China Japan Export Controls 2026: Rare Earths Weaponized in New Escalation

They've shaken hands in the past, but they're clenching their fists today. The economic interdependence between the world's major powers is facing a severe test. On January 6, 2026, China's Ministry of Commerce announced immediate export controls on certain dual-use goods destined for Japan. This move, which includes critical rare earth elements, signals a volatile new phase in East Asian geopolitics.

China Japan Export Controls 2026: Economic Coercion Unfolded

According to Reuters, the restricted items cover advanced materials, precision machinery, and semiconductors essential for modern high-tech industries. This isn't just a trade dispute; it's a strategic response. Beijing's decision follows divisive comments made by Japanese Prime Minister Takaichi Sanae in November 2025, where she suggested a military assault on Taiwan could be viewed as a threat to Japan's survival.

The impact on Japan's automotive sector could be massive. While Japan reduced its reliance on Chinese rare earths from 90% in 2010 to roughly 60-70% today, it remains almost totally dependent on China for heavy rare earths like terbium. Extended restrictions could shave hundreds of billions of yen off Japan's GDP, threatening the stability of its manufacturing core.

A Global Pivot Toward Supply Resilience

Tokyo's response has been swift, condemning the ban as a violation of international trade norms. In response, Japan is deepening ties with the United States, Australia, and India. Notably, a rare earth agreement was signed between Donald Trump and Takaichi in October 2025, aimed at securing alternative sources and refining capabilities away from Beijing's reach.