Rising Frictions in East Asia as China Tightens Controls on Japan

Overview

Tensions between China and Japan have intensified following a series of diplomatic and trade-related actions triggered by remarks from Japan’s leadership about Taiwan. Beijing has responded with new export restrictions, anti‑dumping investigations, and renewed criticism rooted in long‑standing historical and territorial disputes. Tokyo has condemned the measures as discriminatory and destabilizing.

Background to the Dispute

• The latest escalation began after Japanese Prime Minister Sanae Takaichi stated in November that a Chinese attack on Taiwan would pose an “existential threat” to Japan — a comment Beijing denounced as provocative and a violation of the One‑China principle.
• Japan has been increasing its defense spending and redefining its military posture, moves that Chinese state media have described as alarming.

China’s New Trade Measures

China has introduced several punitive economic steps targeting Japan:

1. Export Ban on Dual‑Use Goods

• Beijing imposed restrictions on exporting goods, software, and technologies with both civilian and military applications to Japan, citing national security concerns and Japan’s “erroneous” statements about Taiwan.
• These dual‑use items include rare earth materials, semiconductor‑related components, and other advanced technologies critical to Japan’s high‑tech industries.

2. Anti‑Dumping Investigation

• China launched an investigation into dichlorosilane, a chemical gas essential for semiconductor manufacturing, alleging that Japanese imports had been dumped at prices 31% lower between 2022 and 2024, harming the Chinese industry.

3. Potential Rare Earth Restrictions

• State‑aligned media in China suggested that Beijing may further restrict exports of rare earth minerals to Japan, a sector where China controls most of the global supply.

Japan’s Response

• Tokyo has lodged formal protests, calling the measures “absolutely unacceptable” and inconsistent with international norms.
• Japan has not announced retaliatory actions but is reportedly evaluating its own leverage, including its dominance in key semiconductor chemicals such as photoresist, where Japanese firms control over 70% of the global market.

Political and Diplomatic Fallout

• Beijing has demanded that Prime Minister Takaichi retract her Taiwan remarks, though she has maintained her position while expressing openness to dialogue.
• Tensions were further inflamed when Japanese lawmaker Hei Seki, previously sanctioned by China, visited Taiwan and publicly called it an independent country — prompting sharp rebukes from Beijing.
• China has also revived historical grievances, referencing Japan’s wartime past and accusing Tokyo of interfering in its internal affairs.

Regional Context

• While China’s relationship with Japan deteriorates, Beijing has simultaneously strengthened ties with South Korea, signing new cooperation agreements during a state visit by President Lee Jae Myung.
• Analysts note that despite political friction, Japanese companies operating in China have not yet faced widespread boycotts or disruptions, unlike during past diplomatic crises.

Economic Stakes

• Japan relies heavily on Chinese rare earths for defense, automotive, and electronics manufacturing.
• China depends on Japanese high‑precision chemicals and semiconductor equipment, making the dispute economically risky for both sides.

Conclusion

The latest developments mark one of the sharpest downturns in China–Japan relations in recent years, with both nations holding significant economic leverage over each other — particularly in the semiconductor and rare‑earth sectors — the standoff risks deepening unless diplomatic channels are restored. The Taiwan issue remains the central flashpoint, with broader implications for regional security and global supply chains.