File photo: Japanese flag fluttering on the container wharf at Tokyo Port.
Toshifumi Kitamura | AFP | Getty Images
China on Monday blacklisted four of the Japanese government’s defense research institutes and tightened export restrictions on dozens of other Japanese companies, escalating a months-long campaign to restrict the Japanese government’s access to military supplies including rare earth minerals.
The Department of Commerce has added 20 organizations to the export control list, including the National Defense Research Institute and the Land, Sea, and Air Systems Research Center. under some units Mitsubishi Electric and Mitsubishi Heavy Industries were also targeted.
Domestic exporters as well as foreign organizations and individuals are prohibited from transferring dual-use items of Chinese origin to designated entities, the statement said, adding that ongoing activities must be stopped immediately.
Separately, China added 20 more organizations. Mitsui E&S Co., Ltd.drone manufacturer Terra Drone Co., Ltd.nuclear fuel processing equipment, and multiple units Oki Electric Industrywill be added to the watch list for increased licensing scrutiny. Both actions take effect immediately.
The ministry said it will apply stricter end-user and end-use screening to monitored companies and will not approve exports involving Japanese military users, military uses, or end-uses that could enhance Japan’s defense capabilities.
pressure campaign
The move marks the latest escalation in a campaign launched in January, when the Chinese government banned dual-use exports to Japan, including rare earths, permanent magnets and other critical minerals needed for defense technology.
In February, China added 20 entities, including a subsidiary of Mitsubishi Heavy Industries. IHI Co., Ltd. and Kawasaki Heavy Industriesadded to the export control list and 20 more companies including: Subaru Co., Ltd., TDK Corporation and added Fuji Aerospace Technology to my watchlist.
The Chinese government has increased pressure on the Japanese government after Japanese Prime Minister Sanae Takaichi said in November that a hypothetical Chinese attack on Taiwan could provoke a military response from the Japanese government, prompting criticism from the Chinese government.
A Commerce Department spokesperson said in a statement on Monday that Japan has shown no remorse since its listing in February and is instead “accelerating” its push toward what Beijing characterizes as a “new type of militarism,” including deploying offensive weapons and launching missiles overseas.
The Chinese government called on Japan to “turn back from its wrong path” but insisted that the measures would not affect normal bilateral economic and trade activities and that “law-abiding Japanese companies have no need to worry.”
Chinese influence
Market reaction to this statement was mixed. Mitsubishi Electric and Howa Machinery, one of the 20 companies on the watch list, fell about 1.4% and 4.6%, respectively, while Mitsubishi Heavy Industries and Terra Drone rose 4.9% and 1.7%.
Gracelin Bhaskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, said in a January report that China is seeking to use its dominance over the critical minerals supply chain as a means of deterrence, putting pressure on political actions it opposes without resorting to military force. Countries that have expressed support for Taiwan remain particularly at risk, she added.
Since 2010, Japan has invested in domestic refining and processing to reduce its dependence on China for rare earths, but remains deeply entangled in supply chains dependent on China and Vietnam for everything from mining to permanent magnet manufacturing.
Koki Akimoto, an economist at the Daiwa Institute of Research, estimated in December that Japan’s real GDP would decline by about 1.3%, or about 7 trillion yen ($43.3 billion), due to the one-year suspension of rare earth imports from China and continued constraints on parts supply.
