Thousands of South Koreans protested outside the Japanese embassy in their capital Seoul on Saturday.

They're angry that Japan has downgraded their country's trade status from "preferred" to "normal".

Many of them carried banners saying "Boycott Japan" and "No Abe," referring to Japanese Prime Minister Shinzo Abe.

They now want their government to end a military intelligence-sharing pact with Tokyo.

On Saturday South Korean Prime Minister Lee Nak-Yon said Japan's actions didn't just have economic consequences.

"Japan's successive actions threaten the free trade and economic cooperation framework of not only South Korea and Japan, but the rest of the world. They also disrupt the security cooperation system between the United States, South Korea, and Japan," he said.

Japanese companies now have to apply on a case-by-case basis to export certain goods to South Korea that are classed as sensitive.

That came after Japan tightened control in July on certain technology exports to South Korean companies.

They rely on crucial Japanese parts to produce semiconductors and display screens used in smartphones and TVs, which are key South Korean export products.