On June 29, China expanded its export controls on Japan, announcing new sanctions against 40 Japanese entities. Among these, 20 new Japanese entities were added to the export control list, and another 20 were added to the watchlist. The Ministry of Commerce stated that the new sanctions are completely justified, reasonable, and legal, with the aim of firmly curbing Japan's aggressive militarism.
According to the South China Morning Post, citing Xu Weijun, a public policy analyst at South China University of Technology, the addition of new items to the export control list marks a significant escalation.
This is not merely routine control, but rather a systematized and targeted economic security countermeasure aimed at restricting Japan's military industry chain from obtaining China's dual-purpose items... This is a severe response to Japan's militaristic tendencies.
However, Xu Weijun stated that China has no intention of launching a comprehensive economic war. This time, it targets only a few Japanese entities.
"China is distinguishing between Japanese enterprises that adhere to factual reporting and honest conduct from those in compliance with Chinese law." He said, "This will not disrupt the normal economic relations between the two major economies of Asia."
Xu Weijun said that this move will have an impact on the supply of rare earths.
This depends on whether rare-earth items are recognized as dual-use items, and whether the final users are listed in the inventory. He said, "Not all Japanese importers will automatically lose their legal access channels solely due to their nationality."
Chinese exporters may become more cautious in their operations due to compliance considerations, and they may choose to suspend or delay transactions. Importers from Japan not targeted by the sanctions may be required to provide more details regarding the final use and resale channels.
This is not the first time China has imposed export controls on Japan. On February 24, 2026, the Ministry of Commerce issued Announcement No. 11 of 2026, listing Mitsubishi Shipbuilding Corporation and 20 other entities on the control list. Since January 6 this year, China has prohibited the export of all dual-use items to Japanese military users and for military purposes.
According to data from the General Administration of Customs in China, the aforementioned regulatory measures have had a substantial impact: in May 2026, China's exports of rare earth magnets to Japan decreased by 34.6% month-over-month. This figure has been below 200 tons for three consecutive months, and the decline is significantly higher than the 7.7% decrease in overall global exports.
The Chinese Ministry of Commerce has also previously stated that export control measures are limited to a few Japanese entities, and do not affect normal Sino-Japanese economic and trade relations. Japanese entities that act in good faith and comply with the law need not worry. However, judging from the continuously expanding list of controlled entities and the tightening of review procedures, China's vigilance against any potential tendencies towards Japanese “re-militarization” is being translated into systematic export control measures.
