China Strong-Armed Japan Over Rare Earths. It's a Lesson for the U.S.

After a 2010 clash, Tokyo understood Beijing's coercive power, but it still wasn't ready this year

- Yoko Kubota

The U.S. found out this year that China could use its chokehold on rare-earth minerals as a coercive tool when Beijing imposed export controls. For Japan, it was déjà vu; it had been the victim 15 years earlier.

Tokyo vowed in 2010 to be ready for next time and over the years put hundreds of millions of dollars into Australian supplies.

Yet as of last year, it was still relying on China for some 70% of its imports of rare earths, which are widely used in electronics, cars, and weapons, according to the government-owned Japan Organization for Metals and Energy Security. When China restricted rare-earth exports in April, some of Japan's automakers again got hit.

Japan's experience drives home lessons for the U.S., where the Pentagon recently agreed to take a stake in Las Vegas-based MP Materials so it can mine and refine rare earths on American soil.

Tokyo found that partially reducing dependence still leaves Beijing with plenty of leverage. At the same time, complete independence costs billions of dollars, not millions. After the crisis passed and China resumed exports to Japan, the urgency to diversify supplies waned.

That points to the danger of complacency in the U.S. After it was hit by Chinese rare-earth export controls earlier this year, the U.S. recently got Beijing to reopen the spigot as part of a trade deal.

If costs don't matter, cutting reliance on China might be feasible, but businesses can't swallow high costs, said Kazuto Suzuki, a professor at the University of Tokyo's Graduate School of Public Policy.