(Jan 31): Japan expanded its export controls to include cutting-edge chips and quantum computer-related technology, a move China warned could have a negative impact on trade between the two countries.

The Japanese government is expanding its list of export-controlled items to include advanced chips, lithography equipment and cryocoolers needed for the manufacture of quantum computers, according to draft revisions to the foreign exchange law.

Companies will need licences to export the items to prevent their use in weapons or their development, economy ministry officials have said. Advanced chips could be diverted to increase the computational capabilities of precision-guided weapons, while quantum computers could be used to break encryption.

The new curbs are scheduled to come into effect at the end of May.

The move comes as the US looks to close loopholes to its restrictions on sales of chips used for artificial intelligence applications amid growing alarm in Washington over the possible re-export of Nvidia Corp semiconductors to China.

Separately, Tokyo is also strengthening its exports controls by adding to its entity list. The ministry included 42 new entities worldwide to its list of foreign companies and organisations that would be subject to export oversight on any dual-use items. The additions come into effect on Feb 5, it said. A total of around 110 Chinese companies, research institutions and other entities are on the list.

China responded to the new controls by saying they could impact the security and stability of supply chains and affect normal commercial exchanges between enterprises. Beijing hopes Japan will make sure the measures don’t hinder the economic and trade development between the two countries, according to a statement from the Ministry of Commerce in Beijing.

China has embarked on a diplomatic charm offensive with US allies and partners in recent months. Some foreign policy analysts link the shift to a desire by China for stability considering the change of leadership in the US.

China’s Foreign Minister Wang Yi has informally invited Japanese Prime Minister Shigeru Ishiba to attend the opening ceremony of the Asian Winter Games in the northeastern Chinese city of Harbin in early February, Kyodo News reported Friday.

Diplomatic sources cited in the report played down the likelihood of the trip happening however, pointing out that the Japanese government is trying to organise a meeting between Ishiba and US President Donald Trump at around the same time.

Japanese Foreign Minister Takeshi Iwaya met his Chinese counterpart Wang and Premier Li Qiang in Beijing late last year. The two sides agreed to introduce more measures to promote tourism between the countries, the Chinese government said in a statement and also affirmed the importance of deepening communication on security, according to Japan’s statement.

Japanese companies have benefitted greatly from the increased demand from China in recent years for machines to make semiconductors, with sales hitting a record last year. It’s unclear how the tighter controls will affect that, but the administration of former US President Joe Biden had been pushing Japan and the Netherlands for years to make it more difficult to sell these high-tech goods to Chinese companies.

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