China has added 20 Japanese entities to its export control list and 20 more to a watch list scrutinising the trade of select goods, increasing economic pressure on Tokyo in a move that widens the scope of the countries’ prolonged diplomatic row to include some of Japan’s largest companies.
Chinese exporters have been banned from shipping dual-use goods – items with military and civilian applications – to the firms and institutions on the export control list, Beijing’s Ministry of Commerce said in a statement announcing the additions on Tuesday. All foreign exporters were also prohibited from shipping those products to entities on the list if the items were made in China.
The 20 entities, which include subsidiaries of Mitsubishi Heavy Industries, Kawasaki Heavy Industries and IHI, as well as the National Defense Academy of Japan, are deeply involved in the research, development and production of a wide range of military equipment – from ships and aircraft to radar and missiles.
At the same time, another 20 entities, including carmaker Subaru – whose aerospace division is contracted for defence production – were added to a watch list subjecting them to stricter scrutiny in the trade of dual-use items. Sumitomo Heavy Industries and the Institute of Science Tokyo, a public research university, were also placed on the watch list.
Exports to these entities that are determined to “contribute to enhancing Japan’s military capabilities” would not be approved, the commerce ministry said.
While dual-use items are often primarily designed with civilian functionality in mind, they can significantly contribute to the development or production of weapons and military systems.
Common examples include drones and rare earth elements – essential raw materials for numerous goods in the tech and defence sectors – as well as high-performance semiconductors.
In its statement on the latest measures, China’s commerce ministry said its “completely just, reasonable and lawful” actions were intended to stop Japan’s “remilitarization” and thwart Tokyo’s attempts to build nuclear weapons.
“China’s act of listing entities in accordance with the law is only targeted at a small number of Japanese entities, and the relevant measures are only aimed at dual-use items,” it said.
“They do not affect normal economic and trade exchanges between China and Japan, and Japanese entities that act in good faith and abide by the law have absolutely nothing to worry about.”
Relations between the two countries have continued to worsen in recent months, following a speech by Japanese Prime Minister Sanae Takaichi on November 7 suggesting that a hypothetical attack on Taiwan could constitute an “existential threat” warranting a military response under the conditions of Tokyo’s pacifist constitution.
Prevented from retrenching itself as a major military power by its post-war constitution, Japan has in recent years stepped up its efforts to gain “normal country” status within global security frameworks and reaffirmed its commitment to investing in its treaty alliance with the US.
Particularly under Takaichi, Japan is redoubling its efforts to become a global arms powerhouse, with the prime minister stating her intention to ease restrictions on defence exports and accelerate investment in the nation’s military sector.
With her ruling conservative coalition now holding more than two-thirds of the seats in Japan’s parliament after a February 8 snap election, Takaichi now has more political backing for an increase to defence spending. Following the approval of a record military budget in December, those expenditures have been projected to reach 2 per cent of gross domestic product by the end of March, well ahead of Tokyo’s 2027 deadline.
Analysts said Tuesday’s measures signal an intensified and refined use of Beijing’s export control regime to apply strategic pressure on Tokyo, compared with a January ban of dual-use goods exports to end users linked to the Japanese military.
By targeting specific entities, the Chinese government has shifted its focus from direct to indirect pressure, heightening companies’ concerns about the impact on profits, said Minoru Nogimori, senior economist for Asia at the Japan Research Institute.
“The Chinese government likely realised that pressuring the Takaichi administration directly would only boost its approval ratings among the Japanese public,” Nogimori said.
Lian Degui, director of the Centre for Japanese Studies at Shanghai International Studies University, said it was “particularly necessary” for Beijing to curb Japan’s military build-up, which he said is primarily aimed at containing China.
“The Takaichi administration is steering Japan onto a path of confrontation with China, and China has no obligation to cooperate with or support the revival of Japan’s military-industrial production,” Lian said.
China’s recent moves are intended to prevent potential national security threats, according to Liu Jiangyong, a Japan specialist and professor of international affairs at Tsinghua University in Beijing.
One goal of Japan’s proposal to relax export restrictions on weapons and military equipment is to encourage “like-minded countries” to join Tokyo’s containment and confrontation efforts against China, Liu added.
Xu Tianchen, senior economist at the Economist Intelligence Unit, said while Japan has built its own supply chains for light rare earths, it still relies on China for heavy rare earths and lacks alternative sources.
“We shouldn’t underestimate the impact on Japan’s defence build-up. The silver lining is that those export controls don’t hit civilian sectors as hard – the sanctioned entities are mostly defence-related,” Xu said.
“But China still preserves the option to target civilian firms if Takaichi does something bold to build up Japan’s military capability.”
James Downes, director of the Centre for Explanatory Research and Scientific Prediction, a non-profit think tank based in the US, said Beijing’s moves on Tuesday constituted targeted geopolitical pressure on Japan’s defence-industrial base, using regulatory tools for leverage without disrupting broader trade.
“Specific sectors of Japan’s economy will be hit,” he said. “Affected sectors such as aerospace, automobiles and semiconductors will face supply chain delays and cost hikes.”
