China Sanctions 40 Japanese Firms, Tightens Curbs on Dual-use Exports

China's commerce ministry added 20 Japanese entities to an export control list and 20 to an export watchlist on Monday, according to The Wall Street Journal.

The restrictions aim to prevent Chinese-made dual-use goods from enhancing Japan's military strength. Dual-use items are products with potential military applications. These goods include rare earths used in motors and magnets, machine tools, batteries and chip-making equipment.

The new measures mark a continuation of economic pressure against Tokyo over geopolitical disputes.

Targeted Japanese Entities

Entities added to the export control list include units of Mitsubishi Heavy Industries, which makes warships and other defence systems. The list also targets Nikko Tokki, a firm providing parts and maintenance services for Japan’s Self-Defence Forces and coast guard, alongside a unit of Komatsu, the National Institute for Defense Studies, and several other research organisations.

The commerce ministry added another 20 companies in the drone and nuclear fuel sectors to an export watchlist. These firms face greater scrutiny for potential military uses rather than an outright ban.

In February 2026, China banned Japanese defence contractors and industrial firms, including IHI and NEC, from receiving dual-use goods.

Rising Geopolitical Tensions

Japanese Prime Minister Sanae Takaichi angered Beijing in November 2025 by saying Japan could get involved in a Taiwan conflict, a self-ruled island democracy that Beijing views as part of China’s territory. Takaichi, a security hawk, has boosted defence spending and relaxed lethal weapon export rules.

Beijing previously retaliated by throttling flights, advising tourists to stay away and squeezing heavy rare earth exports, critical minerals that are essential for manufacturing.

Tensions escalated further last week. China detained two Japanese nationals without disclosing the reason.

 US in Hitlist Too

Last week, in a sharp retaliatory move, China announced sanctions against 10 major U.S. companies after they were added to the Pentagon’s blacklist of entities linked to the American military-industrial complex.

The Chinese Ministry of Commerce issued a strongly worded statement accusing the sanctioned firms of activities that “seriously threaten China’s national security and sovereignty.”

The Pentagon’s entity list has long been used by Washington to target Chinese firms suspected of supporting military modernisation in China. Beijing has consistently criticised the list as an instrument of “long-arm jurisdiction” and economic bullying.