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China widened its economic pressure campaign beyond the United States, tightening export restrictions on Japan’s defence sector in a move that underscores how Beijing is increasingly using trade and critical supply chains as strategic tools rather than purely economic instruments.
On Monday, China’s Ministry of Commerce placed 20 Japanese defence-related entities on its export control list while adding another 20 organisations to a separate watch list, citing concerns over Japan’s “remilitarisation” and what it described as Tokyo’s attempts to strengthen its military capabilities.
The move comes just weeks after Beijing imposed similar restrictions on several American companies, suggesting China is institutionalising export controls as a central pillar of its response to countries it believes are undermining its national security interests.
China widens its economic pressure campaign
The latest measures prohibit Chinese companies from exporting dual-use goods — products, software and technologies with both civilian and military applications — to the 20 blacklisted Japanese entities without government approval. Chinese-origin dual-use items also cannot be transferred to these organisations by overseas companies or individuals.
Another 20 Japanese organisations have been placed on a watch list requiring enhanced end-user checks and stricter export licensing procedures.
Chinese authorities said the restrictions were introduced to safeguard national security, fulfil non-proliferation obligations and counter what Beijing described as Japan’s accelerating military build-up.
“Unfortunately, for some time now, Japan has not repented but has instead gone further down the wrong path, accelerating its ’new type’ of militarism,” a spokesperson for China’s Ministry of Commerce said.
The ministry nevertheless sought to reassure businesses that the measures target only “a small number” of Japanese entities and would not disrupt normal commercial exchanges between the two countries.
Who is on the list?
Among the organisations added to China’s export control list are Japan’s National Institute for Defense Studies and several military research institutes responsible for ground, naval and air weapons systems.
The restrictions also cover subsidiaries of Mitsubishi Electric and Mitsubishi Heavy Industries involved in defence electronics, space systems, precision engineering, logistics and specialised software.
NIPPI Corporation, an aerospace company under Kawasaki Heavy Industries, has also been included.
The separate watch list includes Mitsui E&S, drone manufacturer Terra Drone Corporation, nuclear fuel processing companies and several units of OKI Electric Industry.
Unlike entities on the export control list, organisations on the watch list are not completely barred from receiving Chinese products. However, exporters must submit detailed risk assessments and written assurances that shipments will not support Japan’s military capabilities.
Why now?
The latest restrictions are the culmination of steadily worsening relations between Beijing and Tokyo.
China has repeatedly criticised Japanese Prime Minister Sanae Takaichi over remarks suggesting Japan could respond militarily if China were to attack Taiwan.
Beijing has also objected to Tokyo’s decision to significantly increase defence spending and deepen military cooperation with the United States and other Indo-Pacific partners.
Tensions intensified further in May after Japan fired a Type 88 surface-to-ship missile during the US-led Balikatan military exercises in the Philippines.
China described it as the first overseas launch of an “offensive” Japanese missile since the Second World War, arguing that it reflected Japan’s departure from its post-war pacifist doctrine.
Monday’s export controls effectively transform those political disagreements into economic measures.
From tariffs to technology controls
The announcement also highlights a broader shift in China’s economic strategy.
Instead of relying primarily on tariffs, Beijing is increasingly deploying export controls, licensing requirements and restrictions on critical minerals to influence geopolitical outcomes.
Earlier this month, China placed 10 American companies — including rare earth producers MP Materials and USA Rare Earth, along with several defence contractors — on its export control list after Washington expanded the Pentagon’s list of Chinese companies allegedly linked to the People’s Liberation Army.
Beijing also barred 46 US companies from participating in Chinese government procurement.
While analysts viewed the American measures as largely symbolic because many of the targeted firms have limited exposure to the Chinese market, the restrictions on Japan could carry greater commercial consequences.
Japan remains deeply integrated with China’s manufacturing ecosystem, particularly in advanced materials, industrial machinery, electronics and automotive production.
Rare earths remain Beijing’s biggest advantage
Although Monday’s announcement does not explicitly mention rare earth minerals, they remain the most significant source of China’s leverage.
China dominates global processing of rare earth elements and permanent magnets, which are essential for advanced weapons systems, semiconductors, electric vehicles, wind turbines and aerospace equipment.
A familiar playbook
The restrictions also follow a pattern that has become increasingly familiar in Chinese trade policy.
Countries that deepen defence cooperation with the United States or publicly support Taiwan have often found themselves facing targeted economic measures rather than broad trade sanctions.
Rather than imposing sweeping embargoes, Beijing has preferred highly selective restrictions on sectors where it enjoys overwhelming supply-chain dominance.
This approach allows China to maximise strategic pressure while limiting damage to its own economy.
The strategy has become more prominent since January, when China strengthened export controls over dual-use goods, including critical minerals and advanced technologies.
Since then, Beijing has successively expanded those controls against both American and Japanese entities.
With inputs from agencies.
