China detentions highlight risks from rare earth export controls

China has formally arrested two Japanese employees of Fuji Electric who were detained in May in the northeastern port city of Dalian. The arrests, which occurred in mid- and late-June, are in connection with alleged attempts to take rare earth-related products overseas, violating laws on the smuggling of prohibited imports or exports.

Japanese Chief Cabinet Secretary Minoru Kihara confirmed that Chinese authorities detained one national on May 18 and another a week later, stating they were in good health. China's Foreign Ministry spokesperson Guo Jiakun also confirmed the detentions for violating Chinese laws, urging Japanese citizens and enterprises to abide by regulations.

The detentions come amid heightened Sino-Japanese tensions and China's tightened export controls on rare earths, which are critical for high-tech manufacturing. Sources suggest the authorities may be scrutinizing attempts to ship items from which rare-earth magnets could be extracted. Chinese judicial procedures allow authorities up to seven months after formal arrest to examine whether to indict suspects.