TOKYO, Jan 7 — GeokHub Japan on Wednesday sharply criticised China’s decision to ban exports of so-called dual-use items linked to military applications, calling the move “absolutely unacceptable” as fears grow that Beijing could next restrict shipments of critical rare earth minerals.
Dual-use exports include goods, software and technologies with both civilian and military uses — among them key materials used in advanced semiconductors, drones and defense systems.
The dispute escalated after China imposed a ban on exports destined for military users or activities deemed to strengthen Japan’s defense capabilities. Tokyo said the measure unfairly targets Japan and deviates from international trade norms.
Japan’s top government spokesman, Chief Cabinet Secretary Minoru Kihara, said the restriction was deeply regrettable, adding that authorities were still assessing which specific products would be affected.
Financial markets reacted quickly. Japan’s benchmark Nikkei index slipped around 1%, while shares of major defense contractors such as Kawasaki Heavy Industries and Mitsubishi Heavy Industries fell roughly 2%.
Rare Earths in the Crosshairs
Concerns are mounting that China could extend the dispute by tightening exports of rare earth elements, which are essential for electric vehicle motors, wind turbines and advanced electronics.
Japan remains heavily reliant on China for its rare earth supply, importing roughly 60% of its needs from the country. For certain heavy rare earths used in magnets for electric and hybrid vehicles, Japan is almost entirely dependent on Chinese sources.
Industry analysts warn that even a short-term disruption could carry significant economic consequences. A three-month export restriction could cost Japanese companies hundreds of billions of yen and weigh on national economic growth, while a prolonged ban would have a far more severe impact.
Japanese automakers have begun closely monitoring developments, though major manufacturers have yet to issue formal responses.
Political Roots of the Dispute
Tensions flared late last year after Japanese Prime Minister Sanae Takaichi said a potential Chinese military move against Taiwan could pose an existential threat to Japan. China, which claims Taiwan as its territory, demanded a retraction — a request Tokyo has refused.
Since then, Beijing has rolled out a series of retaliatory measures, including travel advisories, trade disruptions and now export controls. China has also launched a separate anti-dumping investigation into Japanese chemical imports used in semiconductor manufacturing.
Analysts say the standoff could persist for months, if not longer, drawing comparisons to previous diplomatic freezes that disrupted bilateral ties for years.
