China Bans Dual-Use Exports to Japan Amid Taiwan Tensions

China Escalates Trade War with Japan Over Taiwan Remarks

China has implemented immediate export restrictions banning the sale of dual-use goods to Japan that could be used for military purposes, marking a significant escalation in tensions between Asia's two largest economies. The ban, announced on January 7, 2026, targets products and technologies with both civilian and military applications and comes in direct response to Japanese Prime Minister Sanae Takaichi's November comments about Taiwan.

What Are Dual-Use Goods?

Dual-use items refer to equipment, machines, goods and technology that can be used for both civilian and military applications. According to Wikipedia, these technologies present a 'dual-use dilemma' where peaceful applications can later be weaponized. China's export control list now includes over 1,250 items ranging from aerospace and nuclear technology to chemical and biological weapons components.

The Taiwan Trigger

The diplomatic crisis began when Prime Minister Takaichi suggested in parliament that a Chinese attack on Taiwan could constitute an 'existential threat' to Japan and potentially trigger Japanese Self-Defense Forces support. 'This recent measure, which exclusively targets our country, deviates significantly from international practice and is absolutely unacceptable,' declared Japanese Cabinet Secretary Minoru Kihara during a press conference.

China, which considers Taiwan an inherent part of its territory, has responded with a series of escalating measures. 'It is likely that more such measures will follow this year,' says Professor Mong Cheung, an expert on China-Japan relations at Waseda University in Tokyo.

Rare Earth Dependence and Economic Impact

Japan relies on China for approximately 60-63% of its rare earth imports, with some heavy rare earths for electric vehicle motors almost entirely dependent on Chinese supply. According to U.S. News, a three-month rare earth export curb could cost Japanese businesses $4.2 billion and reduce GDP by 0.11%, while a year-long ban could cut GDP by 0.43%.

'There is still much uncertainty about the potential impact,' says economic security expert Yoshiaki Takayama of the Japan Institute of International Affairs. 'It depends on how strictly these new rules are enforced.'

Broader Implications for Japanese Industry

The restrictions apply not only to direct deliveries to the Japanese military but also to 'any other end user that contributes to strengthening Japanese military capabilities.' This broad language could affect major Japanese corporations like Mitsubishi, Kawasaki, and Toshiba, which derive most of their revenue from non-military products but also supply Japan's defense forces.

According to CNBC, the regulation also makes non-Chinese entities or individuals who export Chinese dual-use goods to Japan punishable under Chinese law, potentially affecting European companies as well.

Historical Context and Future Outlook

This isn't the first time China has used rare earth exports as a political weapon. In 2010, during a diplomatic conflict, China temporarily halted rare earth exports to Japan, prompting Tokyo to attempt reducing its dependence - with limited success.

Takayama notes the deliberate vagueness in China's approach: 'By not publicly disclosing what and who exactly fall under the regulation, China maintains flexibility in its application.'

With U.S. President Donald Trump and Chinese leader Xi Jinping scheduled to meet in April, Professor Cheung remains skeptical about immediate resolution: 'Even if they reach a major agreement, it is unlikely that tensions between China and Japan will decrease as a result.'