China imposed an export ban on dual-use materials such as rare earths and permanent magnets to Japan from January 2026, and expanded the measures in June by blacklisting or watchlisting 80 Japanese companies. The controls have effectively disrupted Japan’s critical-minerals supply chain, with shipments stalling under the new rules, according to estimates by the Daiwa Institute. Daiwa’s analysis indicates a year-long disruption could cut Japan’s real GDP by 1.3%, or about 7 trillion yen. The episode underscores that while Japan diversified upstream supplies, it remains heavily dependent on China for midstream separation and magnet production.