China’s Ministry of Commerce promulgated a new order prohibiting exports of dual-use items to Japan. This move increases the already high level of friction between the two countries. “Dual-use items,” as their name suggests, are goods or technologies that have civilian and military uses. Now comes the troubling news that this development has raised alarm bells in Japan. Industries are concerned about detrimental effects on their access to rare earth elements, which are essential for numerous high-tech industries.
The ministry’s decision is announced in the background of increasing diplomatic tensions between China and Japan. Analysts say the intensified rules are a reaction to Japan’s increasing convergence with Western nations. This move represents a welcome and needed prioritization of responding to regional security concerns. The U.S. isn’t the only government squeezing the tech export spigot— China’s getting serious. This bold change may revolutionize the Japanese economy.
Tokyo officials have made no secret of their concern about the vagueness of limits. They called the implementation guidance “vague.” This has caused a lot of unpredictability for Japanese companies that rely on these exports for their manufacturing and research and development. Almost all sectors of industry in Japan are deeply interconnected with dual-use items, with direct applications to both civilian electronics and defense technologies. Any interruption in this supply chain would have dire impacts.
Concerns about rare earth elements are everywhere these days. These materials play an essential role in a range of high-tech applications, including electric vehicles and advanced electronics. China is perhaps the most notable global competitor, having long dominated the global rare earth market through the production of about 60% of the world’s supply. As a result, Japanese manufacturers are concerned that their access to these materials will be limited or cut off entirely. They know their competitive edge and technological advancement depend on them.
The current situation also reveals the political and geopolitical realities at play in East Asia. Nations are becoming increasingly suspicious of one another’s military capabilities and economic interests. In many ways, Japan is attempting to thread an extraordinarily challenging needle. Going forward, we’ll need to see how the government begins to respond to defend its industrial base and mitigate national security risks.