On 18 March 2023, German Chancellor Olaf Scholz travelled to Tokyo for the first ever joint cabinet‑level talks between the two G‑7 powers, meeting Prime Minister Fumio Kishida and six German ministers. The delegation spent the day negotiating a comprehensive agreement aimed at insulating critical supply chains from coercive practices, price volatility and the type of “weaponised trade” that Russia has employed since its invasion of Ukraine.
The treaty, signed that evening, obliges both governments to coordinate export‑control legislation, exchange intelligence on raw‑material shortages and create shared stockpiles of rare‑earth elements, microchips and lithium‑ion batteries. Germany, whose economy relies heavily on exports, currently sources 46 % of its rare‑earth magnets, 41 % of its lithium and about 20 % of its automotive chips from China. Scholz told reporters that the pandemic and the war in Ukraine have highlighted the risks of excessive dependence on a single supplier for strategic materials.
He added that Berlin would respond by diversifying its sources, “with Japan and other partners.” Japanese officials disclosed that Germany requested priority access to a national reserve of 1,800 tonnes of dysprosium and neodymium stored in depots from Hokkaido to Kyushu. In exchange, Tokyo seeks German expertise on hydrogen‑ready steel furnaces and recycled‑battery chemistry.
Economy Minister Robert Habeck said the aim is to reduce the Chinese share of Germany’s critical‑mineral imports to below 30 % by 2027. Industry representatives caution that the timeline is tight; constructing a non‑Chinese rare‑earth separation plant within the EU is projected to take at least four years and cost €1.2 billion. The joint statement earmarks semiconductors and batteries as “strategic areas” for cooperation.
Japan holds roughly 30 % of the global market for photoresists, essential chemicals for advanced chip production, while Germany’s Infineon is Europe’s largest automotive‑semiconductor maker. Under the pact, Infineon and Japan’s Rapidus will exchange process data to accelerate development of 2‑nanometre nodes, and both governments will fund a pilot line in Dresden slated to produce its first test wafers next year.
Battery collaboration is deemed even more urgent. Europe’s projected demand of 1.3 TWh of batteries by 2030 will require about 400,000 tonnes of lithium, a material Germany presently does not refine. Japanese trading house Sojitz and chemical firm Hanwa have agreed to back a refinery in Hamburg that will import brine from Argentina and Chile, process it using Japanese membrane technology, and supply carbonate to manufacturers such as BMW and Tesla’s Berlin gigafactory.
Kishida emphasized the desire to “increase cooperation in strategic areas … to build a resilient supply chain that is safe and sustainable.” Beyond commercial ties, the accord includes a “legislative framework for bilateral defence and security cooperation,” allowing German navy tankers to refuel at Japanese bases during Indo‑Pacific patrols and permitting Japan’s Self‑Defence Forces to utilise NATO air‑lift assets. The clause mirrors Japan’s 2022 logistics pact with Australia and stops short of formal intelligence sharing on Chinese troop movements.
Defence Minister Boris Pistorius called the measure a “natural extension of our shared interest in freedom of navigation,” while his Japanese counterpart, Yasukazu Hamada, cited Germany’s 2021 deployment of the frigate Bayern to the South China Sea as evidence of Berlin’s willingness to balance Beijing’s assertiveness. China’s foreign ministry reacted swiftly, warning that “exclusive groupings” would heighten confrontation and undermine regional stability. German automakers—Volkswagen, BMW and Mercedes‑Benz—quietly opposed any clause that might provoke retaliation, given their heavy reliance on the Chinese market.
A senior Volkswagen board member told Nikkei Asia on background that diversification away from China is necessary, yet “we cannot replace the Chinese market; we need a dual‑track strategy.” Berlin has pledged a €9 billion fund to reshore battery production, conditional on manufacturers cutting Chinese exposure. Both parties also agreed to establish an early‑warning system for export bans, modelled on the EU’s 2022 silicon‑embargo alert, enabling factories to switch suppliers within 90 days.
The treaty now proceeds to parliamentary approval: Japan’s ruling coalition holds a majority, while Germany’s three‑party government must persuade Greens and Liberals that overseas mining subsidies align with climate goals. If ratified, joint delegations will travel to Canada, Australia and South Africa this summer to evaluate lithium, nickel and cobalt projects for co‑investment, with a follow‑up summit slated for Munich in early 2024.
Scholz departs Tokyo with a diplomatic win after domestic criticism of his China policy, but the ultimate test will be whether German and Japanese firms can realistically shift orders away from cheaper Chinese suppliers amid looming recession risks. The pact signals a clear shift: two export‑driven economies that once courted Beijing are now aligning to safeguard their factories and economies from future shocks, whether a Taiwan blockade or another pandemic.
