Japan Firms Seek Assurance China Curbs Won’t Hit Civilian Trade

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(Bloomberg) — A group of Japanese businesses in China is urging Chinese authorities to reaffirm their earlier comments that fresh curbs on dual-use items won’t present problems for those who handle civilian items in the usual manner. 

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In a statement Monday, the Japan Chamber of Commerce and Industry in China emphasized remarks made last week by He Yadong, a spokesman for China’s Ministry of Commerce, who said civilian applications won’t be affected and parties engaged in normal civilian trade have no need to worry. 

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“We request that this statement be reaffirmed and thoroughly communicated to relevant parties both within and outside China,” the statement said. “The Japan Chamber of Commerce in China will also widely disseminate the commerce ministry’s explanation to Japanese companies in China.” 

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The group also said it will make requests to the ministry if Japanese companies in China experience difficulties. 

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Last week, China announced a ban on the sale of more than 800 dual-use items, including rare earths, to end-users that could aid Japan’s military capabilities. The move has stoked concerns that it may tighten China’s grip on rare earths, which are critical for various products including electric cars, mobile phones and missiles. 

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China leads the world in reserves and production of these minerals, controlling more than 90% of global refining capacity, according to the Japan Organization for Metals and Energy Security. Last week state-run China Daily reported that Beijing is considering tighter export license reviews for certain medium and heavy rare earth–related items.

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Tensions have risen between Asia’s two biggest economies after Japanese Prime Minister Sanae Takaichi made comments in November that suggested Japan could deploy its military if China uses force to try and seize Taiwan. 

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Japan remains highly dependent on China for rare earths even though it had some success diversifying its supply chain after Beijing blocked the flow of the critical minerals in a previous dispute more than a decade ago. 

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This week, Japanese Finance Minister Satsuki Katayama met with her global financial counterparts in the US to discuss rare earths. Katayama noted that bolstering supply chains was a critical task. 

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—With assistance from Martin Ritchie.

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