China expands export controls on Japanese defense and tech firms
9 reported
China added four Japanese government defense research institutes to an export control list and tightened restrictions on dozens of other Japanese entities, according to a Monday statement from the Ministry of Commerce. The ministry blacklisted 20 entities, including the National Institute for Defense Studies and research centers for ground, naval, and air systems, as well as units under Mitsubishi Electric and Mitsubishi Heavy Industries. Separately, another 20 entities, including Mitsui E&S Co., drone maker Terra Drone Corporation, nuclear fuel processors, and units of OKI Electric Industry, were placed on a watch list requiring enhanced licensing scrutiny. Both actions take effect immediately. The ministry said exports involving Japanese military users or applications that could strengthen Japan’s defense capabilities would not be approved. The measures are the latest in a campaign launched in January, when Beijing banned dual-use exports to Japan, including rare earth elements and critical minerals. A commerce ministry spokesperson said Japan had shown no remorse since February listings and had accelerated what Beijing calls “new-style militarism.” Market reactions were mixed, with Mitsubishi Electric and Howa Machinery declining, while Mitsubishi Heavy Industries and Terra Drone Corp gained.
What’s reported
China blacklisted four Japanese government defense research institutes and 20 entities total on an export control list.
Another 20 entities were added to a watch list requiring enhanced licensing scrutiny.
The Ministry of Commerce said exports involving Japanese military users or applications that could strengthen Japan’s defense capabilities will not be approved.
The campaign began in January with a ban on dual-use exports to Japan, including rare earth elements and critical minerals.
In February, China added 20 entities to the export control list and another 20 firms to the watch list.
A commerce ministry spokesperson said Japan had “accelerated” its push toward “new-style militarism.”
Market reactions: Mitsubishi Electric declined about 1.4%, Howa Machinery declined about 4.6%, Mitsubishi Heavy Industries gained 4.9%, and Terra Drone Corp gained 1.7%.
Gracelin Baskaran of CSIS said China leverages critical mineral supply chains as a tool of deterrence.
Koki Akimoto of Daiwa Institute of Research estimated a one-year cutoff of Chinese rare earth imports could reduce Japan’s real GDP by about 1.3%.
Key figures
Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic & International Studies
Koki Akimoto, economist at Daiwa Institute of Research
Japanese Prime Minister Sanae Takaichi (mentioned in context of November comments)
Ministry of Commerce spokesperson (unnamed)
Sources: CNBC
