China Approves Limited Rare Earth Exports to Japan Amid Dual-Use Controls

Limited Approvals Granted Under New Controls

China has approved a limited number of rare earth export licenses to Japan, operating under its recently implemented 'dual-use' export control framework. This development offers some relief to Japanese manufacturers facing supply pressures, while simultaneously underscoring Beijing's expanding strategic influence over essential minerals. The approvals come amidst a period of heightened political tensions between the two nations.

Geopolitical Context of Export Restrictions

The tightening of China's export controls on rare earth elements, particularly those categorized as 'dual-use' due to potential civilian and military applications, became more pronounced in early 2026. These measures are widely seen as a response to comments made by Japanese Prime Minister Sanae Takaichi in November 2025, which hinted at military intervention in the event of a Chinese attack on Taiwan. Chinese authorities have characterized these controls as legitimate responses to security concerns, asserting that while exports for defense remain prohibited, 'compliant' civilian applications will be processed.

Impact on Japanese Industry and Supply Chains

Japan maintains a significant reliance on Chinese rare earth supplies, with approximately 72 percent of its needs for the automotive and electronics sectors, and 63 percent of its total rare earth imports in 2024, originating from China. The new regulatory framework has led to stricter scrutiny, particularly for heavy rare earths such as dysprosium and terbium, which are crucial for high-performance magnets used in electric vehicles and advanced weapons systems. Japanese importers are now required to submit detailed documentation regarding downstream users and re-export destinations, making the approval process slower and less transparent than in previous periods.

Japan's Efforts Towards Supply Diversification

In response to the ongoing supply uncertainties and China's strategic use of export controls, Japan has intensified its efforts to diversify its rare earth supply chains. A notable initiative includes the successful test retrieval of deep-sea sediment containing rare earth minerals near Minamitorishima Island, located in Japan's economic waters. This project aims to reduce Japan's dependence on any single country for these critical materials. Additionally, Japan has invested in rare-earth separation facilities in countries like France and supported producers such as Lynas Rare Earths Ltd. in Australia, further demonstrating its commitment to securing alternative sources.