Japan's dependence on China for rare earths — the metals used in magnets, motors and electronics — remains an unresolved risk for manufacturers, a year after Prime Minister Sanae Takaichi's remarks on a Taiwan contingency set off the current strain in relations. China's export controls on the metals continue, and the Ministry of Economy, Trade and Industry has asked business groups for help in coping with them.
The request, sent to Keidanren and other business organizations in mid-September, drew baffled reactions from executives. "It's a creepy document," one business figure said, according to the Mainichi Shimbun. Another asked: "Even if they send this much, what are we supposed to do?"
The document opens by warning that "since export control measures by a certain country, supply shortages and price rises have occurred in important minerals including rare earths." It calls for price pass-through that includes small and medium-sized businesses, and for companies to be able to form procurement outlooks, and asks the groups to help maintain and strengthen supply chains.
Business leaders facing continuing procurement uncertainty found the document short on specifics and its intent hard to read, and said it arrived without warning. Receiving a request framed this way is unusual, they said.
A senior METI official said the aim was partly to get companies thinking about alternative suppliers. "To make a request to the business world at a level that does not provoke China, we had no choice but to use this kind of wording," the official said.
Beijing keeps the pressure on
China tightened export controls on dual-use items, those with both civilian and military applications, including rare earths, in response to Takaichi's remarks in November last year. Shipments of rare-earth magnets and similar products to Japan have kept falling.
Japan sources much of its rare earths from China, and the effects are spreading through manufacturing. A survey released in July by Resilire, a private company that provides supply-chain risk management services, found that more than 90% of companies procuring rare earths — the report continues beyond the portion available here.
The Mainichi Shimbun reported the document and the reactions to it. The ministry's notice did not name China, and the official's explanation makes clear that keeping the wording indirect was the point.