China-Japan rift deepens over dual‑use goods export ban

China is ramping up economic and political pressure on Japan, announcing on Tuesday a ban on exports of equipment with dual military and civilian applications, including items that use rare earth elements.

Beijing followed up the next day by launching an anti-dumping investigation into a Japanese compound used in the manufacturing of semiconductors.

The measures come shortly after Beijing cancelled a visit by Japanese business leaders, which had been scheduled for this month. China also put pressure on domestic travel agencies to cancel trips to Japan, resulting in millions of Chinese booking alternative destinations over the coming months.

The row between Beijing and China is continuing to escalate two months after Prime Minister Sanae Takaichi responded to a question in the Japanese parliament by saying that a "contingency" around Taiwan — broadly understood to mean a Chinese invasion of the self-ruled island — could constitute a threat to Japan's national security and necessitate a military response.

Beijing — which views Taiwan as a Chinese province and has vowed to reunify it with the mainland, even by force if necessary — has called Takaichi's comments an unwanted interference in a domestic issue.

Conservative Takaichi shows no signs of backing down

Beijing has also expressed concern about Japan's record defense budget, which was announced in December and projected to reach 9 trillion yen (€49.2 billion, $57.4 billion) in 2026, up 3.8% from last year's defense outlays.

Worryingly, analysts point out that neither side appears able to back down in the confrontation and that bilateral relations may well get worse before an off-ramp can be found.

"The chances of either side de-escalating the situation at the moment appear quite low because neither wants to lose face," said Ben Ascione, an assistant professor of politics and international relations at Tokyo's Waseda University.

"Prime Minister Takaichi is showing no signs of backing down on her Taiwan comments, while Xi has strong domestic reasons not to back down," he told DW.

This means Chinese President Xi Jinping might look for yet more ways to compel Tokyo to back down if Beijing's latest round of pressure does not have the desired effect.

China and Japan have long been at loggerheads over a wide range of issues, ranging from imperial Japan's vicious invasion in the 1930s and its often brutal treatment of Chinese people to differing interpretations of the two nations' shared history, territorial disputes and military confrontations.

Geopolitical rivalry now defines the bilateral relationship amid China's growing economic might and military assertiveness.

'Absolutely unacceptable and deeply regrettable'

In the weeks immediately after Takaichi's comments about Taiwan, Japan said Chinese military aircraft locked their radar onto Japanese jets monitoring naval exercises off the coast of Okinawa Prefecture. And, in late December, Chinese troops carried out air and maritime exercises simulating a blockade of Taiwan.

Japan has protested what it says is overly aggressive maneuvers by China in the region, including Beijing's repeated claims of sovereignty over the uninhabited Senkaku Islands, which Beijing refers to as the Diaoyu archipelago.

The row between Beijing and China is continuing to escalate two months after Prime Minister Sanae Takaichi responded to a question in the Japanese parliament by saying that a "contingency" around Taiwan — broadly understood to mean a Chinese invasion of the self-ruled island — could constitute a threat to Japan's national security and necessitate a military response.

The announcement by China's Ministry of Commerce on Tuesday involved banning exports of dual-use civilian and military equipment to Japan, including sensors, semiconductors, batteries and chemicals, as well as components for equipment. The export controls went into effect immediately, the ministry said.

The ban was imposed despite Takaichi striking a conciliatory note on Monday.

"We are open to dialogue with China and have not closed the door," she told reporters at a press conference marking the new year. "We maintain the policy of pursuing a comprehensive, strategic, mutually beneficial relationship to build a constructive relationship with China."

Responding to the export ban, however, the Japanese government lodged an official protest on Wednesday, saying Beijing's actions were "absolutely unacceptable and deeply regrettable" as they only target Japan and "deviate significantly" from international practice.

In Beijing, a government spokeswoman said China's actions are in accordance with laws and regulations, dismissing requests from Japan that the export ban be lifted.

Who has the upper hand?

Also on Wednesday, China doubled down by opening an anti-dumping investigation into imports of dichlorosilane from Japan. The chemical compound is used primarily in thin-film deposition processes in chip manufacturing, making it very important for companies producing integrated circuits.

Beijing claims imports of the precursor chemical from Japan have risen since 2022 while prices have fallen by 31%, damaging domestic Chinese manufacturers.

The restrictions have rattled Japanese businesses, with the Tokyo Stock Exchange down broadly for a second day on Thursday and Ken Kobayashi, the chairman of the Japan Chamber of Commerce and Industry, stating at an event this week that efforts need to be made on both sides to deepen dialogue and enhance a "mutually beneficial relationship."

Toshimitsu Shigemura, a professor of politics and international relations at Waseda University, believes China holds the upper hand.

"China can exert a lot of pressure on Japanese companies, which are quite quickly going to find themselves in a difficult situation," he said. "If Beijing really is halting exports of rare earths, that will cause turmoil."

Shigemura pointed out that Chinese leader Xi attempted to win the support of South Korean President Lee Jae Myung for an anti-Japanese alliance during the latter's visit to China earlier this week, although the Korean leader remained noncommittal.

Seoul is undoubtedly watching developments with concern, he added. For nearly a decade, Beijing has also exerted pressure on South Korea with an undeclared ban on its music, movies and live performances, introduced after the US stationed Terminal High-Altitude Area Defense (THAAD) anti-missile systems in South Korea in 2017.

Not a trade issue, but a political one

And while South Korea's Lee has been working hard to build bridges with Beijing, the outlook for Takaichi is less optimistic, Shigemura suggested.

"This is not a trade issue for China; it is a political issue," he said. "Beijing sees Takaichi as being too conservative and they want her out of office. China wants to make life difficult for her and to see her replaced at the next election and for a new government that is more open to Beijing."

Ascione believes Takaichi made a strategic error by needlessly stating out loud a policy that has previously only been tacitly held in Tokyo and eliminating diplomatic wiggle room on Taiwan created by previous Japanese governments. The challenge will be to find a way out of the current situation, he said.

"Japanese diplomats will be thinking about how they might be able to deescalate the situation, which is very difficult if Takaichi will not retract her comments," he said. "Neither side appears willing to blink at this point and it will take time for the anger and frustration to subside to the point that moves can be made to patch up the relationship," the expert added.

"Over time, that is feasible, but not in the short term."

Edited by: Srinivas Mazumdaru

Julian Ryall is a Journalist based in Tokyo, focusing on political, economic and social issues in Japan and Korea

Disclaimer: This article first appeared on DW, and is published by special syndication arrangement.