TMTPost -- China is pressing Japan not to align with possible further U.S. curbs on semiconductor industry, according to a recent report.

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China has threatened severe economic retaliation against Japan if Tokyo further restricts sales and servicing of chip-making equipment to Chinese firms, Bloomberg reported, citing people familiar with the matter.  Senior Chinese officials have repeatedly expressed that position in recent meetings with their Japanese counterparts, according to the source. It was reported that Japan’s top automaker Toyota Motor Corp. privately tell Japanese officials that Beijing could react to the curbs by cutting Japan's access to minerals required for automotive production.

Toyota’s concerns play a major role in Japanese policymakers’ consideration as the company has invested in a new chip campus being built by Taiwan Semiconductor Manufacturing Co. (TSMC) in Kumamoto, according to the report. Besides Toyota, the report noted concerns of Tokyo Electron Ltd., a well-known supplier of semiconductor equipment that would be affected by any new Japanese export controls, are also part of major consideration for Japanese officials.

Japan started in July 2023 restricting 23 types of equipment, ranging from machines that deposit films on silicon wafers to devices that etch out the microscopic circuits of chips that could have military uses, joining in the U.S. and the Netherlands in restricting sales of key technology to China.

The recent report came as the U.S. has been seeking leverage with allies including Japan to rein in China through access restrictions of advanced semiconductor technology. The U.S. has been pressuring Japan to impose additional restrictions on the ability of firms including Tokyo Electron to sell advanced chipmaking tools to China, and Washington feels confident that it can assuage Tokyo’s concerns and reach an agreement by the end of this year, according to the report.

Another Bloomberg report in July said the Biden administration has told allies that it’s considering using the most severe trade restrictions available if companies such as Japanese firm Tokyo Electron Ltd. and ASML continue giving the country access to advanced semiconductor technology. The U.S. was reported to consider whether to impose the foreign direct product rule, or FDPR, which allows the country to impose controls on foreign-made products that use even the tiniest amount of American technology. The U.S. government is presenting the idea to officials in Tokyo and the Hague as an increasingly likely outcome if the countries don’t tighten their own China measures, according to that report.

China is committed to keeping the global industrial and supply chains secure and stable, and has kept its export control measures just, reasonable and non-discriminatory, Mao Ning, the spokesperson of China’s Foreign Ministry, responded to a question about the latest Bloomberg report at a press Monday. Mao said China firmly rejects actions that certain country has adopted, which have been turning normal economic cooperation and trade into political and security issues, co-opting other countries to join the tech blockade against China. Mao suggested what behind such actions is just the attempt to perpetuate the country’s supremacy. The spokesperson called on relevant countries to uphold market principles and the spirit of contract, say no to economic coercion, and jointly uphold the stability of the global industrial and supply chains.

A Toyota spokesperson said earlier this week the company was constantly considering the best procurement strategies, not limited to mineral resources, to meet the needs of its customers.