For years, Germany bet big on cheap Russian gas and a sprawling Chinese supply chain. That bet is now being unwound, one bilateral deal at a time. The latest move came on 18 March 2023 in Tokyo, when Chancellor Olaf Scholz and Prime Minister Fumio Kishida sat down with their full cabinets — six German ministers and their Japanese counterparts — and signed a pact to protect critical supply chains from being weaponised, disrupted, or held hostage.
What drove Berlin to Tokyo is simple arithmetic. Germany still gets 46 percent of its rare-earth magnets from China. Forty-one percent of its lithium comes from the same source. Roughly one of every five automotive microchips used by German industry is Chinese. Those numbers, laid bare by the pandemic and then by Russia’s invasion of Ukraine, spooked policymakers. Scholz put it plainly: the past few years made Berlin “acutely aware of the issues that might occur when there is too much economic dependency in vital areas.”
The deal struck in Tokyo is not a vague declaration. It commits both governments to co-legislate on export controls. It requires them to share intelligence on raw-material bottlenecks. And it opens up joint stockpiles of rare-earth minerals, microchips, and lithium-ion batteries. Behind the scenes, Germany asked for priority access to Japan’s 1,800-tonne national stockpile of dysprosium and neodymium — metals essential for high-strength magnets used in everything from wind turbines to electric-vehicle motors. Those stockpiles sit in coastal depots stretching from Hokkaido to Kyushu.
Japan, for its part, wants German know-how on hydrogen-ready steel furnaces and recycled battery chemistry. Tokyo has long worried about its own China exposure but lacks Europe’s industrial base in green steel. The trade is straightforward: Berlin gets physical reserves it can draw on in a crisis; Tokyo gets technical blueprints it can build into its own decarbonisation push.
Scholz arrived in Tokyo straight from a stormy EU summit on China policy. European leaders are split — some want to decouple fast, others fear the economic pain. Germany’s own position has shifted. Economy Minister Robert Habeck set a target: cut the China share of Germany’s critical mineral imports below 30 percent by 2027. That is ambitious. Industry groups warn the timetable is tight. Building a non-Chinese rare-earth separation plant inside the EU alone will take at least four years and cost €1.2 billion. No such plant exists today at commercial scale.
The logic behind the pivot is defensive, not ideological. Russia showed that energy can be turned into a weapon. China has not done the same with minerals — not yet — but Berlin is no longer willing to assume it never will. The pandemic revealed how quickly a single factory closure in Wuhan can stall assembly lines in Wolfsburg. Ukraine showed how fast trade routes can be severed. The German model of exporting high-end machinery and importing cheap inputs rests on stable supply lines. Those lines now look fragile.
Japan is a natural partner. It is a fellow G-7 democracy, it has its own stockpile infrastructure, and it faces the same China dilemma. The two countries had never held joint cabinet-level talks before. That they did so now, and signed a binding agreement on supply-chain security, signals how much the calculus has changed. Diversification is no longer a talking point. It is a policy with a price tag, a timeline, and a depot full of dysprosium waiting in Kyushu.
