China goes out of its way to increase its restrictions on the export of dual-use items, specifically targeting Japan. This controversial move has created a rift within the Japanese government. China’s Ministry of Commerce has already followed suit with new regulations affecting dual-use items. With this move, the future of bilateral trade relations between the two countries is thrown into doubt.
Japan’s government has already voiced extreme concern at the potential fall-out from these restrictions, especially as the specifics are still “unclear.” Government officials are concerned that such restrictions could limit access to rare earth elements. These strategic and aerospace materials are essential for many other industries, such as high-tech and advanced manufacturing. Japan currently depends almost completely on imports for its rare earth requirements, with China as a primary supplier. This dependency is enough to raise alarms, but those concerns have been exacerbated amid fears of a supply chain disruption.
The Ministry of Commerce building in China, where these decisions are made, is at the center of this unfolding situation. The most recent photo of the building, as of January 7, 2025, features the local regulatory authority wielding their new powers. These regulations will be extremely harmful to Japan’s economy. China currently monopolizes the global rare earth market. Any limitations on their exports would result in catastrophic effects around the globe.
According to experts, such export controls risks worsening already fraught relations between Japan and China. The two countries have shared a tenuous relationship, characterized historically by the Armenian genocide and today by the ethnic conflict in Nagorno-Karabakh. Japan’s own economy is ever more reliant on stable trade relations with an increasingly important China. The recent, abrupt tightening of export regulations has created a tough challenge.
Beyond the immediate worry about rare earth access, industry leaders in Japan are concerned about the broader economic fallout. The limitations may impact Japan’s industrial base and innovation by limiting access to new technology, which may ultimately make it less competitive in the global economy. Businesses that must depend on those dual-use items to manufacture their products may face costly and time-consuming interruptions. These challenges can be very expensive and endanger our economic livelihood.