China is overplaying its hand with its rare-earth choke-offs

Its export curbs aimed at Japan could prove counterproductive

- DAVID FICKLING

To a hammer, every problem is a nail. If your most potent means of geopolitical leverage is threatening supplies of high-strength magnets, rare-earth elements will always be the solution.

That's the latest approach Beijing is taking in its dispute with Tokyo. Exports of all items with potential military applications to Japan will be immediately banned, China's ministry of commerce said on Tuesday.

The most obvious victim of this threat will be rare-earth magnets made with the elements neodymium and praseodymium, and increasingly spiced up with rarer samarium, dysprosium and terbium. They're used everywhere from charging cables to the switch-gear in wind turbines to motors powering electric vehicles, missile-guidance systems and aircraft flaps.

There's just one problem: Few countries are better prepared against China threatening their rare-earth supplies than Japan. Thanks to similar threats in 2010, it has spent years diversifying its supply chains and building up stockpiles for precisely this sort of eventuality.

While China produces about 80% of the world's neodymium magnets, Japan manufactures about half the remainder, according to UBS SuMi TRUST Wealth Management—levels far above its own roughly 5% share of global manufacturing.