China Imposes Export Controls on 40 Japanese Firms as Tokyo Lifts Defense Spending to $58 Billion
Updated
Updated · The Guardian · Jul 1
China Imposes Export Controls on 40 Japanese Firms as Tokyo Lifts Defense Spending to $58 Billion
3 articles · Updated · The Guardian · Jul 1
Summary
Forty Japanese companies were hit with new Chinese export controls on dual-use goods this week, with Beijing accusing Tokyo of pursuing “new militarism.”
The move follows a sharp downturn in ties since Prime Minister Sanae Takaichi said in November 2025 that a Taiwan attack could trigger Japanese force deployment if Japan faced an existential threat.
Recent frictions have widened beyond trade: Tokyo protested joint Chinese-Russian bomber flights near its airspace, alleged Chinese coast guard entry into its Exclusive Economic Zone, and announced missile launcher deployments on its easternmost island.
Japan has raised defense spending 9.4% to about $58 billion this year, while China says that buildup proves remilitarization even though its own stated military budget is about $275 billion.
Despite the chill, bilateral trade reached $322 billion in 2025 and kept growing in the first five months of 2026, leaving an expected Takaichi-Xi meeting at November’s APEC summit in Shenzhen as the main off-ramp.
As trade hits new highs, can economic ties prevent Japan and China from stumbling into military conflict?
Is Japan's military revival making it a stronger US partner or an unpredictable new power in Asia?
Economic Fallout and Geopolitical Tensions: China's 2026 Export Controls on Japan and the Global Supply Chain Impact
Overview
In June 2026, China imposed new export controls on Japan, marking a major escalation in its use of economic pressure to defend its core interests, especially regarding Taiwan. By leveraging its dominance in critical mineral supply chains, China aims to deter countries from supporting positions it opposes without using military force. This move not only targets Japan but also sends a warning to other nations about the risks of crossing China’s red lines. The action highlights the sensitivity of the Taiwan issue and signals China’s willingness to use economic tools to shape international behavior.