China’s Rare Earth Curbs Squeeze Japan As Exports of Key Minerals Remain Near Zero

China’s exports of several strategically important rare earth elements and critical minerals to Japan remained virtually non-existent in June, extending supply disruptions that have become one of the clearest examples of Beijing’s growing willingness to use its dominance in critical mineral supply chains as a geopolitical tool.

Chinese customs data released on Monday showed that China exported no gallium, dysprosium, terbium or yttrium to Japan during the month, indicating that export restrictions imposed over the past year remain firmly in place despite strong demand from Japanese manufacturers.

The latest figures underscore how diplomatic tensions have evolved into economic pressure, with critical mineral exports becoming an increasingly important instrument of Chinese foreign policy.

Exports of the controlled materials have remained severely constrained since relations between Beijing and Tokyo deteriorated following comments by Japanese Prime Minister Sanae Takaichi on Taiwan in November.

While China first introduced export controls on several heavy rare earth elements and the permanent magnets containing them in April 2025, Beijing subsequently tightened restrictions on exports to Japan in January 2026 before expanding the measures twice again the following month, including restrictions affecting major Japanese industrial groups.

Although China maintains that its export licensing regime is based on national security and strategic resource management, the timing of the tighter controls has reinforced perceptions among governments and businesses that critical minerals have become an increasingly important diplomatic lever. The restrictions have also featured prominently in China’s broader trade negotiations with the United States under President Donald Trump, highlighting the strategic importance Beijing places on its near-monopoly over several critical minerals.

Japan’s Manufacturers Remain Vulnerable

Japan possesses the world’s largest rare-earth magnet industry outside China, supplying components essential for electric vehicles, industrial robots, consumer electronics, defense systems, and renewable energy equipment. However, despite decades of efforts to diversify supply following the rare earth dispute with China in 2010, Japanese manufacturers remain heavily dependent on Chinese processing capacity for several critical heavy rare earth elements.

The latest customs data illustrates that dependence.

China shipped:

• No gallium
• No dysprosium
• No terbium
• No yttrium

to Japan during June.

Gallium is a vital input for compound semiconductors used in advanced communications equipment, defense electronics, and high-performance power devices.

Dysprosium and terbium are indispensable for manufacturing high-performance permanent magnets capable of maintaining magnetic strength under high temperatures, making them critical for electric vehicle motors, wind turbines, industrial automation and military applications.

Yttrium plays a key role in aerospace and power generation by protecting turbine blades and other components from extreme heat through advanced ceramic coatings. Without reliable supplies of these materials, manufacturers face rising costs, production delays and greater uncertainty in long-term procurement planning.

Japanese companies have repeatedly warned that shortages of critical minerals are beginning to affect broader industrial activity rather than remaining confined to specialized manufacturers.

Export restrictions on yttrium have been particularly disruptive because alternative sources remain extremely limited. The material is widely used in thermal barrier coatings that protect aircraft engines and power plant turbines from extreme operating temperatures.

China also exported no yttrium to the United States for the second consecutive month, demonstrating that restrictions continue to affect multiple major economies simultaneously.

Similarly, exports of gallium to Japan fell back to zero after a temporary recovery in May, when Chinese exporters delivered a relatively large shipment that briefly eased supply concerns. The June figures suggest that improvement was short-lived rather than signaling any lasting relaxation of export controls.

China Retains Powerful Leverage

The latest data bolsters China’s dominant position across global critical mineral supply chains.

China produces or processes the overwhelming majority of the world’s heavy rare earth elements and remains the leading supplier of refined gallium, graphite, and numerous other strategic minerals essential to advanced manufacturing. That market position allows Beijing to influence industries ranging from semiconductors and artificial intelligence to electric vehicles, renewable energy, aerospace and defense.

The importance of these supply chains was highlighted only days ago when the International Energy Agency (IEA) warned that full implementation of China’s expanded export restrictions on rare earths could place approximately $6.5 trillion worth of downstream industrial production outside China at risk.

According to the IEA, sectors including automotive manufacturing, high technology, defense, and clean energy remain highly vulnerable because supply chains for many critical minerals remain heavily concentrated in China.

Western governments, Japan, and South Korea have responded by accelerating efforts to diversify supply through new mining projects, refining facilities, and strategic stockpiles, but building alternative supply chains is expected to take many years.

While exports of strategically controlled materials to Japan remained heavily restricted, China’s broader rare earth exports continued to recover. The country exported 5,649 metric tons of rare earth magnets in June, up from 4,730 tons in May.

The increase suggests that although shipments to selected countries remain tightly controlled through licensing requirements, Chinese producers continue supplying other international markets where export approvals have been granted.