China escalated economic pressure on Japan Monday by imposing export controls on 40 Japanese entities, including multiple divisions of Mitsubishi Corporation, in response to Tokyo's expanding military capabilities and defense cooperation with the United States. The move marks Beijing's second round of sanctions this year against Japanese firms it accuses of supporting what it calls the country's "remilitarization."
China's Commerce Ministry placed 20 Japanese entities on a control list that prohibits Chinese and foreign exporters from selling them dual-use items made in China. Dual-use items can be used for both civilian and military purposes. Another 20 entities landed on a watch list requiring special export licenses, including Mitsui E&S, which makes engines and other equipment for ships, as well as divisions of Fujitsu and Komatsu corporations. Chinese companies exporting to these watch-listed firms must now submit risk assessment reports and written pledges that the dual-use items won't be used for military purposes.
Japan's Military Expansion
Relations between Beijing and Tokyo have deteriorated since Japanese Prime Minister Sanae Takaichi about 1 year ago implied Japan could intervene if China used military force against Taiwan, an island democracy China claims as its own territory. Under Takaichi, Japan's military has been equipped with more offensive capabilities, including long-range missiles on remote islands. Exports of lethal weapons are now allowed under a new policy. Japan will revise its defense and security documents about 5 months from now, which could further increase its defense budget.
On Monday, Japan's Ground Self-Defense Force announced the deployment of a Type-12 missile launcher on the southernmost remote island of Minamitorishima, an apparent response to China's growing activity expanding into the Pacific. The timing wasn't coincidental.
Tokyo Calls Sanctions 'Unacceptable'
Japan's top government spokesperson called the curbs "unacceptable and extremely regrettable," while calling on Beijing to retract the measures. Chief Cabinet Secretary Minoru Kihara said Monday that Japan would take necessary countermeasures after thoroughly assessing the curbs and their impact. The Chinese Commerce Ministry defended the export controls as "entirely justified, reasonable and lawful," adding they're aimed at "firmly deterring Japan's reckless pursuit of 'new militarism.'" "We hope Japan will recognize its mistakes, reverse its wrongful course, genuinely reflect on its past and return to the right track," it added.
About 4 months ago, China put 20 Japanese companies on an export control list and 20 others on a watch list. The Commerce Ministry said that since then, "instead of reflecting on its past and correcting its course, Japan has continued down the wrong path" by accelerating remilitarization, deploying offensive weapons and launching missiles. The ministry emphasized the curbs affect only a small number of Japanese entities, and the measures only apply to dual-use items. "They do not affect normal Sino-Japanese economic and trade exchanges, and honest and law-abiding Japanese entities have absolutely nothing to worry about."
Regional Security Pressures
The measures function more as a "diplomatic message" as Beijing steps up its pressure on Tokyo, said George Chen, partner for Greater China at the advisory firm The Asia Group. "From Beijing's perspective, Japan has not taken meaningful actions to stabilize bilateral ties," Chen said. "And concerns are growing in China about deeper defense cooperation between Japan, the United States, and potentially other partners." In the short term, Japan–China relations will likely remain fragile "and at risk of slipping further if neither side moves to arrest the downward trend," he added.
For Beijing, the issue of Taiwan is particularly sensitive. China considers the self-ruled island its own territory, to be retaken by force if necessary, and has increased military pressure on it. About 1 month ago, the Chinese coast guard conducted patrols east of Taiwan in what state media described a "pointed warning" to Japan and the Philippines following an announcement that the countries would discuss their maritime boundaries in waters that Beijing views as its own. The United Kingdom, Germany and France in a rare joint statement about 1 week ago condemned Chinese activities in the waters east of Taiwan, adding they opposed any change of the status quo between China and Taiwan.
Why This Matters:
China's expanding use of export controls as a diplomatic weapon demonstrates how economic coercion has become a standard tool in Beijing's foreign policy arsenal. Japan's response will test whether targeted sanctions can effectively deter a sovereign nation's legitimate defense modernization or simply accelerate the decoupling of supply chains between the world's second and third-largest economies. The sanctions affect major Japanese corporations with global reach, potentially disrupting established trade relationships worth billions. Japan's countermeasures could include similar export restrictions on critical materials or technology, further fragmenting regional commerce. The escalation also highlights the limits of economic interdependence as a stabilizing force when fundamental security interests clash, particularly regarding Taiwan's status and freedom of navigation in the Pacific.