How China's Export Ban On Japan Affects Korea's REE Dependancy

China’s decision on Tuesday to ban exports to Japan of “dual-use” items — goods that can be repurposed for military use — is being viewed as a major inflection point in growing tensions between Beijing and Tokyo.

Beijing had previously dealt a heavy blow to Japan through its restrictions on rare-earth exports. By once again pulling what analysts call its “sure-win card,” China appears to be signaling that it has no intention of easing pressure on Tokyo over the Taiwan Strait issue.The move also serves as a warning to other countries in the region, including Korea. China has declared that it will impose secondary sanctions — penalties on third countries — on any party that exports Chinese-origin rare-earth materials to Japan. This is raising concerns in Korea, which relies on China for nearly 90 percent of its rare earth supply.

“We are closely monitoring related developments,” said a Korean Ministry of Foreign Affairs official on Wednesday. “We will thoroughly assess the direct and indirect impacts these measures could have on Korean companies.”

U.S.-style secondary sanctions now a weapon

While the Korean government’s remarks were cautious, there’s growing unease over potential economic fallout. The timing — during President Lee Jae Myung’s state visit to China — and China’s explicit mention of “legal liability for third-party transfers” suggest the country intends to enforce de facto secondary boycotts.

This could mean punitive measures for companies or individuals in third countries — including Korea — that process Chinese rare earths and supply them to Japanese military-related entities.Secondary boycotts have historically been considered a uniquely American tool, powered by the dominance of the U.S. dollar and global financial networks. Their strength lies in their ability to isolate sanctioned entities from international dollar transactions — a tactic used effectively in sanctions against Iran and others.

Diplomatic observers say China’s adoption of similar tactics marks a new chapter. Instead of dollar-based financial exclusion, China is leveraging its grip on the global manufacturing supply chain as its weapon of choice.

China's lesson from WTO defeat

In 2010, after a collision between a Chinese fishing boat and a Japanese coast guard vessel near the disputed Senkaku Islands (called Diaoyu by China), Beijing retaliated when Japan arrested the Chinese captain.

China halted rare earth exports to Japan, which ultimately led to the captain’s release. Even after the release, Beijing maintained restrictions and cut overall export quotas — signaling the start of its rare earth weaponization.

Japan, the United States and the European Union filed a complaint with the World Trade Organization (WTO), which ruled in their favor in 2014.China had claimed resource conservation and environmental protection as the rationale for its export limits. But the WTO rejected this, stating that such restrictions must also apply to domestic consumption if truly aimed at conservation.

China had also pledged not to impose export tariffs on most items when it joined the WTO in 2001 — a promise that did not exempt rare earths, thereby making the restrictions a violation of its commitments.

Beijing’s latest measures appear to reflect lessons learned from that case. This time, instead of specifying rare earths, it imposed controls on a broader category of dual-use items — and justified the move by citing “Japan’s Taiwan-related remarks.”

This shift allows China to invoke the WTO’s national security exemption clause. Whereas Beijing lost on environmental grounds last time, it is now framing Taiwan as a core security interest.

With Japanese Prime Minister Sanae Takaichi suggesting potential involvement of the Japanese military in a Taiwan conflict, Beijing argues that Japanese imports could be used to manufacture weapons that threaten China.The scope of dual-use items is broad, including not just rare earths, but also semiconductor materials and aircraft components. By avoiding a narrow item list, China has cast a much wider net.

Japan has since diversified its sources of rare earth imports, reducing its dependence on China from 90 percent to around 60 percent. Still, with China dominating the global market, Japan’s vulnerabilities remain — and the latest restrictions are seen as a calculated move to rekindle its “rare earth trauma.”

Because the restrictions are grounded in national security, it’s unclear what conditions would warrant their removal, raising concerns about prolonged supply chain disruption.Korea’s dependence on Chinese minerals

Korea imported 89.4 percent of its rare earth raw materials from China between January and October last year, according to the Korea Customs Service, making the risks even more acute.

Beijing’s secondary boycott signals a clear message: Choose the Japanese market or Chinese materials.

Rare earths are just the beginning. A Korea International Trade Association report from August last year noted that 90.1 percent of permanent magnets used in electric vehicles and other devices were of Chinese origin.

China also controls 98 percent of the global gallium supply, a key component in next-generation power semiconductors. For graphite, a critical anode material in secondary batteries, Korea’s reliance on China reaches 97 percent.Beijing’s pressure on Japan using rare earths is widely seen as a warning to all regional players, underscoring the need for Korea to prepare countermeasures.

During Lee’s visit, Chinese Premier Li Qiang publicly called for stronger “strategic communication” and deeper political trust — an apparent attempt to drive a wedge between Seoul and Tokyo.

The implication is that unless Korea maintains its current neutral stance on Taiwan, it could face the same consequences as Japan.

This also clashes with the United States’ push to modernize alliances in the Indo-Pacific by encouraging stronger regional support for Taiwan, suggesting Korea may eventually be forced to make a choice.

“China is using Japan to draw a red line on the Taiwan issue, to deter other countries from taking similar stances,” said Lee Dong-ryul, a professor of Chinese studies at Dongduk Women’s University. “There also seems to be an intent to highlight shared concerns about the revival of Japanese militarism, especially ahead of President Lee’s planned visit to Japan.”"Source:koreajoongangdaily.joins.com"

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.