Japan and China Clash Over Tech Exports

China's Recent Move

Japan is displeased with China's decision to halt the export of certain dual-use technology items. These items serve both civilian and military purposes, and the restriction is part of an ongoing dispute between the two nations.

Origins of the Dispute

The conflict began when Japan's leader made a statement regarding Taiwan. Japan asserted that a Chinese attack on Taiwan could pose significant risks to Japan. China, displeased with this statement, demanded that Japan retract it. When Japan refused, China retaliated by restricting the export of these tech items.

Japan's Response

A spokesperson for Japan's government labeled China's move as unfair and atypical of international behavior. They also expressed uncertainty about the potential impact on Japanese businesses.

Market Reactions

While the news did not cause a major market upheaval, Japanese shares experienced a slight decline. The mining sector was particularly affected.

Potential Rare Earth Mineral Restrictions

There is speculation that China might also limit the export of rare earth minerals to Japan. These minerals are crucial for manufacturing cars and electronics. Despite Japan's efforts since 2010 to diversify its sources, it still relies heavily on China for these minerals.

Economic Implications

If China enforces restrictions on rare earth mineral exports, Japanese businesses could face substantial financial losses. This could also lead to a contraction in Japan's economy. However, as of now, there are no indications that China has halted these exports. In fact, exports increased in November.