Japan on Wednesday condemned China’s new ban on "dual-use" exports, calling the move "absolutely unacceptable" as a diplomatic rift between Asia’s largest economies deepens.
The ban targets goods, software, and technologies that have both civilian and military applications—including minerals vital for manufacturing drones and semiconductors. Beijing implemented the restrictions on Tuesday, specifically prohibiting exports to Japanese military users or any entity contributing to Japan's defense strength.
The friction stems from comments made late last year by Japanese Prime Minister Sanae Takaichi, who suggested a Chinese attack on Taiwan could pose an "existential threat" to Japan. Beijing’s demands for a retraction have gone unheeded, leading to these targeted countermeasures.
Market anxiety is growing following reports that Beijing may soon restrict rare earth minerals. While Japan has worked to diversify its supply chain since a similar crisis in 2010, it still relies on China for approximately 60% of its rare earth imports. For specific materials used in electric vehicle motors and high-tech magnets, Japan’s dependence is nearly total.
The news hit Japanese markets hard on Wednesday. The Nikkei share index dropped 1%, with major defense contractors Kawasaki Heavy and Mitsubishi Heavy seeing shares fall by roughly 2%.
"A measure such as this, targeting only our country, is absolutely unacceptable and deeply regrettable," said Chief Cabinet Secretary Minoru Kihara. He added that the full impact on Japanese industry remains unclear until the specific list of banned items is released.
On January 7, 2026, Japanese Chief Cabinet Secretary Minoru Kihara officially labeled China's targeted export restrictions as "absolutely unacceptable" during a Tokyo press conference.
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