China's Ministry of Commerce announced on Tuesday that it has imposed export restrictions on 40 Japanese entities accused of supporting Tokyo's military expansion. The measures target dual-use goods, items with both civilian and military applications, such as chemicals, electronics, sensors, navigation systems, and rare earth elements, and took effect immediately.

Twenty entities, including subsidiaries of Mitsubishi Heavy Industries involved in shipbuilding and aircraft engines, Kawasaki Heavy Industries, IHI Corporation subsidiaries, Fujitsu, Japan's National Defense Academy, and the Japan Aerospace Exploration Agency (JAXA), were added to China's export control blacklist. Exports of dual-use items from China to these groups are prohibited, and foreign organizations or individuals are banned from transferring such Chinese-origin goods to them. Another 20 entities, such as Subaru Corporation (including its helicopter design subsidiary), Hino Motors, Nitto Denko, Yashima Denki, ENEOS, Mitsubishi Materials Corporation, and the Institute of Science Tokyo, were placed on a watchlist requiring export licenses, risk assessments, and pledges that the items will not enhance Japan's military.

The ministry stated the restrictions are 'entirely legitimate, reasonable, and lawful' to safeguard national security and deter Japan's 'remilitarization' and alleged nuclear ambitions. Beijing claims the targeted entities contribute to military equipment like ships, aircraft, radar, and missiles. This follows Prime Minister Sanae Takaichi's November 2025 parliamentary remarks suggesting Japan could intervene militarily in a Taiwan crisis, which China views as provocative. Japan has since doubled defense spending toward 2% of GDP, eased arms export restrictions, and strengthened U.S. ties, prompting prior Chinese actions like a January dual-use ban on military end-users, a travel advisory, and seafood import halts.

Japan lodged a formal protest on Wednesday with China's deputy chief of mission in Tokyo, Shi Yong. Foreign Ministry Director-General Masaaki Kanai called the measures 'absolutely unacceptable' and deviating from international norms. Deputy Chief Cabinet Secretary Kei Sato echoed that they 'will never be tolerated,' urging their withdrawal, and said Tokyo would assess impacts before responding.

Affected companies reported minimal immediate disruption due to limited China trade. Mitsubishi Heavy Industries, IHI, and others are verifying details. Shares fell Tuesday: Mitsubishi Heavy Industries dropped 3.1%, IHI 5.73%, and Kawasaki Heavy Industries 4.02%. The restrictions come as Japan's economy grew just 1.1% in 2025 amid slowing exports, with Takaichi's party gaining in recent elections ahead of a March vote.

China emphasized the steps to spare 'law-abiding' Japanese firms and normal trade. Analysts note the move fits Beijing's playbook of economic pressure, as seen with Australia and the Philippines, potentially prolonging amid unresolved Taiwan disputes.