China expanded its export control list targeting Japanese companies on Monday, restricting sales of dual-use items that could serve both civilian and military purposes. The move represents Beijing's latest effort to pressure Prime Minister Sanae Takaichi's government over its defense policies, which China characterizes as a 'new type of militarism.'

Beijing's escalation comes after Takaichi suggested Japan could become militarily involved in any regional conflict over Taiwan. China has repeatedly accused Japan of violating its pacifist constitution through aggressive remilitarisation. Relations between the two Asian powers have deteriorated to their worst point in over a decade, with diplomatic tensions spilling into the economic sphere.

The restrictions now cover subsidiaries of Mitsubishi Electric and Mitsubishi Heavy Industries, along with Japanese government research bodies including the National Institute for Defense Studies. Chinese exporters cannot sell to these entities, while foreign organizations face similar prohibitions on items built in China. An additional 20 Japanese companies, including units of Fujitsu, Hitachi, and Komatsu, landed on a watchlist for heightened scrutiny.

This trade weaponization reflects a broader pattern. The EU Chamber of Commerce found China nearly tripled export controls in five years, frequently targeting strategic economic chokepoints. For investors, these measures create supply chain risks and potential revenue losses for affected Japanese manufacturers operating in China's massive market.