China has significantly reduced its export of rare-earth products, shipping 6,745 tons in December, down from 6,958 tons in November, according to customs data released recently. This decline comes amid escalating tensions between China and Japan, particularly following remarks made by Japan”s Prime Minister Takaichi Sanae regarding Taiwan.
The majority of China”s rare-earth exports consist of magnets, which have been pivotal in past trade disputes. Recently, China”s Ministry of Commerce announced intentions to impose tighter controls on shipments of these critical materials, specifically targeting potential military applications, with Japan being a focal point.
The strained relationship between these two nations has intensified since Takaichi Sanae expressed Japan”s willingness to support Taiwan in the event of an aggressive move by Beijing. In response, reports indicate that China is considering stricter licensing rules for exporting rare-earth elements to Japan.
The implications of these actions are already being felt globally. In October, China indicated that its new export restrictions would apply not only to specific nations but worldwide. This has prompted the United States to convene a meeting with G7 finance ministers and representatives from Australia, India, South Korea, and the EU to discuss strategies to reduce reliance on Chinese rare-earth supplies.
During the meeting, led by Treasury Secretary Scott Bessent, the dialogue centered on establishing price floors to encourage other nations to initiate their own rare-earth mining and processing projects. An official noted the urgency of the situation, emphasizing the need for swift action given the complexity and involvement of multiple countries.
Currently, foreign companies require a license from China to export rare-earth materials or related technologies, a system that is now being leveraged to delay or block shipments to certain countries, particularly those involved in defense and advanced technologies, including Japan, Europe, and the United States.
Jon Lang, who oversees economic security policy at APCO in Washington, remarked that the U.S. initiative to decrease dependence on rare-earth materials from China is gaining traction, especially in light of what he described as China”s broad economic coercion. He also pointed out that the G7 nations are more unified than before, and this meeting could serve as a display of support for Japan, which has been a previous target of China”s trade coercion tactics since 2010.
In response, the Chinese state-owned tabloid, The Global Times, characterized the G7 discussions as a reflection of America”s strategic anxiety. They asserted that the West”s ambitions to outperform China in the rare-earth sector are unrealistic given the current landscape of global demand and production.
Nevertheless, it is evident that China is closely monitoring the efforts of other countries to enhance their investments in new mining and processing facilities. The international community is keen to diversify its supply chains for these essential materials, reducing long-term reliance on a single nation.
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