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TOKYO: Japan has urged China to revoke its decision to impose tougher export controls on products with potential military uses, possibly including rare earths.
The Chinese commerce ministry said in a statement Tuesday (Jan 6) that authorities have "hereby decided to strengthen export controls on dual-use items to Japan", noting that the new measures take effect immediately.
It comes as China ramps up pressure on Tokyo after Japanese Prime Minister Sanae Takaichi suggested in November that Japan may react militarily in any attack on Taiwan.
Beijing claims the island as part of its own territory and has not ruled out seizing it by force.
While the Chinese statement did not mention specific items, it has fuelled worries in Japan that Beijing may choke supplies of rare earth minerals, some of which are included in China's list of dual-use goods.
China by far is the world's biggest supplier of rare earths, crucial for a range of tech products from smartphones to fighter jets.
Hours after the Chinese announcement, Masaaki Kanai, the secretary general of the Asian and Oceanian Affairs Bureau of the Japanese foreign ministry "strongly protested and demanded the withdrawal of these measures".
He issued the protest to Shi Yong, the Chinese embassy's deputy chief of mission, the Japanese foreign ministry said in a statement dated Tuesday.
Kanai said these measures "deviate significantly from international practice, is absolutely unacceptable and deeply regrettable".
Global risk consultancy Teneo said the ambiguous wording of the Chinese statement may have been intended to press Takaichi to take a more conciliatory stance towards China.
"The brief statement by China's commerce ministry is vague, and the impact of the new measures could range from almost entirely symbolic to highly disruptive," it said.
"By triggering concern in Japan about the ongoing availability of critical Chinese industrial inputs, the announcement puts immediate pressure on Takaichi to offer concessions."
"A plausible scenario is that the commerce ministry initially rejects a small handful of licence applications, creating only minor supply-chain disruption but signalling potential for broader damage in future unless Tokyo takes conciliatory action," Teneo said.
Takahide Kiuchi, executive economist at Nomura Research Institute, said the impact on the Japanese economy would be "extremely severe" if China includes rare earths in export controls, estimating that a three-month ban could cost the country 660 billion yen (US$4.2 billion) and reduce the nation's gross domestic product by 0.11 per cent.
