- China produced ~270,000 tons Rare Earth in 2024, ~70% of world supply
- Exported 55,431 tons, a record high
- Japan depends on China for 71.9% of rare earths; ~100% of heavy REEs
- Minamitori deep-sea project: ¥40B investment, 6 km underwater
- China maintains ~90% of global refining capacity
For years, rare earths—the suite of 17 critical elements underpinning modern electronics, defense systems, and renewable technologies—have been the subject of geopolitical alarm. Japan’s Finance Minister recently declared a priority: “take away” China’s power to “weaponize” rare earths.
Western capitals have echoed similar concerns. But a sober examination of the data, market dynamics, and industrial history suggests something far less sinister—and far more strategic.
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1. China’s Dominance Is Industrial, Not Coercive
The numbers are unmistakable. In 2024, China’s rare earth oxide (REO) production quota approached 270,000 metric tons, commanding roughly 70% of global mine output. In the downstream chain—refining, separation, magnet manufacturing—China’s share balloons to an estimated 90%, especially for heavy rare earths essential to permanent magnets.
Japan condemns China’s dual-use export ban as rare earth curbs loom
Exports tell a complementary story. Rather than constricting supply, Chinese customs data show:
- 55,431 metric tons of rare earths exported in 2024—a record high.
- In January–September 2025, exports remained strong at approximately 48,356 tons, with monthly flows consistently robust.
If China were intent on throttling markets, volumes would shrink and prices spike dramatically. That is not the pattern.
2. Japan’s Dependency Is Structural
Japan’s alarm isn’t fabricated—it reflects economic reality. In 2024:
- 71.9% of Japan’s rare earth imports came from China.
- For heavy rare earths such as dysprosium and terbium, used in electric vehicle motors and advanced sensors, the dependency approaches 100%.
These figures reveal not coercion but consequence: Japan and other industrial nations ceded ground decades ago, prioritizing capital goods industries over raw material production and processing.
Japan condemns China’s dual-use export ban as rare earth curbs loom
3. “Monopoly” Is Misleading — Dominance Is the Accurate Term
Monopoly implies intentional restriction and market exclusion. China’s export statistics suggest otherwise:
- Export value in 2024—about $488.8 million—fell even as volumes rose, indicating market pricing, not artificial scarcity.
- Monthly export trends in 2025 show variation, not systematic restriction.
- China remains a rare earth importer as well, bringing in ~132,931 tons in 2024 from sources like the U.S. and Myanmar, though this declined in 2025.
These dynamics point to participation in global commodity markets, not unilateral blockade.
4. Geopolitics Colors Perception
The tensions between Tokyo and Beijing do not arise in a geopolitical vacuum. Territorial disputes in the East China Sea, divergent views on Taiwan, and Japan’s evolving defense posture feed strategic mistrust. From Beijing’s perspective, tightening certain dual-use export controls—whose restricted list remains unpublished—is a defensive measure tied to national security and export licensing norms.
In public remarks, Chinese spokespeople have framed these decisions as lawful responses to perceived Japanese “remilitarization” and efforts to deepen alliance frameworks with U.S. and European governments.
From Tokyo’s vantage, the lack of transparency on the restricted list cultivates uncertainty over compliance, documentation requirements, and licensing timelines—especially for dual-use tech transfers.
5. Japan’s Responses: Diversification and Deep-Sea Mining
Tokyo has initiated a multi-pronged strategy:
- Stockpiling rare earths since the 2010 Senkaku crisis.
- Investing in recycling and alternative sources.
- Participating in rare earth ventures abroad.
- Launching the Minamitori Island deep-sea mining test, with a ¥40 billion ($250 million) investment to retrieve rare earth–rich mud from 6 km beneath the seabed.
This project symbolizes ambition and urgency but is not a near-term fix. Commercial viability remains years away, with full-scale trials planned for February 2027 at the earliest. Rare earth supply chains were not ruptured overnight, and they will not be rebuilt overnight either.
6. Markets Respond; Policy Must Adjust
Institutional investors and corporations are already reacting to this complex nexus of policy and commerce. Companies are adjusting:
- Supplier audits to reduce concentration risk.
- Contingency plans for lead-time extensions.
- Increased inventory baselines and working capital adjustments.
From a public policy perspective, identifying and fostering alternative supply sources—Australia, the U.S., Southeast Asia—requires sustained commitment and regulatory alignment. Reducing dependency is a strategic goal but not a shortcut.
7. The Real Strategic Imperative: Cooperation, Not Confrontation
China’s rare earth prowess is the result of decades of focused industrial development: large-scale mining infrastructure, environmental tolerance, and integration of refining with manufacturing. Western and Japanese competitors exited these segments for economic and environmental reasons. The result was not Chinese coercion but a redistributed global value chain that reflects historical choices.
Labeling China’s position as a “monopoly” misstates the issue. It conflates effective market presence with abusive leverage, obscuring the deeper reality: dominance rooted in industrial capability.
If Japan, the U.S., and European partners wish to reshape global rare earth supply chains, they must do so through patient investment, transparent policy coordination, and market incentives—recognizing that geopolitics and economics are intertwined but not reducible to rhetorical confrontation.
China is not weaponizing rare earths.
It is exporting them—and doing so at record levels.
Japan and the West can compete, diversify, and innovate. But effective policy begins by acknowledging how the global market was built—and who built it.