongly protested and demanded the withdrawal of these measures”.
He lodged the protest with Shi Yong, the Chinese embassy’s deputy chief of mission, the ministry said in a statement late Tuesday.
Kanai said the measures “deviate significantly from international practice, are absolutely unacceptable and deeply regrettable”.
More than 70 per cent of Japan’s rare earth imports come from China, according to the Japan Organization for Metals and Energy.
This is despite Tokyo’s efforts to diversify supplies following a diplomatic row in 2010, when Beijing temporarily cut off exports of the materials to Japan.
Global risk consultancy Teneo said the ambiguous wording of the Chinese statement may have been intended to pressure Takaichi into adopting a more conciliatory stance towards China.
“The brief statement by China’s commerce ministry is vague, and the impact of the new measures could range from almost entirely symbolic to highly disruptive,” it said.
“By triggering concern in Japan about the ongoing availability of critical Chinese industrial inputs, the announcement puts immediate pressure on Takaichi to offer concessions.”
“A plausible scenario is that the commerce ministry initially rejects a small handful of licence applications, creating only minor supply-chain disruption but signalling the potential for broader damage in the future unless Tokyo takes conciliatory action,” Teneo added.
Takahide Kiuchi, executive economist at Nomura Research Institute, said the impact on the Japanese economy would be “extremely severe” if China includes rare earths in its export controls.
He estimated that a three-month ban could cost Japan 660bn yen ($4.2bn) and reduce the country’s gross domestic product by 0.11 per cent.
“Particularly for rare earths like dysprosium and terbium, which are auxiliary materials for neodymium magnets used in electric vehicle motors, Japan is said to depend almost 100 per cent on China,” he said.
Japan’s top government spokesman, Minoru Kihara, declined on Wednesday to comment on the potential impact on Japanese industries, citing “the numerous unclear points, including the scope of the measures”.
AFP
