China rare earth exports to Japan and US decline amid new controls

China's export of regulated rare earth minerals has seen significant declines, with exports to Japan falling 51% and to the United States falling 28% during the first half of the year. Monthly data for June shows a sharp drop in exports to Japan, where shipments of yttrium fell to zero and exports of dysprosium and terbium—essential for electric vehicle motors—have remained at zero since March.

These declines follow the implementation of an export licensing system by China's Ministry of Commerce in April 2025. The measures are described as a way to regulate strategic resources used in high-tech sectors like semiconductor manufacturing, aerospace, and defense. While supply disruptions pose risks to Japanese automotive manufacturing, reports indicate that licenses are occasionally issued to prevent complete production halts.

Despite these geopolitical tensions and export controls, Chinese rare earth producers have reported strong financial performance. Driven by rising prices linked to AI supply chain expansion and hardware demand, companies like China Northern Rare Earth (Group) High-Tech and China Rare Earth Resources and Technology have seen substantial year-on-year profit growth. US efforts to diversify supply chains via domestic mining investment have also coincided with these rising market valuations.