China detains two Japanese nationals suspected of smuggling banned goods

TOKYO — China has detained two Japanese nationals suspected of smuggling banned goods, Tokyo said on Wednesday (June 24) after media reported that an employee of a major Japanese electronics firm was among those arrested in a case involving rare earth-related exports.

The arrests could further strain relations between Asia's top two economies which have plunged since comments by Japan's leader Sanae Takaichi on Taiwan sparked a major dispute with Beijing late last year.

China notified Tokyo that a Japanese national had been detained in the port city of Dalian on May 18 on suspicion of violating a law against smuggling goods prohibited from import or export, Japan's top government spokesperson Minoru Kihara told a news briefing on Wednesday.

Another Japanese national was detained for the same reason on May 25, Kihara added.

"The (Japanese government) will continue taking appropriate steps to protect Japanese citizens, while keeping contact with the detained individuals and relevant parties," Kihara said.

China's foreign ministry did not immediately respond to a request for comment.

One of the arrests relates to allegations of attempts to export products containing rare earths, which are widely restricted in China, Kyodo news agency and the Asahi newspaper reported on Wednesday, citing sources familiar with the matter.

Kihara did not specify what the goods involved in the arrest were.

China dominates the global market for rare earths, vital in making everything from electric cars to weapons. 

It has also been tightening its grip on the once-unruly sector in recent years, turning it into a powerful source of diplomatic leverage.

China's spy agency said last year foreign agents were trying to steal rare earths and it would crackdown on attempts at smuggling.

Since the feud with Japan erupted in November, China has choked off supplies of certain key minerals to Tokyo and restricted shipments of so-called dual-use items that can be used for military purposes, including rare earths.

It has also ordered its citizens not to travel to Japan and cancelled a swathe of trade and cultural events.

Arrests of Japanese nationals in China have become a recurring issue since Beijing enacted sweeping anti-espionage laws in 2014, including the high-profile case of an employee of drugmaker Astellas Pharma sentenced to three-and-a-half years in prison last year.

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