A ministerial-level meeting on critical minerals in Washington on January 12 saw G7 finance ministers agree to reduce dependence on China for rare earths. Amid China's intensifying use of export restrictions as economic coercion, this step is vital for securing resources underpinning technologies like electric vehicles and semiconductors.
On January 12, a ministerial-level meeting on critical minerals convened in Washington, attended by finance ministers from G7 nations including Japan, the United States, and European countries, as well as representatives from resource-rich Australia, India, Mexico, and South Korea. Participants agreed to efforts aimed at reducing reliance on China for rare earths.
These materials are essential strategic resources supporting environmental and communication technologies, such as electric vehicles, smartphones, semiconductors, and wind power generation. In 2025, China imposed export restrictions on rare earths amid its trade war with the United States. Beijing also tightened controls following remarks by Japanese Prime Minister Sanae Takaichi in the Diet about a potential Taiwan contingency, unsettling Japan.
While China's share of global rare earth reserves is about 50%, it dominates the refining stage with around 90%. The refining process produces significant environmental pollutants, but China's lenient regulations keep costs low, aided by low-wage labor in harsh conditions.
Post-World War II global economic growth relied on free trade, yet rising geopolitical risks and the emphasis on economic security mean supply chains cannot depend solely on low prices. Governments of major nations should bolster mine development and refining technologies through subsidies, tax incentives, and financing from public institutions.
A proposed "minimum price" for rare earths would help producers achieve profitability, with rules encouraging manufacturers in major countries to procure at or above that level. Such cooperation is key to keeping the United States, inclined toward an America First policy, engaged in multilateral frameworks and strengthening unity against China.
Japan drew on its experience reducing dependence from 90% to about 60% after a 2010 incident involving a Chinese fishing boat ramming Japan Coast Guard vessels near the Senkaku Islands, and sharing this know-how multilaterally is crucial. (198 words)