Japan warns of China's rare earth controls on global economy

Japan's Minister of Economy, Trade and Industry, Ryosei Akazawa, has warned that China's control over the rare earth supply chain poses a significant economic threat to Japan, the United States, and the global economy. To mitigate these risks, Akazawa emphasized the need to either persuade China to maintain supplies or develop alternative materials. He noted that Japan should leverage its competitive advantages in semiconductor manufacturing equipment and materials for AI to strengthen its economic security.

While Japan faces challenges in direct AI development compared to the US and China, Akazawa identified 'Physical AI'—integrating AI with advanced manufacturing and robotics—as a key area where Japan could achieve a dominant position.

On the international stage, a growing divide exists between the United States and Europe regarding China. While the US views China as a security threat and has implemented high tariffs on Chinese electric vehicles (EVs), Europe maintains deeper economic dependencies. This divergence highlights the risk of economic reliance on China being used as a geopolitical tool, a concern echoed by analysts who suggest that allies must work together to build supply chains independent of Chinese control.