Japan Firms Move to Stockpile Rare Earths as Tokyo Raises China Supply Risks at G7

Japanese companies are increasingly stockpiling rare earth materials as concerns grow over potential supply disruptions from China, prompting Tokyo to raise the issue at a high level meeting of the Group of Seven this week. The move reflects rising anxiety within Japanese industry as political tensions with China deepen and export controls on critical minerals become a more prominent geopolitical tool.

Fears that China could restrict exports of rare earths to Japan have triggered alarm across sectors ranging from automotive manufacturing to electronics and defence. Rare earth elements are essential components in electric vehicles, wind turbines, advanced semiconductors and military equipment, making stable access a strategic priority for Japan’s economy and national security.

Although Beijing has publicly stated that civilian trade would not be affected, Japanese officials and businesses appear unconvinced. Companies have reportedly begun quietly increasing inventories of key materials as a precaution, aiming to cushion themselves against any sudden disruption. Industry insiders say this behaviour mirrors past episodes, when supply uncertainty led firms to prioritise resilience over cost efficiency.

The issue has now reached the political level. Japan’s finance minister, Satsuki Katayama, said last week that she would attend the G7 finance ministers meeting in Washington with the risk of a rare earth supply interruption firmly in mind. Her comments were reported by Jiji Press, underscoring how seriously the government is treating the issue.

Officials from Canada, the United States and Australia are also expected to participate in discussions, highlighting a shared concern among advanced economies over dependence on Chinese critical mineral supply chains. China currently dominates the global production and processing of rare earths, giving it significant leverage in times of political or economic dispute.

For Japan, the stakes are particularly high. The country relies heavily on imported raw materials and has limited domestic resources. Any prolonged disruption could affect industrial output, technological competitiveness and broader economic stability. Analysts note that while short term stockpiling may help firms manage immediate risks, it is not a sustainable long term solution.

Tokyo has been working for years to diversify supply sources, investing in overseas mining projects and recycling technologies. Partnerships with countries such as Australia have already reduced Japan’s exposure compared with previous decades, but China remains a critical supplier, especially for processing and refining capacity.

Raising the issue at the G7 suggests Japan is seeking a coordinated response rather than acting alone. Policymakers hope that closer cooperation among advanced economies can accelerate alternative supply chains, promote investment in non Chinese production and reduce vulnerabilities tied to geopolitical tensions.

At the same time, experts caution that rapid decoupling from China is neither realistic nor desirable in the near term. Global supply chains for rare earths are deeply interconnected, and building new capacity takes years. As a result, Japan’s current strategy appears to focus on managing risk while gradually strengthening resilience.

The renewed attention on rare earths illustrates how economic security has become a central issue in international diplomacy. For Japan, balancing stable trade relations with preparedness for disruption is now a defining challenge as competition over critical resources intensifies.