China’s Commerce Ministry announced on Tuesday that China has prohibited the export of dual-use items to 20 Japanese entities that it says supply Japan’s military.
China is leveraging its supply chain influence to pressure Tokyo after Prime Minister Sanae Takaichi’s landslide win, following her Taiwan remarks that angered Beijing.
The measures target units of major Japanese industrial conglomerates such as Mitsubishi Heavy Industries’ shipbuilding and aero engines divisions, the ministry said.
The rules effectively cut companies off from the seven rare earths and associated materials currently on China’s dual-use control list, along with a swathe of other controlled critical minerals. The new rules bar exports of rare earths like dysprosium, yttrium or samarium which play tiny but vital roles in cars, planes, weapons and consumer electronics.
“The measures announced today are completely unacceptable and deeply regrettable,” Japan’s Deputy Chief Cabinet Secretary Kei Sato told a press briefing. Tokyo has demanded their withdrawal,he added.
New Defence Strategy
The restrictions were aimed at curbing Japan’s “remilitarisation” and nuclear ambitions, China’s commerce ministry said, adding overseas organisations and individuals were also banned from transferring Chinese-origin dual-use items to the listed entities.
Firms could apply to sell to the listed entities under “special circumstances” that required them to export, the ministry said.
China has assured that entities operating “in good faith” have no reason to worry, and that the measures announced would not affect normal economic and trade exchanges between the two countries.
Takaichi has pledged to revise Japan’s three core security documents to produce a new defence strategy and accelerate a review of military export rules to expand overseas sales and strengthen defence companies.
China’s commerce ministry also added another 20 Japanese entities, including Subaru Corp, Itochu Aviation and Mitsubishi Materials Corp to a watch list, saying it could not verify the end-users or end-uses of the entities’ dual-use items.
Subject to stricter scrutiny, companies exporting to these entities would have to apply for individual export licences for dual-use items and provide a written commitment that the items would not contribute to enhancing Japan’s military capabilities.
None of the affected Japanese companies contacted by Reuters had an immediate comment on the trade measures. Market reaction in Tokyo was mixed, with Subaru shares falling 3.5% while Mitsubishi Materials shares rose 3.8% and Mitsubishi Heavy shares were down 3.1%.
(With inputs from Reuters)
