New Delhi, Jan 8
Tensions between China and Japan have escalated after Beijing signalled that it may restrict exports of rare earth materials to Japan, raising serious concerns among Japanese businesses and policymakers, a report has said.
China's Ministry of Commerce said it would ban the export of all "dual-use" items to Japan, citing national security reasons, according to The New York Times.
These are products that can be used for both civilian and military purposes. While the official statement did not clearly name the items involved, reports in state-linked media suggested that rare earth elements could be included in the restrictions.
According to China Daily, Chinese authorities are considering tighter checks on export licences for medium and heavy rare earths.
These materials are critical for many modern technologies, including electric vehicle motors, electronics and advanced defence systems.
Soon after the announcement, a former editor of the state-affiliated Global Times warned on social media that stopping rare-earth shipments could hit a wide range of industries.
He added that no option should be ruled out, adding to market anxiety.
For Japan, the warning brings back memories of 2010, when China quietly halted rare-earth exports during a territorial dispute between the two countries.
Although no formal ban was announced at the time, the move disrupted Japanese industries and sent shockwaves through the economy.
Experts believe China may not impose an outright ban this time, but could instead slow exports through lengthy screening processes.
Yoshikiyo Shimamine, a senior fellow at the Dai-ichi Life Research Institute, said China could use strict checks to ensure rare earths are not used for military purposes, effectively creating a backdoor export ban, reported NYT.
Shimamine said rare earths pose the biggest economic risk among the items covered by China's dual-use controls because they are essential to many industries, especially Japan's automobile sector.
He warned that prolonged restrictions could have a serious impact on the Japanese economy.
China has already disrupted global supply chains in recent years by tightening controls on rare-earth exports.
These steps forced countries such as the United States and the European Union to look for alternative sources and reduce their dependence on China.
In the past, China's dominance in rare earths has also been used as leverage in trade and technology disputes.
Japan has spent the last 15 years trying to reduce its dependence on Chinese rare earths.
Its reliance has fallen to around 60-70 per cent today, from nearly 90 per cent in 2010.
However, China still controls most global production, and Japan remains almost fully dependent on China for heavy rare earths such as dysprosium and terbium, which are crucial for high-performance motors and advanced technologies.
- IANS
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