（Singapore, 29.06.2026）China and Japan are becoming increasingly locked in an economic security rivalry, with Beijing expanding export restrictions on Japanese organizations just as Tokyo rolls out sweeping measures to protect strategic industries and critical technologies.
The latest developments highlight how trade, technology and national security are becoming increasingly interconnected between Asia’s two largest economies, as both governments seek to safeguard their long-term strategic interests.
China Broadens Export Restrictions
China’s Ministry of Commerce on Monday announced new export controls targeting 40 additional Japanese entities, widening a campaign that first began in February.
20 organizations were added to China’s export control list, effectively banning exports of Chinese dual use goods that can be used for both civilian and military purposes. The affected organizations include Japan’s National Institute for Defense Studies, several military research centers and affiliates of Mitsubishi Electric.
Another 20 entities, including shipbuilder Mitsui E&S and Japan Nuclear Fuel, were placed on a monitoring list, meaning imports of dual-use products from China will face stricter government scrutiny.
According to a Bloomberg report, the latest measures build on restrictions introduced on Feb. 24, when China blacklisted another 40 Japanese companies, including automaker Subaru.
The move also marks another escalation in the diplomatic dispute between Beijing and Japanese Prime Minister Sanae Takaichi.
China has repeatedly criticized comments made by Takaichi last year suggesting Japan could deploy its Self-Defense Forces should China attempt to take control of Taiwan, the self-governed island claimed by Beijing. While Takaichi has insisted Japan’s official policy remains unchanged, she has declined to withdraw her remarks.
Japan Strengthens Economic Security
As tensions with China grow, Japan is moving ahead with one of its most comprehensive economic security reforms in years.
Beginning Monday, Tokyo is launching a new investment screening body modeled after the United States’ Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments for potential national security risks.
The new mechanism will coordinate multiple ministries when evaluating sensitive foreign investments, replacing a system previously led mainly by Japan’s Finance Ministry together with the ministry overseeing the relevant industry.
Bloomberg reported that the changes are part of revisions to Japan’s Foreign Exchange and Foreign Trade Act, giving authorities broader powers to review investments involving complex ownership structures, foreign governments and state-backed entities.
The reforms come amid a series of recent incidents that have raised concerns over Japan’s economic security.
Recent media reports have linked Chinese actors to cyber intrusions involving Japan’s defense sector, while authorities have investigated alleged attempts to route advanced Nvidia artificial intelligence chips through Japan before they reached China. Separate investigations have also examined suspected links between Japanese organizations and international fentanyl trafficking networks.
These cases have reinforced concerns that Japan is increasingly becoming both a target for industrial espionage and a transit point for sensitive technologies.
Before becoming prime minister, Takaichi served as Japan’s minister responsible for economic security, overseeing policies designed to strengthen supply chains, protect critical infrastructure and safeguard advanced technologies.
In her 2024 book on economic security, she argued that policymakers must pay particular attention to China because of its dominant position in global supply chains and technology networks, Bloomberg noted.
Investment Push Goes Beyond Security
Japan’s security strategy is being accompanied by an ambitious long-term investment plan designed to strengthen the country’s technological competitiveness.
Last week, Takaichi unveiled a roadmap calling for more than ¥370 trillion (S$2.95 trillion) in combined public and private investment through fiscal 2040.
According to Bloomberg, more than ¥101 trillion (S$8078 billion) has been earmarked for artificial intelligence and semiconductor development, reflecting Tokyo’s efforts to rebuild domestic chip production while improving supply-chain resilience.
The strategy also aims to channel investment into emerging technologies that can support both economic growth and national security, although economists have questioned whether such long-term projections are achievable and how the spending will ultimately be financed.
Taken together, China’s expanding export controls and Japan’s tougher investment screening reflect a broader shift in regional competition.
What was once primarily an economic relationship is increasingly being shaped by strategic considerations, with trade, technology, investment and national security becoming central to the evolving relationship between Beijing and Tokyo.
