China restricts critical mineral exports to Japan amid Taiwan diplomatic dispute

Jun 21, 2026

China is choking exports of critical minerals, including tungsten and heavy rare earths like terbium and dysprosium, to Japan. The supply squeeze, triggered by Japanese Prime Minister Sanae Takaichi's November 2025 comments on Taiwan, has severely disrupted Japan's magnet industry. In response, Japanese firms like Shin-Etsu Chemical are investing in alternative supply chains and new refining facilities.

China rare earth export controls

▪China's exports to Japan of several rare earths used for powerful magnets were negligible in May 2026, extending a months-long supply squeeze.
▪China introduced export controls on heavy rare earths and magnets in April 2025, and tightened controls on exports to Japan in January and February 2026.
▪China stopped nearly all supplies of some forms of tungsten to Japan in 2026.

Japan-China Taiwan diplomatic dispute

▪Comments on Taiwan by Japanese Prime Minister Sanae Takaichi in November 2025 prompted a diplomatic breakdown and subsequent export curbs by Beijing.
▪The slowdown in critical mineral exports has prompted calls for Japanese Prime Minister Sanae Takaichi to find a diplomatic off-ramp with Beijing.

Heavy rare earth supply shortage

▪There have been no shipments to Japan of terbium or dysprosium oxide since November 2025, and only tiny shipments of yttrium oxide since December 2025.
▪Japan received its first big shipment of chip metal gallium from China in May 2026 since December 2025.

Japanese magnet industry disruption

▪Japan's rare earth magnet makers are overwhelmingly reliant on Chinese imports of key heavy rare earths.
▪China's exports of rare earth magnets to Japan fell 35% month on month in May 2026 to their lowest volume since May 2025.

Japan alternative supply investment

▪Japanese rare earth magnet manufacturer Shin-Etsu Chemical plans to build its first new rare earth refining facility since 2008.
▪The export curbs have disrupted magnet availability and led to a rush of Japanese investment into new heavy rare earth supply.