Japan's High-Technology Trade with China and Its Export Control

Article excerpt

While Japanese business interests support the export of high-technology items and the transfer of technology from Japan to China, these economically motivated actions may have direct and indirect impacts on Japan's national security. First, the transfer of dual-use technology to China may directly help China's military buildup. Second, high-tech exports and technology transfers may have an indirect effect by eroding Japan's technological advantages vis-a-vis China. In this article I place these concerns into a historical context and analyze the current challenges to Japan's export control policies. I offer an overview of the Japan-China trade relationship, with a special focus on high-tech trade. I then discuss changes in Japan's export controls regarding China, based on heightened security concerns. Evidence indicates that the Japanese government is ill equipped to deal with "technology leakage," which is accelerating the erosion of Japan's technological supremacy and is not covered by its current export control regime. KEYWORDS: export control, Japan, China, high technology, dual-use technology, technology transfer, technology leakage

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WITH THE ECONOMIC AND MILITARY RISE OF CHINA AND THE TENSIONS with China caused by territorial disputes over the Senkaku/Diaoyu Islands, Japan faces a serious dilemma. Business interests support the export of high-technology items and the transfer of technology to China. For example, in 2009, China became Japan's largest export destination, taking over that position from the United States. Currently, more than half of Japan's exports to China consist of machinery, including highly sophisticated industrial machinery that supports China's manufacturing. In addition, nearly 23,000 subsidiaries of Japanese companies operated in China at the end of 2011. But such economically motivated actions may have direct and indirect impacts on Japan's national security. First, the transfer of dual-use technology to China may help China's military buildup. Second, high-tech exports and technology transfers may lead to the erosion of Japan's technological advantages vis-a-vis China.

Arguably, Japan's economic and technological supremacy have been the basis for a sound bilateral relationship between Japan and China. China sees Japan as an indispensable source of capital investment and advanced technology, which China needs as it modernizes. Although the Chinese were occasionally offended by Japan's treatment of historical issues, China has had good reason to maintain a sound relationship with Japan. With the wane of Japan's economic and technological supremacy, however, China's motivation to refrain from outright confrontation with Japan has diminished. It is not a coincidence that Sino-Japanese relations have deteriorated since 2010, the first year that China's GDP exceeded that of Japan.

These concerns have once again triggered debate on Japan's export control policies. Japan joined its Western allies in exercising restrictions on its exports to the Eastern bloc, including China, in the 1950s. After the end of the Cold War, Japan joined some international export control regimes that aim to prevent the proliferation of weapons of mass destruction, such as missiles and nuclear and chemical weapons. Japan's commitment to these export control regimes, however, was mainly driven by (1) a desire to maintain good economic relationships with its allies and (2) a national commitment to be a "peace-seeking nation" (heiwa kokka) rather than by its own security concerns. It is perceived, perhaps without serious examination, that Japan's exports and technology transfer to China have made little contribution to Chinese military modernization. What is of more concern in Japan are the ongoing "technology leakages" through formal and informal channels that undermine Japan's technological supremacy, but are out of the reach of the current export control regime. The present export controls seem to be ill-suited to cope with the challenges to Japan's national security caused by China's rise. …