(Feb 24): China blacklisted 20 Japanese entities and tightened scrutiny on a raft of other firms, signalling Beijing won’t drop its pressure campaign against Tokyo even after Prime Minister Sanae Takaichi’s recent landslide victory.
The Ministry of Commerce added top Japanese military suppliers including the shipbuilding and aerospace affiliates of Mitsubishi Heavy Industries to an export control list, according to a Tuesday statement. The move marks the first time Japanese firms were added to the list since its January 2025 debut.
In another measure, Beijing placed an additional 20 entities, including automakers Subaru and Hino Motors, on a monitor list. While not an outright ban, this status subjects Chinese exporters to stricter checks when they apply for a licence to provide the Japanese companies with goods that have both civilian and military applications.
“China is clearly not letting up the pressure in spite of the Japanese PM’s landslide results,” according to Dylan Loh, associate professor at Nanyang Technological University. The rules can “restrict alleged militarisation and also deal a blow to these companies directly”, he said.
The measures come on the heels of a broader ban announced earlier this year blocking exports to Japan with any military applications, although the use of the monitor list for the first time signals an expansion of the scope of targets for further export controls.
Japan so far hasn’t directly retaliated against Beijing’s moves. Tokyo has protested the measures to China and demanded their withdrawal, Deputy Chief Cabinet Secretary Kei Sato told reporters on Tuesday.
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The news triggered a selloff in Tokyo’s defence and heavy machinery sectors, with Mitsubishi Heavy shares reversing gains to drop as much as 3.6%. Kawasaki Heavy and IHI Corp extended losses to fall more than 5%. Subaru shares extended declines to as much as 4.6% after the Chinese announcement.
The curbs mark the latest escalation in a dispute over comments on Taiwan by Takaichi last year, when she suggested Tokyo could deploy its military if China uses force to try and seize Taiwan. Takaichi has refused to withdraw her comments on the island democracy, which China claims as its own territory.
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Beijing said the latest moves seek to deter Japan’s remilitarisation and nuclear ambitions. The ministry added that law-abiding Japanese entities have no cause for concern, though Takaichi’s calls for higher defence spending have rankled China.
The measures are Beijing’s first punitive actions after Takaichi won a resounding victory in a snap election earlier this month, securing a clear mandate for her policy agenda including a more assertive stance on foreign policy.
After Takaichi emerged with a historic majority, some Japanese officials were hopeful China would have little choice but to soften its tone on Tokyo. The latest curbs suggest Beijing doesn’t intend to back down, unless Takaichi retracts her comments — a scenario that is politically impossible for her at home.
Beijing’s two-tiered approach allows it to better differentiate between known military contractors and those suspected of enhancing Japan’s military strength.
For firms on the export control list, the designation prohibits exporters from supplying them with dual-use items. It also bars overseas entities from providing the companies with dual-use technology that originated in China.
While the blacklist functions as a total ban, the monitor list imposes stricter scrutiny on firms like electronic components maker TDK Corp and others less tied to the defence sector. For these companies, exporters must now provide documented proof of civilian end-use to clear the heightened licensing hurdles.
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Under the monitoring rules, exporters cannot apply for general licences for these firms. They must submit risk assessment reports and written pledges that goods will not be used to enhance Japan’s military capabilities, according to a Commerce Ministry statement.
Qing Ren, partner at Global Law Office in Beijing, said the designation might lead some Chinese exporters of dual-use items to avoid Japanese firms on the monitor list. However, exports of those goods for civil use may still proceed if the companies provide documentation proving they are the final users. Exports of non-dual-use items will not be affected by the measures, he added.
Kazuto Suzuki, director of the Tokyo-based Institute of Geo-economics, said the move was an attempt to send a political signal to Japan and likely wouldn’t lead to much disruption for Japanese companies.
“It’s about optics,” he said. “So long as companies send end-user certificates then they should still be able to get materials if they are not coming from the defence sector.”
China’s dual-use export control list features more than 800 items, ranging from rare earths, chemicals, electronics and sensors to equipment and technologies used in shipping and aerospace.
Mitsubishi Heavy is one of Japan’s largest machine manufacturers, ranging from equipment for aircraft, engines, power plants and maritime systems. It has previously pinpointed China as a key market for the sale of gas turbines and engines, and is one of its major hubs for servicing equipment.
The company is also pushing ahead with developing next-generation nuclear energy technology.
A spokesperson for IHI said the company is examining the matter and will monitor the situation closely. Eneos Holdings, whose petroleum arm Eneos Corp was placed on the watch list, said it will take appropriate measures as needed.
Japan remains highly dependent on China for its rare earth imports, with the country accounting for around 70% of its supply as of 2024. That vulnerability has lingered since 2010, when Beijing curtailed the flow of the critical minerals in a territorial dispute, sending shockwaves through Japanese manufacturers.
“It’s China learning,” said Brad Glosserman, senior adviser at Pacific Forum, said of Beijing’s latest measures. “They are moving to a rule by law system, emulating the US to defuse any complaints while creating a regulatory structure that leverages their position in global supply chains to influence foreign governments that act in ways they don’t like.”
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