Rare Earths and the East China Sea: Why hasn't China embargoed shipments to Japan? Ifri-CIGS Op-Ed Series, October 2012
As tensions persist between China and Japan in the East China Sea, it is interesting to note that one of the most symbolic actions of the previous crisis has yet to make an appearance this time around.
The stoppage of rare earth shipments to Japan in the fall of 2010 lasted nearly two months, threatened the health of vital Japanese industries, and placed this once obscure raw materials issue on the front page of newspapers across the globe. China’s near monopoly on the global production of rare earth oxides - metals that have become essential components in making a range of high tech products that include vehicles, wind turbines, consumer electronics, medical equipment and defense systems - proved to be a useful tool for applying pressure on Japan. Two years later, the possibility of China cutting off Japan’s access to rare earths has been floated once again in the Chinese press, but has yet to take place. So why hasn’t China played the rare earth card?
The opacity of China’s decision-making apparatus and of the rare earth business itself makes precise answers hard to come by, but a number of related points are worth noting and ultimately serve to contextualize China’s real power to use rare earths as an economic weapon today. In particular, the risks for China seem to be higher today than in 2010 while the potential impact on Japan is much lower.