File photo: The national flag of Japan flies in front of a container pier in the port of Tokyo.
Toshifumi Kitamura | Afp | Getty Images
China on Monday blacklisted four Japanese government defense research institutes and imposed tougher export restrictions on dozens of other Japanese businesses, intensifying a months-long campaign to limit Tokyo’s access to dual-use goods including rare earth minerals.
The Commerce Department added 20 entities to its export control list, including the National Defense Research Institute and land, naval and air systems research centers. Several units under Mitsubishi Electric And Mitsubishi Heavy Industries were also sent.
Domestic exporters, as well as foreign organizations and individuals, are prohibited from transferring dual-use goods of Chinese origin to the named entities, the statement said, adding that any ongoing activities must cease immediately.
Separately, China added 20 more enterprises, including Mitsui E&S Co.., drone manufacturer Terra Drone Corporationnuclear fuel reprocessors and several units OKI Electrical industryon a watch list requiring more extensive licensing. Both actions take effect immediately.
The ministry said it would apply stricter end-user and end-use inspections to entities on the watch list, and that exports involving Japanese military users, military applications or any end-use that could enhance Japan’s defense capabilities would not be approved.
Pressure campaign
The measures mark the latest escalation in a campaign that began in January when Beijing banned exports to Japan of dual-use items including rare earths, permanent magnets and other critical minerals needed for defense technology.
In February, China added 20 enterprises, including subsidiaries of Mitsubishi Heavy Industries. IHI Company And Kawasaki Heavy Industrieson its export control list and 20 more companies, including Subaru company., TDK company. and FUJI Aerospace Technology to the watch list.
China has stepped up pressure on Tokyo after Japanese Prime Minister Sanae Takaichi’s comments in November that a hypothetical Chinese attack on Taiwan could provoke a military response from Tokyo, prompting criticism from Beijing.
In a statement Monday, a Commerce Ministry official said Japan had shown no remorse since the February listings and had instead “accelerated” its progress toward what Beijing characterizes as “new-style militarism,” including deploying offensive weapons and launching missiles overseas.
Beijing called on Japan to “turn back from the wrong path,” while insisting the measures would not affect normal bilateral economic and trade activities and that “law-abiding Japanese firms have no reason to worry.”
China’s leverage
The market reaction to this announcement was mixed. Shares of Mitsubishi Electric and Howa Machinery, one of the 20 companies on the watch list, fell about 1.4% and 4.6%, respectively, while shares of Mitsubishi Heavy Industries and Terra Drone Corp rose 4.9% and 1.7%.
China has sought to use its dominance of critical minerals supply chains as a tool of deterrence, putting pressure on political behavior it opposes without resorting to military force, Graceline Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies, said in a January report. Countries that have expressed support for Taiwan remain particularly vulnerable, she said.
Japan has invested in domestic rare earth processing and recycling to reduce its dependence on China for rare earths since 2010, but it remains deeply involved in supply chains that depend on China and Vietnam, from mining to permanent magnet production.
Koki Akimoto, an economist at the Daiwa Research Institute, estimated in December that a one-year halt in Chinese imports of rare earths and sustained restrictions on component supplies would reduce Japan’s real GDP by about 1.3%, or about 7 trillion yen ($43.3 billion).
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