Sources indicate that China is considering tightening the review process for export licences of rare earths to Japan

On January 6th, according to Caishulan (a financial news website) citing media reports, a reliable source stated that due to Japan's recent poor performance, the Chinese government is considering tightening the export license review for certain items related to medium and heavy rare earths that were listed on April 4, 2025.

On April 4, 2025, in accordance with relevant laws and regulations such as the "Export Control Law of the People's Republic of China", the Ministry of Commerce and the General Administration of Customs jointly issued an announcement regarding the implementation of export control measures for 7 types of medium and heavy rare earth-related items. The announcement came into effect immediately upon its release.

In a regular press conference held on December 4th last year, the spokesperson of the Ministry of Commerce, He Yadong, stated that Japanese Prime Minister Koizumi Masahiko openly made incorrect remarks regarding Taiwan, seriously undermining the political foundation of China-Japan relations. The Japanese side bears the inescapable responsibility for this.

He Yadong emphasized that China has repeatedly stated its firm position, urging Japan to immediately correct its wrongdoings and take concrete actions to fulfill its commitments to China, in order to create conditions for the normal economic and trade cooperation between the two countries. If Japan persists in its own course, China will take necessary measures and all consequences will be borne by Japan.

An assessment by Nomura Research Institute in Japan indicates that Japan's supply of heavy rare earth elements such as dysprosium and terbium for electric vehicle drive motors is almost entirely dependent on China. In the event of supply restrictions, the Japanese economy would face a significant impact.

Nomura Research Institute estimates that if China's restrictions on rare earth exports to Japan persist for three months, the result would be a loss of around 660 billion yen, causing the nominal and real GDP to decline by 0.11% annually. If this situation persists for one year, the loss would amount to approximately 2.6 trillion yen, and the nominal and real GDP would decrease by 0.43% annually.