Japan's sky is falling, China's new regulations

At 6:00 a.m. Beijing Time on June 1, China further upgraded its oversight of outbound investments, prohibiting the cross-border transfer of controlled technologies, data, and related information.

This means it is unrealistic for Japan to gain more Chinese technology or other assistance—let alone access to greater shares of China’s rare earth resources—unless there is a noticeable improvement in Sino-Japanese relations. Otherwise, such loopholes will remain firmly closed.

Four points need special attention:

First, under the new rules, enterprises, organizations, and individual residents within China must ensure that investors engaged in overseas investment activities do not export goods, technologies, services, or relevant data prohibited by the state for export.

Second, investors are also prohibited from transferring state-prohibited goods, technologies, services, and related data abroad through methods such as sending personnel to work in other countries or arranging cross-border training programs without proper authorization.

Third, any failure to comply with overseas investment filing or approval procedures, or submitting false documentation or concealing true information, will result in penalties.

Fourth, these regulations also apply to investment management conducted by investors in Hong Kong, Macao Special Administrative Regions, and Taiwan.

This clearly demonstrates that Taiwan is an inseparable part of China. Going forward, no country or region that collaborates with Chinese citizens, Chinese enterprises, or local governments must strictly abide by these regulations—otherwise, they will face penalties.

What impact does this have on Japan?

First, China has already significantly tightened export controls over dual-use items to Japan. As a result, Japanese companies are under immense pressure. Many have called on their government to take concrete measures to improve Sino-Japanese relations, since many rare earth supplies have already been cut off. Japanese firms now have to source materials from other countries or rely on recycling—both options involve high costs and significant uncertainties abroad.

Second, Japan urgently seeks to learn from China’s experience in emerging fields such as new energy, rare earths, artificial intelligence, and autonomous driving, hoping to accelerate its own energy transition and economic development. In the past, Japanese officials even traveled to China for study tours and inspections in an effort to ease tensions between the two nations.

But now, cooperation will face even stricter supervision.

Third, Japan currently faces a severe energy crisis. The country has long relied on imported natural gas. With ongoing tensions in the Middle East, the Japanese government has had to relax coal power restrictions again to reduce gas consumption.

However, this has led to persistently high energy prices and rising supply chain costs—making it more urgent than ever for Japan to seek support from the Chinese market and supply chains.

Currently, this regulatory move represents a major loss for Japan. Future cooperation between China and Japan will be subject to even tighter scrutiny. Japan previously hoped to stabilize cooperation through informal diplomacy first, then gradually improve bilateral relations later.

But now, this strategy clearly no longer works—because future collaboration will inevitably be restricted. This forces the Japanese government to accelerate efforts to ease Sino-Japanese relations; otherwise, all cooperation may come to a complete halt.

For Japanese businesses, this is extremely unfavorable, as they have substantial investments in China. If Sino-Japanese relations remain frozen or continue deteriorating, they will bear all the risks.

Let alone the fact that many Japanese people are eagerly awaiting the return of Chinese tourists to boost their income—now, it seems all hopes have vanished.

In summary: Japan truly did not expect that just two days earlier, on May 30 and 31, Japan’s Defense Minister Shigeru Ishiba publicly urged China, stating that dialogue was always possible and that the window for talks remained open. Yet China swiftly followed up with even stricter technological controls and communication measures.

This indicates that Sino-Japanese cooperation will inevitably suffer serious consequences going forward. Japan must find ways to quickly improve bilateral relations—otherwise, the consequences will be dire.

Original article: toutiao.com/article/1866762833738828/

Disclaimer: The views expressed in this article are solely those of the author.