Tensions between China and Japan are escalating as Beijing has imposed additional export sanctions on 40 Japanese defense research institutes and companies regarding dual-use (civilian and military) goods, prompting Japan to demand an immediate withdrawal of the measures.

The Chinese Ministry of Commerce announced on June 29 that it has placed 20 Japanese entities involved in strengthening Japan's military capabilities on an export control list, while another 20 companies whose end-users and end-uses could not be verified have been placed on a watch list.

The export control list includes the National Institute for Defense Studies, the Ground Systems Research and Development Center, the Naval Systems Research Center, the Air Systems Research Center, as well as Nikko Toki, Nikko YPK Corp., Mitsubishi Electric's Defense & Space Systems, and Mitsubishi Heavy Industries Logitec.

Under these measures, Chinese exporters are prohibited from shipping dual-use goods to these entities, and overseas organizations or individuals are also barred from transferring or providing Chinese-made dual-use items to them.

Any ongoing transactions must be halted immediately.

Exports required for special reasons must receive prior approval from the Ministry of Commerce.

The watch list includes 20 companies, such as Mitsui E&S, Mitsui & Co. Aerospace, Fujitsu Network Solutions, and Komatsu NTC.

When exporting dual-use goods to these companies, exporters cannot obtain export certificates through general license applications or registration information reporting methods.

To apply for individual licenses, companies must submit a risk assessment report along with a written guarantee that the goods will not be used for purposes that contribute to Japan's military buildup.

The Ministry of Commerce stated that it will more strictly scrutinize the end-users and end-uses for companies on the watch list and will not approve exports if it is determined that the goods could be used for Japanese military purposes or contribute to military expansion.

These measures took effect immediately upon announcement.

The Ministry of Commerce stated that the actions are intended to safeguard national security and interests and to fulfill international non-proliferation obligations.

It further explained that the measures are aimed at deterring Japan's remilitarization and attempts at nuclear armament.

In a Q&A session with reporters, a spokesperson for the Ministry of Commerce criticized Japan, stating, "Instead of reflecting on its mistakes, Japan is actively pursuing a 'new militarism,' accelerating its remilitarization, deploying offensive weapons, and launching offensive missiles overseas."

The spokesperson added, "We hope Japan will turn back from its wrong path, correct its actions, and return to the right track through genuine reflection. These measures only restrict the export of dual-use items to a small number of Japanese entities and do not affect normal economic and trade exchanges between China and Japan. Law-abiding Japanese companies have nothing to worry about."

Guo Jiakun, a spokesperson for the Chinese Ministry of Foreign Affairs, also explained at a regular briefing, "China's measures are entirely justified, reasonable, and legal. They are intended to firmly curb Japan's new militaristic moves."

When asked to comment on concerns from the Japanese business community that the procurement of rare earth elements by private firms might be affected, the spokesperson reiterated that since the sanctions are limited in scope, they do not impact normal economic and trade exchanges.

China previously imposed retaliatory measures in January, banning the export of dual-use goods for military purposes to Japan, citing remarks by Japanese Prime Minister Sanae Takaichi suggesting potential intervention in a Taiwan contingency. In February, China placed 20 Japanese entities, including Mitsubishi Shipbuilding, on an export control list, and another 20, including Subaru, on a watch list.

The Japanese government has protested the additional export restrictions and demanded their withdrawal.

Chief Cabinet Secretary Minoru Kihara, the government spokesperson, stated at a regular press conference, "The fact that the Chinese Ministry of Commerce announced export control measures targeting only Japan in January is contrary to international practice and is absolutely unacceptable. The measures announced today are equally regrettable."

He added that the government would conduct a detailed investigation into the content and impact of China's additional export restrictions and take necessary countermeasures.

A senior official at the Japanese Ministry of Foreign Affairs told Kyodo News that China, which criticizes Japan's defense buildup as "new militarism," is expected to continue strengthening its regulations. The official interpreted the additional measures announced today as a "message that China will take countermeasures against companies involved in strengthening (Japan's) defense capabilities."

However, the official noted that the inclusion of the National Institute for Defense Studies, which is under the Japanese Ministry of Defense, in China's export restrictions is "symbolic and lacks practical effectiveness."