China Imposes Export Controls on 40 Japanese Companies Amid Escalating Tensions

China Imposes Sweeping Export Restrictions on Japanese Entities

Beijing, China – In a significant escalation of diplomatic and trade tensions, China's Ministry of Commerce (MOFCOM) announced on Tuesday, February 24, 2026, the imposition of export controls on 40 Japanese entities. The measures target 20 companies with immediate export bans on 'dual-use items' and place another 20 companies on a watchlist, citing national security concerns and Japan's alleged 'remilitarization' and 'nuclear ambitions'.

The move comes as a direct response to what China describes as Japan's efforts to enhance its military capabilities, further intensifying a months-long dispute between Asia's two largest economies.

Details of the Restrictions

The 20 Japanese entities placed on China's export control list are now prohibited from importing 'dual-use items'—goods and technologies with both civilian and military applications—from China. This ban also extends to foreign organizations or individuals, preventing them from transferring Chinese-origin dual-use items to these listed companies. MOFCOM explicitly stated that 'all ongoing related activities must cease immediately'.

Prominent companies affected by this immediate ban include several affiliates of Mitsubishi Heavy Industries, such as its Shipbuilding Co. and aerospace units, as well as divisions of Kawasaki Heavy Industries and IHI Corp. involved in aerospace. Also on this list are the Japan Aerospace Exploration Agency (JAXA) and the National Defense Academy of Japan.

A separate 'watchlist' comprises another 20 Japanese entities, including Subaru Corporation, Mitsubishi Materials Corporation, TDK Corporation, Hino Motors, Nitto Denko, Yashima Denki, and ENEOS. For these companies, Chinese exporters are now required to submit individual export license applications, risk assessment reports, and written pledges ensuring that dual-use items will not be utilized for military purposes by Japan.

Background to the Escalation

This latest action by Beijing is rooted in a diplomatic crisis that began in November 2025. The dispute was ignited by comments from Japanese Prime Minister Sanae Takaichi, who suggested that Japan might intervene militarily in the event of a hypothetical Chinese attack on Taiwan. China, which views Taiwan as an integral part of its territory, condemned these remarks as a violation of the 'One China' principle.

Since then, China has implemented several retaliatory measures. These include tightening controls on dual-use item exports to Japan in January 2026, threatening or banning Japanese seafood imports, and issuing travel advisories that have led to a significant decline in Chinese tourism to Japan. Beijing has also expressed growing unease over Japan's increased defense spending and its strengthening security alliances with the United States and other regional partners.

Reactions and Economic Implications

Japan has swiftly condemned China's new restrictions. Japanese officials have labeled the measures as 'unacceptable and deeply regrettable' and lodged a 'strong protest' with Beijing, demanding their withdrawal. Tokyo is currently assessing the full impact of these controls and has indicated it will 'take appropriate measures' in response.

The economic ramifications are expected to be substantial, particularly for Japanese companies heavily reliant on Chinese supply chains for critical components. Shares of several affected companies, including Kawasaki Heavy Industries, Mitsubishi Heavy Industries, and Subaru, experienced declines in the Tokyo stock market following the announcement. Concerns have also been raised about potential disruptions to the supply of vital rare-earth minerals, many of which are sourced from China and are crucial for various high-tech industries.