Chinese authorities detain employee of Japanese heavy electrical maker in Dalian over rare earth rules

2026-06-24

Chinese authorities in May detained a Japanese employee working for the Chinese unit of a major Japanese heavy electrical equipment maker in Dalian, Liaoning province, it was learned on the 24th. He is believed to be suspected of violating Chinese laws and regulations related to rare earth exports.

Detained over rare earth exports?

According to people familiar with the matter, the specific allegations in the detention have not been disclosed. Trade-related legal violations are suspected, and it is believed not to involve national security issues such as the anti-espionage law.

The Chinese government implemented a regulation on exports of dual-use goods in December 2024. In April 2025, it introduced export controls on seven rare earths, including dysprosium, a heavy rare earth essential for high-tech products.

Growing caution among Japanese companies

China strongly reacted to Prime Minister Sanae Takaichi's parliamentary remarks in November 2025 on a possible Taiwan contingency, and tightened export restrictions to Japan with rare earths in mind. As part of compliance with dual-use rules, Japanese companies are being required to submit detailed information, including end use, when exporting rare earth products to Japan.

After Takaichi's remarks, exports to Japan of products using heavy rare earths and other materials have become extremely difficult, forcing local Japanese companies to respond. As ties between Japan and China worsen, caution among Japanese firms is expected to intensify further as a risk to their China operations.

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