Beijing is leveraging a distracted Washington to ratchet up pressure on Tokyo, launching an anti-dumping investigation into a key semiconductor chemical while the United States is preoccupied with Venezuela, according to analysts.
China made moves targeting Japan for two consecutive days. On Tuesday, the Ministry of Commerce banned exports of “dual-use” products to end users linked to the Japanese military. And on Wednesday, it said the anti-dumping investigation into dichlorosilane would last at least a year.
With China holding leverage over rare earths, while Japan has a commanding market share in semiconductor equipment and materials, analysts say both sides are testing each other’s baselines to assess how far this economic tit-for-tat can go.
The bilateral row kicked off when Japanese Prime Minister Sanae Takaichi suggested on November 7 that Tokyo could respond militarily to a potential attack by Beijing on Taiwan, which Beijing sees as part of China to be reunited by force if necessary.
Beijing’s move “coincides with the Venezuela event for a reason”, said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis, referring to Saturday’s abduction of Venezuelan President Nicolas Maduro by US forces.
China might believe that the US is preoccupied with the western hemisphere and is not going to put pressure on China at the current juncture regarding Japan, she explained, adding that China is “clearly” targeting Japan.
Mark Cogan, an associate professor of peace and conflict studies at Kansai Gaidai University in Japan, agreed that US action in Venezuela could play a role.
It “potentially emboldens the Chinese to posture more aggressively, even when they know that their supply of dichlorosilane comes mainly from either Japan or Europe”, Cogan said, noting that “there’s no evidence that China has come up with an alternative product”.
Dichlorosilane is a volatile and hazardous precursor chemical primarily used to process silicon wafers into semiconductors.
Garcia-Herrero suggested that China could shift to importing the chemical from South Korea, following a warming of ties that saw South Korean President Lee Jae Myung hold a summit with President Xi Jinping on Monday.
While there are no official customs figures on China’s dichlorosilane imports, analysts said that Japan’s dominance in certain chemicals – especially photoresists, light-sensitive materials used to engrave chips – could be a potential source of leverage against Beijing.
As of 2023, China’s market share for electronic-grade dichlorosilane was valued at 4 billion yuan (US$573 million), and Japan held 80 per cent of the global market share, according to a report that year by Guosheng Securities.
Minoru Nogimori, senior economist for Asia at the Japan Research Institute, said the logic behind Beijing’s moves was “not easy to understand”, given the potential “damages” to the Chinese market.
“China may want to support its domestic industry related to dichlorosilane,” he speculated. “I think China may want to signal that it will not give in to pressure from Japan.”
Cogan said that these types of complaints are predictable amid heightened tensions, but “the larger question” is about how the investigation will proceed.
“The complaint comes from a Chinese supplier, which claimed that the price had dropped 30 per cent, despite a decrease in Japanese imports of the chemical,” he added. “If, in the end, the investigation lacks transparency or fades from public view, we’ll know this is posturing.”
Beijing appeared to be observing Tokyo’s response, as there is a need to strike a balance in light of China’s reliance on Japan for certain products and materials, according to a Chinese researcher specialising in international relations who asked not to be identified because he was not authorised to speak publicly on the sensitive matter.
If Japan does not tone down its prime minister’s remarks about Taiwan, “there could be a chance that China will continue to enlarge its list of export controls”, the researcher said.
Most countries, including the US, do not recognise Taiwan as an independent state, but Washington is opposed to any attempt to take the self-governed island by force and is committed to supplying it with weapons.
The researcher also suggested that Japan wants to see how China implements the ban on military-linked exports and “whether such a ban will include rare earth elements”.
On Thursday, Ministry of Commerce spokesman He Yadong said at a press briefing that the export controls targeting military applications were “fully justified, reasonable and lawful”.
“China has always been committed to safeguarding the stability and security of global industrial and supply chains. Products for civilian use will not be affected,” he added. “Parties engaged in normal civilian trade have absolutely no need to worry.” -- SOUTH CHINA MORNING POST
