Japan has sharply condemned China’s decision to ban exports of so-called dual-use items to military users, warning that the move could be followed by sweeping restrictions on rare earth minerals vital to its economy.
The ban, announced by Beijing on Tuesday, targets goods, software and technologies that have both civilian and military applications, including critical minerals used in making drones and semiconductors.
Tokyo said the decision was discriminatory and outside international norms.
“A measure such as this, targeting only our country, differs significantly from international practice, is absolutely unacceptable and deeply regrettable,” Japan’s top government spokesman, Chief Cabinet Secretary Minoru Kihara, said on Wednesday.
Speaking at a daily press briefing, Kihara declined to assess the potential industrial impact, noting that it remained unclear exactly which items would be affected.
The latest move deepens an already tense dispute between Asia’s two largest economies, triggered late last year when Japanese Prime Minister Sanae Takaichi said a Chinese attack on democratically governed Taiwan could be considered an existential threat to Japan. China, which claims Taiwan as its territory, demanded she retract the remarks. She has not done so.
Beijing’s export ban applies to military users or purposes that contribute to Japan’s military strength, and analysts say it could signal a tougher economic response.
Adding to those concerns, the state-owned China Daily reported on Tuesday that Beijing is considering further clamping down on exports of rare earths to Japan, citing sources familiar with the matter.
Such a step could have major consequences for Japan’s manufacturing sector, particularly the automotive industry. Despite efforts to diversify supply chains since China restricted rare earth exports in 2010, Japan still relies on China for about 60% of its rare earth imports. For some heavy rare earths used in magnets for electric and hybrid vehicle motors, analysts say Japan is almost entirely dependent on China.
The market reaction was swift. Japan’s Nikkei share index fell about 1% on Wednesday, diverging from record highs in US and European markets. Shares of major defence contractors Kawasaki Heavy and Mitsubishi Heavy were among the biggest decliners, each down about 2%.
Subaru said it was closely monitoring the situation, while Toyota and Nissan declined to comment immediately.
Nomura Research Institute economist Takahide Kiuchi warned that even a short-term restriction could be costly. A three-month curb similar to that imposed in 2010 could cost Japanese businesses 660 billion yen and shave 0.11% off annual GDP, he said. A year-long ban would knock 0.43% off GDP.
Tokyo is unlikely to remain passive if the restrictions expand, according to supply-chain experts.
“If there are Japanese civilian or commercial entities targeted, you could see the Japanese retaliate,” said Cameron Johnson, a senior partner at consultancy Tidalwave Solutions in Shanghai. He added that any response could hit sectors such as semiconductors or other high-end manufacturing materials China depends on.
Separately on Wednesday, China’s commerce ministry said it had launched an anti-dumping investigation into imports from Japan of dichlorosilane, a key chemical used in the semiconductor industry, underscoring the widening scope of the economic dispute.
Faridah Abdulkadiri
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