JAPAN FACES DIPLOMATIC FRICTION WITH CHINA AND SOUTH KOREA

The Japanese state is currently managing separate diplomatic developments with the People’s Republic of China and the Republic of Korea. On 24 February 2026, the Chinese Ministry of Commerce (hereinafter: MOFCOM) announced the implementation of export controls targeting 20 Japanese technology and defence entities. These measures restrict the transfer of dual-use items to specific corporations and research institutions. In a concurrent development, the government in Seoul has lodged a formal protest against Tokyo following the annual “Takeshima Day” event held in Shimane Prefecture on 22 February 2026. These events have resulted in a period of Japan's diplomatic friction involving trade regulations and territorial sovereignty.

China Imposes Export Controls On 20 Japanese Entities

MOFCOM has introduced a ban on the export of dual-use items to 20 more Japanese companies and organisations, effective from 24 February 2026. Dual-use items are classified as goods, software and technologies that can be applied to both civilian and military purposes. According to the statement from MOFCOM, these measures were established to safeguard national security and fulfill international non-proliferation obligations.

The list of entities subject to the export ban includes:

• Mitsubishi Heavy Industries Shipbuilding Co., Ltd.
• Kawasaki Heavy Industries Aerospace Systems Company
• IHI Aerospace Co.
• The National Defence Academy of Japan
• The Japan Aerospace Exploration Agency (hereinafter: JAXA)

Furthermore, MOFCOM placed an additional 20 entities on a “watch list” for enhanced screening procedures. This list includes Subaru Corporation, Hino Motors, ENEOS and the Institute of Science Tokyo. Under the new regulations, Chinese exporters are prohibited from supplying the blacklisted firms, and third-party organisations are restricted from transferring Chinese-origin dual-use items to these designated entities. A spokesperson for the Chinese ministry stated that the controls are intended to prevent the enhancement of military capabilities.

South Korea Protests Territorial Claims Over Dokdo Islets

The diplomatic friction includes a formal dispute with the Republic of Korea regarding the Dokdo islets, referred to as Takeshima by the Japanese state. On 22 February 2026, the Shimane Prefecture held its annual “Takeshima Day” ceremony to assert administrative sovereignty over the islets. In response, the South Korean Ministry of Foreign Affairs (hereinafter: MOFA) summoned Hirotaka Matsuo, the deputy chief of mission at the Japanese Embassy in Seoul, to deliver a formal protest.

The South Korean MOFA released a statement asserting that the islets are an “integral part of South Korean territory historically, geographically and under international law”. The Republic of Korea has maintained effective control of the islets since 1945. The Japanese government was represented at the prefecture’s event by Naoki Furukawa, a Cabinet Office parliamentary secretary. This marks the 14th consecutive year that a vice-ministerial level official has attended the ceremony.

The territorial dispute has influenced recent regional military coordination. According to reports, the South Korean government declined a proposal from the United States of America for trilateral air drills involving Japan earlier in February. The proposed timing for the exercises coincided with the “Takeshima Day” anniversary, leading Seoul to request a rescheduling of the drills.

Institutional Responses And Economic Indicators

The Japanese government has communicated its position regarding the Chinese export restrictions. Deputy Chief Cabinet Secretary Kei Sato stated that the government would monitor the impact of the measures on Japanese industrial operations. In November 2025, Prime Minister Sanae Takaichi made remarks regarding the security situation in the Taiwan Strait, which has been a factor in the current trade restrictions imposed by Beijing.

The economic effects of the export controls were noted in the financial markets, where share prices for firms such as Subaru and Mitsubishi Heavy Industries saw adjustments following the MOFCOM announcement. Additionally, the Japan-China Economic Association (hereinafter: JCEA) has postponed a planned delegation of 200 business representatives to China. Meanwhile, diplomatic interactions between the People’s Republic of China and South Korean President Lee Jae Myung have continued, focusing on bilateral economic cooperation.

Concluding Outlook

The current state of relations between Japan, China and South Korea suggests several institutional and economic trajectories.

• Diversification of Industrial Inputs: The imposition of export controls by China on 20 Japanese entities is likely to result in an institutional shift towards the diversification of supply chains for dual-use components. Japanese corporations in the aerospace and shipbuilding sectors may seek to increase domestic production or establish new procurement agreements with partners in European and Neo-European states to ensure the stability of their manufacturing processes.
• Limitations on Trilateral Security Frameworks: The refusal of the Republic of Korea to conduct air drills during “Takeshima Day” indicates that territorial disputes continue to affect the scheduling and depth of trilateral security cooperation with the United States of America. Future military exercises are likely to be planned with greater consideration for historical and commemorative dates to avoid diplomatic friction between Seoul and Tokyo.
• Bilateral Trade Realignment: While Tokyo faces new restrictions from Beijing, the People’s Republic of China appears to be maintaining its diplomatic and economic engagement with South Korea. This could lead to a scenario where Japanese firms face higher barriers to entry in the Chinese market compared to their South Korean counterparts, potentially altering the competitive landscape for technology and automotive exports in East Asia.

In a wider context, Japan is also integrated in alliances with European and Neo-European nations, which likely influence Japan to diplomatically pressure China. The alienating remarks on South Korea, however, must be assessed from a situation of political shortsightedness. As Takaichi already navigates through complex situations domestically and internationally, further diplomatic friction does not aid the short-term development of Japan. We will be closely monitoring future events in Japan to assess Takaichi’s political skills and goals, as these questions become more important in light of the increasingly aggressive stance of Japan.