China blacklists 20 entities in Japan economy

China escalated its dispute with Japan by including 20 Japanese entities on its blacklist of export restrictions, depriving them of obtaining Chinese goods for dual civilian and military use, in a move it said was aimed at protecting its national security and adhering to non-proliferation controls.

The Chinese Ministry of Commerce said in a statement that the entities on the list “participated in strengthening Japan’s military capabilities,” explaining that the restrictions aim to “preserve national security and interests” and “comply with international obligations, especially in the field of non-proliferation.”

The decision comes in light of escalating tensions between Beijing and Tokyo, after Japanese Prime Minister Sanae Takaichi hinted last November that Japan might intervene militarily if China attacks Taiwan, which Beijing considers part of its territory.

Since Takaichi took power, Japan has adopted a more proactive defense approach, with support from the United States of America, while increasing military spending and strengthening security partnerships with regional allies, including the Philippines, in the face of growing Chinese military capabilities.

In a separate statement, a spokesman for the Chinese Ministry of Commerce confirmed that “China’s decision is fully justified,” stressing that it “will not affect normal economic and trade exchanges between China and Japan,” considering that Tokyo “recently engaged in a wrong path.”

The targeted entities include technology companies and branches specialized in supplying the Japanese defense sector, including the Mitsubishi Heavy Industries (MHI) group, in addition to the National Institute for Defense Studies, a research center affiliated with the Japanese Ministry of Defense.

The decision is an extension of Beijing’s tightening of its restrictions on exports of dual-use goods to Japan since the beginning of January, as Japanese media reported earlier, imposing restrictions on supplies of Chinese rare earths.

Rare metals

China enjoys almost complete dominance over the production and export of rare metals, which are used in the manufacture of advanced technologies, such as missile guidance systems and laser devices, while Japan depends on China to provide about 70% of its needs for these metals.

On Monday, Beijing also announced the inclusion of 20 additional Japanese entities on the “watch list,” which requires Chinese exporters to conduct more stringent risk and safeguards assessments before exporting dual-use products to those entities.

For its part, the Japanese government described the Chinese measures as “unacceptable and very regrettable.”

Japanese government spokesman Minoru Kihara said: “Our government has lodged a strong protest and demanded the cancellation of these measures. We will carefully study the consequences of these measures and take the necessary steps.”

The Chinese move reflects the continued escalation of trade and security tensions between the two largest economies in East Asia, in light of the overlapping issues of trade, technology and regional security, especially with regard to Taiwan and advanced industries supply chains.