Japan urges US, Europe to build rare earth supply chains to counter China

TOKYO — Japan should partner with the United States and Europe to establish a rare earth supply chain and prevent China from using strategic minerals as an "economic weapon," Finance Minister Satsuki Katayama said.

In an interview with the Nikkei news agency, Katayama said the initiative aims to secure materials essential for high-tech manufacturing. Rare earths are critical components in products ranging from electric vehicles to military equipment.

China currently dominates the global market for both the mining and processing of these elements. Katayama’s call for cooperation reflects rising concerns among major economies regarding their heavy reliance on supply chains controlled by Beijing.

A senior Japanese official’s recent call to accelerate "de-risking" strategies underscores a growing G7 imperative to reduce industrial dependence on China. The 2010 rare earth embargo remains a pivotal cautionary tale for global policymakers, illustrating Beijing’s willingness to weaponize its dominance over critical mineral supply chains. For the world’s leading industrial powers, securing these materials has transitioned from a matter of trade efficiency to a core pillar of national security.

Vietnam is increasingly viewed as the linchpin of this diversification effort. Holding the world’s second-largest rare earth reserves, Hanoi is positioned to capitalize on a significant geopolitical opening as a primary alternative supplier. The 2023 elevation of U.S.-Vietnam ties to a Comprehensive Strategic Partnership has already laid the groundwork for deep cooperation on strategic minerals. Tokyo’s latest diplomatic push—acting as a key bridge between Washington and Southeast Asia—further solidifies this trajectory.

However, Hanoi’s path to becoming a global mineral hub faces significant structural headwinds. The challenge lies not in extraction, but in the complex, capital-intensive processing phase, which carries substantial environmental risks. To bridge this technical gap, Vietnam must secure high-quality foreign direct investment and clean-processing technologies from Japan, the United States, and Europe. This transition will serve as a definitive litmus test for Vietnam’s regulatory environment, challenging the government to balance aggressive industrial expansion with stringent environmental and social governance (ESG) standards.

The Vietnamese-American community will likely see no immediate impact on its core economic pillars, ranging from the nail salon industry and phở restaurants to the steady flow of remittances. These developments also do not affect immigration pathways or visa categories such as F2B, H-1B, TPS, or EB-5. While significant investment in this sector could shift Vietnam’s macroeconomic landscape over the long term, the direct influence on daily life in Little Saigons across the country remains negligible.