Japan businesses in China seek transparency in dual-use export controls

Key facts

• Japanese businesses in China are calling for greater transparency in Beijing's dual-use export controls.
• These controls have reportedly led to rare-earth supply shortages in Japan.
• The shortages are impacting the manufacturing of items for civilian purposes.
• China dominates the global supply of rare earths, essential for high-tech products.
• The export curbs were implemented earlier this year amid diplomatic tensions between Japan and China.

Japanese businesses operating in China are urging Beijing to improve the transparency of its export controls on dual-use items, citing disruptions caused by recent measures that have led to shortages of rare earths in Japan. Tetsuro Homma, head of the Japanese Chamber of Commerce and Industry in China, stated that these curbs, introduced earlier this year amidst a diplomatic row between Tokyo and Beijing, have affected items intended purely for civilian use.

China, a dominant global supplier of rare earths crucial for high-tech manufacturing, banned exports to 20 Japanese defense-related entities in February and placed 20 more companies and organizations on an export watchlist requiring stricter screening. Homma reported that some companies have struggled to obtain export licenses for rare-earth materials, prompting them to adjust their supply chains. The Chinese Commerce Ministry has maintained that the curbs target a small number of entities and will not impact normal trade, explaining the measures are aimed at curbing Japan's "remilitarization" and nuclear ambitions.

The heightened economic pressure from Beijing follows remarks made by Japanese Prime Minister Sanae Takaichi last November, which suggested that an attack on Taiwan could prompt a response from Japan's Self-Defense Forces. Despite the export restrictions to Japan, China continues to approve rare-earth exports to other countries.