China’s exports of strategic minerals to the United States showed signs of recovery in July, while shipments to Japan declined sharply, according to recent customs data. The divergence reflects shifting trade policies and ongoing geopolitical tensions affecting critical material flows between these countries.

In July, exports of rare earth permanent magnets to the United States rose 4.6 percent compared with the same month last year and increased 32.6 percent from the previous month. Shipments of other rare earth oxides to the US surged 56.8 percent year-on-year. Additionally, some smaller product categories saw substantial growth, such as industrial synthetic diamonds, which experienced an increase of nearly 808 percent from a low base.

In contrast, exports to Japan fell significantly. Rare earth magnet shipments to Japan dropped 52.2 percent from a year earlier, while natural flake graphite exports to the country plunged 62 percent.

These trends are influenced by recent policy changes. China has eased some export restrictions to the US, expediting approval processes for rare earth materials following bilateral trade negotiations. In November, Beijing suspended certain US-specific curbs on key materials, enabling a partial rebound in shipments. However, exports of essential materials like gallium, antimony products, and most germanium products remain minimal or halted.

Meanwhile, China has tightened export controls targeting Japan. Starting in January, Beijing restricted dual-use exports with potential military applications for Japanese users. Subsequently, it added 40 Japanese entities to its export control list, further curbing trade in strategic minerals to Japan.

Alicia Garcia-Herrero, chief economist for Asia-Pacific and the Middle East at Natixis, described the recovery in US-bound shipments as modest. She noted the growth in rare earth magnets was positive but remained below levels prior to the tightening of controls. Garcia-Herrero suggested that an anticipated visit by Chinese President Xi Jinping to the US could create new opportunities for discussions aimed at easing export restrictions further.

The fluctuations in China’s critical mineral exports underscore the complex interplay between economic interests and geopolitical considerations as global demand for strategic materials grows amid shifting alliances.