Dual-use items are goods, software or technologies that have both civilian and military applications, including certain critical minerals essential for making drones and chips.
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Japanese Prime Minister Sanae Takaichi touched off the dispute late last year by saying a Chinese attack on democratically-governed Taiwan could be deemed an existential threat to Japan. China regards Taiwan as part of its territory, a claim the island rejects.
Beijing has demanded she retract the remarks, which she has not done, prompting a series of countermeasures, the latest of which was Tuesday’s ban on exports to military users or for any purposes that contribute to Japan’s military strength.
“A measure such as this, targeting only our country, differs significantly from international practice, is absolutely unacceptable and deeply regrettable,” said Japan’s top government spokesman, Chief Cabinet Secretary Minoru Kihara.
At a daily press conference on Wednesday, he declined to comment on the possible impact on Japanese industry, saying it remained unclear exactly what items would be targeted.
RARE EARTH CURBS NEXT?
Beijing is considering further clamping down on exports of rare earths to Japan, the China Daily, a newspaper owned by the ruling Chinese Communist Party, said on Tuesday, citing sources with knowledge of the matter.
Such a move could have sweeping implications for the manufacturing powerhouse, including its key automotive sector.
Japan has sought to diversify its supply of rare earths since China last throttled exports of the minerals in 2010, but still relies on China for about 60% of imports.
For some heavy rare earths, such as those used for magnets in electric and hybrid vehicle motors, for example, Japan is almost totally dependent on China, analysts say.
A three-month curb on Chinese exports of rare earths, similar to that of the 2010 dispute, could cost Japanese businesses 660 billion yen ($4.2 billion) and shave 0.11% off annual gross domestic product, Nomura Research Institute economist Takahide Kiuchi said in a note on Wednesday.
A year-long ban would knock 0.43% off GDP, he added.
Tokyo will not likely sit by idly if Beijing’s bans do start to target Japanese business more broadly, said Cameron Johnson, a senior partner at supply chain consultancy Tidalwave Solutions in Shanghai.
“If there are Japanese civilian or commercial entities targeted, you could see the Japanese retaliate,” he said.
Such responses could target areas such as semiconductors or other high-end manufacturing materials China needs for its own supply chain, he added.
Separately on Wednesday, China launched an anti-dumping probe into imports from Japan of dichlorosilane, a key chemical for the semiconductor industry, the commerce ministry said on its website.
BRACING FOR A LONG WINTER
The quarrel does not, however, appear to have damaged Takaichi’s robust popularity at home, opinion polls show.
Analysts liken the rift to one triggered by Tokyo’s 2012 decision to nationalise disputed islands that set off mass anti-Japan protests in China, and halted meetings of the two countries’ leaders for 2-1/2 years.
Asked about the export curbs on Japan at a regular press briefing on Wednesday, China’s foreign ministry spokesperson reiterated Beijing’s anger over Takaichi’s Taiwan comments.
“We urge the Japanese side to confront the root cause of the issue, reflect on its mistakes, and retract the erroneous remarks,” Mao Ning said.
($1=156.6800 yen)
Reporting by Satoshi Sugiyama, Kantaro Komiya, Tim Kelly, Rocky Swift, Daniel Leussink and Maki Shiraki in Tokyo; Liz Lee, Ethan Wang, Xihao Jiang, Shi Bu and Lewis Jackson in Beijing; Writing by John Geddie; Editing by Michael Perry and Clarence Fernandez
Our Standards: The Thomson Reuters Trust Principles.
