Japan's Takaichi Seeks China Dialogue as Rare Earth Restrictions Bite

Highlights

• China has restricted rare earth exports to Japan including yttrium, terbium, gallium, and dysprosium following diplomatic tensions over Taiwan comments.
• China controls roughly 90% of global rare earth refining capacity, giving Beijing powerful geopolitical leverage over Japan's industrial supply chains.
• Diplomacy alone cannot solve Japan's vulnerability; long-term solutions require ex-China separation capacity, recycling, and strategic stockpiles.
• November's APEC summit in China could provide a meeting point for PM Takaichi and Xi Jinping, but no breakthrough is expected.
• Investors should watch terbium, dysprosium, and yttrium shipment flows as the real indicator of diplomatic progress, not political optics.