China has banned the export of dual use items to 20 'Japanese companies that supply Japan military', announced the Commerce Ministry on Tuesday. This is the latest in a series of disputes between Beijing and Tokyo.

China uses its influence over supply chains to increase pressure on 'Tokyo', even after Prime Minister Sanae Takaichi won a landslide victory in this month's election, despite angering Beijing in November with remarks about Taiwan.

According to the Ministry, these measures are aimed at units of major Japanese conglomerates like Mitsubishi Heavy Industries, which is known for its shipbuilding and aero engine divisions.

The new rules cut off companies from a number of critical minerals and rare earths that are currently controlled by China for dual-use. The new rules ban?exports for rare earths such as dysprosium or samarium, which are vital but tiny components in consumer electronics, aircraft, weapons, and cars.

It is unclear how long it will take before shortages become a problem. Japanese companies have a reputation for keeping large stockpiles of rare earths. Until December, when the most recent export data was available, China regularly sent large shipments to Japan.

China controls the export of 1,100 dual-use products and technologies. Manufacturers must obtain a license to export these items overseas to their end users, wherever they may be.

Kei Sato, Japan's Deputy Chief Cabinet Secretary, told reporters at a briefing: "The measures announced today were completely unacceptable and deeply regretted."

Sato stated that the?government of Tokyo has demanded withdrawal.

NEW DEFENCE STRATEGY

China's Commerce Ministry said the restrictions were intended to curb Japan's nuclear and "remilitarisation ambitions". It added that overseas individuals and organisations were prohibited from transferring dual-use Chinese items to listed entities.

The ministry stated that firms could apply for exporting to be able to sell their products to listed entities in "special circumstances".

China assures that those who are "operating in good faith" will not be affected by the new measures.

You could say that it is a check on the Japan-U.S. "You could say it's a check against the Japan-U.S. relationship and Japan's added defence efforts," said Ryo SAHASHI, a Professor at the University of Tokyo.

Takaichi pledged to revise Japan’s three core security documents in order to create a new defense?strategy. He also promised to accelerate the review of military export regulations to increase overseas sales and to strengthen defence companies.

She has intensified a'military buildup' that was launched in 2023 and 'will double Japan's defense spending to 2% GDP by the end March', making it one of the biggest military spenders in the world despite the country's pacifist Constitution.

China's Commerce Ministry added another 20 Japanese entities to its watch list. These include Subaru Corp, Itochu Aviation, and Mitsubishi Materials Corp. The ministry said it couldn't verify who the final users or uses of dual-use products were.

Companies exporting dual-use products to these entities will be subject to a stricter review. They must apply for an individual export license and provide "a written assurance that the items won't contribute to enhancing Japan’s military capabilities."

No one from the Japanese companies that we contacted had a comment about the trade measures. The market reaction in Tokyo has been mixed. Subaru shares fell 3.5%, while Mitsubishi Materials rose 3.8%, and Mitsubishi Heavy shares dropped 3.1%. Reporting by Colleen howe and Liz Lee from Beijing, and Rocky Swift and Kentaro Okasaka in Tokyo, and editing by Christian Schmollinger and Saad Sayeed.

(source: Reuters)