In a significant escalation of economic pressure, China has initiated a series of export controls against Japan, directly testing the strength of America's alliance with its top Asian partner and challenging former US President Donald Trump's past boasts about resolving rare earth issues. The moves come in response to comments by Japanese Prime Minister Sanae Takaichi on Taiwan.
A Multi-Pronged Economic Squeeze
This week, Beijing turned up the heat by banning all dual-use shipments for military purposes to Japan, a measure that could impact an estimated 40% of Chinese exports to its neighbour. Simultaneously, it threatened tighter controls on rare earth minerals, which are vital for Japan's automobile sector. Hours later, China opened an anti-dumping probe into a key chipmaking material, taking aim at another pillar of Japanese industry.
These coordinated actions signal that President Xi Jinping's pressure campaign against Prime Minister Takaichi is just beginning. The restriction on rare earths delivers a direct challenge to Donald Trump, who had previously claimed he "settled the rare earth issue for the world" after a meeting with China's top leader, which resulted in a vow from Beijing to continue supplying the critical metals.
Japan's Cautious Stance and Diplomatic Dilemma
For now, Prime Minister Takaichi appears to be weighing her options carefully. While her government has protested China's actions, she has refrained from any immediate tit-for-tat retaliation. This caution stems from the risk of greater blowback at home, where Japanese carmakers, especially in electric vehicle production, rely heavily on Chinese-sourced inputs.
"Japan's default approach to China's policy tantrum is to avoid seeking a compromise off-ramp, but also to avoid any leaps toward retaliation," said Kurt Tong, a former senior US diplomat in Asia. He added that Tokyo's strategy is to patiently wait out China, expecting it to calm down eventually.
Bolstered by domestic support, Takaichi has refused to retract her comment suggesting Japan could deploy its military if China tried to seize Taiwan. This dispute unfolds at a delicate time, as Trump tries to preserve a truce with China to ensure America's own rare earth supply and ahead of a potential April summit with Xi.
Shifting Alliances and Limited Options
The geopolitical landscape has complicated Japan's position. "Traditionally, Japan's diplomacy has followed a clear pattern: First you lock in the relationship with the US, and then face China. But the situation now is completely different," explained Ryo Sahashi, a professor of international politics at the University of Tokyo. With US-China relations currently stable, Japan can no longer use its old tactic of negotiating with Beijing via Washington.
Japan is keeping the US informed as ties with China fray. Recently, Takaichi described a call with Trump as "extremely meaningful" and plans a US visit later this year. Following the new Chinese curbs, Japanese and US officials affirmed "close coordination," though specifics were not disclosed.
Analysts like Daisuke Kawai from the University of Tokyo argue that what Takaichi needs now is a direct, supportive message from the Trump administration that clearly states Japan is not in the wrong and includes criticism of China's actions.
Regional Ripples and Potential for Escalation
China's strategy also appears designed to drive a wedge between US allies. The export controls were announced hours after South Korean President Lee Jae Myung posed for selfies with Xi during a state visit, contrasting sharply with the solidarity shown by Japan, South Korea, and the US at Camp David less than three years ago.
If the conflict escalates, Japan has potent economic weapons of its own. It dominates key semiconductor sectors, controlling up to 90% of the advanced photoresist market. Export curbs here could cripple China's chip ambitions for years, according to Bloomberg Economics. However, some analysts, like Tilly Zhang of Gavekal Dragonomics, believe China's demand for such high-end materials may be limited due to existing machine import restrictions.
For now, the vague wording of China's measures leaves Beijing with flexibility. "This is serious, but so far strikes me as a further warning shot, not a death blow," said Cory Combs of Trivium China. Yet, voices in China, like Wu Xinbo of Fudan University, argue that since diplomatic efforts have failed, more powerful measures are needed to restrict Japan's military capabilities regarding Taiwan.
The next scheduled high-level meeting between Xi and Takaichi is not until the APEC summit in Shenzhen this November, meaning Japan could face months of economic pressure as it navigates this complex crisis between its security ally and its largest trading partner.
