Minister of Finance Satsuki Katayama (front row, center) and other attendees at the G7 Finance Ministers' Meeting on Critical Minerals. (From the official X account of US Treasury Secretary Scott Bessent via Kyodo)
China's late paramount leader Deng Xiaoping once famously said, "The Mideast has oil and China has rare earths."
Nevertheless, the Chinese government's recent actions under President Xi Jinping to impose restrictions on rare earth exports are completely unacceptable. They are designed solely to intimidate other nations by demonstrating Beijing's dominant supply power.
Finance ministers from the Group of Seven nations, as well as Australia, Mexico, India, and South Korea, attended a meeting on critical minerals on January 12 in Washington, DC. This was an important demonstration of international solidarity in resisting such attempts at coercion. The participants unanimously agreed to quickly reduce their dependence on China for rare earths.
China is particularly subjecting Japan to economic pressure. Taking issue with Prime Minister Sanae Takaichi's reasonable remarks regarding a Taiwan emergency, Beijing has responded by tightening export controls on dual-use goods, including rare earths.
A Unified Response
International cooperation will help Japan respond resolutely to such Chinese pressure in the short term. Looking ahead, Tokyo should actively help the international community build long-term supply chains that are not dependent on China.
Finance Minister Satsuki Katayama explained Japan's position at the meeting, while calling on China to withdraw its coercive measures. The participating countries account for 60% of the world's demand for critical minerals. At the same time, resource-rich countries such as Australia also attended the meeting. The significance of this collaboration is tremendous.
Reports also indicate that China is supplying the world with cheap rare earths, mined and processed under poor working conditions and lax environmental measures. The meeting discussed the creation of a new market to establish a supply chain that does not rely on China. This market would be subject to international standards for labor conditions and human rights.
The finance ministers also discussed a system to set minimum prices for critical minerals. The objective would be to secure profits for producers who are exposed to price competition from Chinese products. Hopefully, this will develop into a long-term initiative. For that to happen, clarification is needed as to what each participating country needs to do, including in terms of its tax system and fiscal measures.
Japan's Contribution
Japan, in particular, has room to make a significant contribution.
Sixteen years ago, in 2010, China imposed restrictions on rare earth exports to Japan. Learning from this experience, Tokyo has promoted a shift in the source of its rare earth needs away from China. As a result, Japan's dependence on China for rare earths has fallen from 90% at that time to 60% today.
The Japan Organization for Metals and Energy Security, JOGMEC, and Sojitz Corporation have teamed up with an Australian company to begin importing highly scarce heavy rare earth elements from Australia. There are also plans for JOGMEC and other Japanese entities to work with French companies to import heavy rare earths.
Furthermore, a government-led project to test drill for "rare earth mud" from the seabed off the coast of Minamitorishima has just begun. That island is part of the Ogasawara Islands, which are under the administration of Tokyo, although they are 1,000 kilometers south of the capital.
Hopefully, knowledge from these initiatives will be effectively employed to enhance Japan's economic security.
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Author: Editorial Board, The Sankei Shimbun
