China Tightens the Screws on Japan: 40 Companies Targeted in Sweeping Export Crackdown

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Beijing Hits Japan With Another Round of Trade Restrictions

China has imposed new export controls on 40 Japanese companies, effective immediately. The country's Ministry of Commerce announced Monday that 20 Japanese entities — among them several divisions of Mitsubishi Heavy Industries and Kawasaki Heavy Industries — have been added to a formal export control list. This means neither Chinese nor foreign suppliers are permitted to sell them so-called "dual-use" items of Chinese origin. Dual-use items are goods and technologies that can serve both civilian and military purposes, ranging from specialized alloys and electronics to advanced sensors.

A separate watch list now includes an additional 20 companies, among them Mitsui E&S, a manufacturer of ship engines and marine equipment, as well as units of Fujitsu, Komatsu, Terra Drone Corporation, and the Institute of Science Tokyo. Chinese exporters dealing with these watch-listed firms must now apply for individual export licenses, submit detailed risk assessments, and provide written guarantees that no materials will be used for military applications.

Beijing's Justification: "New Militarism" and Nuclear Ambitions

China's Commerce Ministry did not mince words in its official statement. Beijing described its measures as "entirely justified, reasonable and lawful," accusing Tokyo of recklessly pursuing what it called "new-style militarism." The ministry also cited concerns about Japan allegedly seeking to revise its longstanding "Three Non-Nuclear Principles" — the country's self-imposed commitments not to produce, possess, or permit nuclear weapons on its soil.

"We hope Japan will recognize its mistakes, reverse its wrongful course, genuinely reflect on its past and return to the right track," the ministry stated. A spokesperson added that the controls targeted only a limited number of entities and would not disrupt normal bilateral trade for law-abiding Japanese firms.

Japan's government rejected that framing entirely. Tokyo's Deputy Chief Cabinet Secretary Kei Sato called the measures "absolutely unacceptable" and "deeply regrettable," announcing a formal protest through diplomatic channels. Japan's Foreign Ministry summoned China's Deputy Chief of Mission to lodge an official objection.

The Second Wave: A Pattern of Escalating Pressure

This is not the first time Beijing has used export controls as a lever against Tokyo in 2026. In February, China placed 20 Japanese companies on a similar control list and another 20 on a watch list — targeting firms including subsidiaries of Mitsubishi Heavy Industries, IHI Corp., and Subaru Corp. Monday's announcement effectively doubles the scope of that earlier action.

According to China's Commerce Ministry, the February measures failed to produce any change in Japanese policy. Instead, Beijing said, Tokyo had "accelerated" its military buildup, deployed offensive weapons, and launched missiles — actions China views as direct provocations.

Economists have flagged the broader economic risk. A one-year cutoff of Chinese rare earth imports combined with sustained component supply disruptions could reduce Japan's GDP by roughly 1.3%, equivalent to around 7 trillion yen, or approximately $43 billion.

Japan's Strategic Shift: From Pacifism to Deterrence

At the core of this dispute lies Japan's most significant security transformation since World War II. Prime Minister Sanae Takaichi — whose party won a landslide election victory earlier this month — has made accelerating Japan's defense posture a central pillar of her government's agenda.

Japan is now deploying longer-range missiles on remote southern islands. On Monday, the Ground Self-Defense Force confirmed the deployment of a Type-12 missile launcher on Minamitorishima, Japan's southernmost island, extending Tokyo's reach further into the Pacific. Japan has also revised its policies to allow lethal weapons exports, previously banned under its pacifist constitution, and plans to update its core defense and security documents by December 2026 — a move that could push defense spending even higher.

The trigger point for Beijing's anger was a statement by Takaichi last November, in which she implied that Japan could intervene militarily if China used force against Taiwan. China, which claims Taiwan as its own territory and has repeatedly threatened to take it by force if necessary, regarded the comment as a direct challenge.

Taiwan and the Wider Regional Fault Lines

The Taiwan question sits at the center of the China-Japan tension. Beijing has ramped up military pressure on the island, and earlier this month the Chinese Coast Guard conducted patrols east of Taiwan — which state media framed as a "pointed warning" to both Japan and the Philippines over discussions about maritime boundaries in waters China considers its own.

The international community has taken notice. Last week, the United Kingdom, Germany, and France issued a rare joint statement condemning Chinese activities in the waters east of Taiwan and declaring their opposition to any unilateral change to the status quo in the strait.

For Japan, the stakes are both strategic and economic. Its deep entanglement in Chinese supply chains — particularly for rare earths and critical minerals used in everything from consumer electronics to advanced weapons systems — leaves it exposed to exactly the kind of economic pressure Beijing is now applying.

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Sources

1. AP News – China imposes export controls on 40 Japanese entities as tensions with Tokyo rise (June 29, 2026): https://apnews.com/article/china-japan-watch-list-military-export-1c9241dcd05560f1076a58b5953d99b5

2. CNBC – China widens Japan export curbs, targeting drone makers, nuclear firms and defense institutes (June 29, 2026): https://www.cnbc.com/2026/06/29/china-japan-export-controls-watch-list-defense-entities.html

3. Reuters / NBC News – China imposes export controls on 20 Japanese entities to curb 'remilitarization' (February 24, 2026): https://www.nbcnews.com/world/asia/china-imposes-export-controls-20-japanese-entities-rcna260387

4. South China Morning Post – China adds 20 Japanese entities to export control list over remilitarisation concerns (June 29, 2026): https://www.scmp.com/economy/china-economy/article/3358686/china-adds-20-japanese-entities-its-export-control-list

5. NPR – China restricts exports to 40 Japanese entities with ties to military (February 25, 2026): https://www.npr.org/2026/02/25/g-s1-111441/china-restricts-exports-to-40-japanese-entities-with-ties-to-military

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