Multiple Industries in Japan Plagued by Rare Earth Anxiety

On December 10, the International section of the Economic Daily (Page 04) published an article titled "Multiple Industries in Japan Plagued by Rare Earth Anxiety."

The full text is as follows:

Recently, Japanese economists have noted that the Japanese government and industries are closely monitoring China's implementation of export controls on rare earth-related items.

In recent years, Japan has accelerated efforts to diversify supply sources, develop alternative materials, strengthen national reserves, and promote recycling to reduce its reliance on Chinese rare earths. Statistics show that Japan's dependence on Chinese rare earth imports has decreased from approximately 90% to around 60%. However, its reliance on critical categories remains highly concentrated. Heavy rare earths such as dysprosium (Dy) and terbium (Tb), essential for neodymium magnets used in electric vehicle drive motors, are almost 100% dependent on Chinese supply. Any restrictions would still inflict significant shocks on Japan's economy.

Analysis suggests that five key sectors—automotive, electronic components, wind power, medical equipment, and aerospace—would bear the brunt if China imposed export controls. In the automotive industry, electric and hybrid vehicles rely on neodymium magnets for drive motors. Japanese automakers have previously suspended production of certain models due to rare earth shortages, and alternative technologies have yet to be commercialized. In electronics, rare earths are widely used in smartphones, semiconductor manufacturing equipment, and hard disk drives, with fluorescent and magnetic materials particularly difficult to replace. China holds an overwhelming advantage in the refining process. Wind power equipment also heavily depends on high-performance magnets, while alternative technologies face issues of reduced efficiency and higher costs. In medical equipment, strong magnets used in devices such as magnetic resonance imaging (MRI) are irreplaceable without rare earths. The aerospace sector, including engines and defense equipment, extensively uses rare earth alloys and magnets, leaving even less room for substitution.

Japanese economists estimate that if China's rare earth export restrictions persisted for three months, Japan's economic losses would amount to approximately 660 billion yen, equivalent to a 0.11% decline in nominal and real GDP for that year. If the restrictions lasted a year, the economic losses would expand to about 2.6 trillion yen, reducing GDP by 0.43%.

(Source: Zhengshi'er)