Sino-Japanese Relations Deteriorate Following Takaichi’s Comments on Taiwan

Key Takeaways:

• Sino-Japanese tensions have surged after Takaichi’s remarks on possible military involvement in a Taiwan crisis.

• Beijing has escalated pressure across multiple fronts by issuing travel warnings, launching coast guard patrols near the Senkaku Islands, increasing military activity around Taiwan, and reinstating a seafood import ban.

• Takaichi has adopted an unusually assertive stance toward China compared with her predecessors, while simultaneously pursuing closer security ties with South Korea to address shared regional threats.

• China could escalate to more disruptive measures, such as rare earth export curbs or heightened activity around the Senkaku Islands, raising the risk of a full-scale trade confrontation.

• China’s backlash reinforces Japan’s concerns and could push Tokyo closer to Taipei, strengthening Taiwan’s security calculus at a time of uncertainty over Washington’s stance regarding a cross-strait conflict.

• A potential Taiwan conflict carries global economic and operational risks, making it essential for companies to assess exposure and prepare contingencies.

Recent Events: Escalation in East Asia

Sino-Japanese relations have deteriorated in recent weeks following comments made by Japanese Prime Minister Sanae Takaichi while speaking to a parliamentary committee on 07 November 2025. When asked about whether a Chinese naval blockade or other action against Taiwan could be grounds for a Japanese military response, Takaichi answered: “If it involves the use of warships and military actions, it could by all means become a survival-threatening situation”. Takaichi, who later refused to retract her remarks, is a longtime supporter of Taiwan who considers China to pose a growing threat. Amid rising tensions, she has pledged to boost Japan’s defence spending, reaching an annual target of 2% of gross domestic product (GDP) by March 2026, months ahead of schedule.

Unsurprisingly, Takaichi’s comments sparked backlash from Beijing, which considers Taiwan to be a breakaway province that must return to mainland control as outlined by the One China principle. In one noteworthy escalation in rhetoric, China’s consul general in Osaka remarked: “The dirty head that sticks itself out must be cut off”, prompting a formal protest from Tokyo. Beijing then targeted Japan’s tourism industry by issuing a notification advising against travel to the country, causing shares in Japanese tourism and retail firms to fall sharply. Then, on 16 November 2025, a fleet of Chinese coast guard ships sailed through the waters of Japan’s Senkaku Islands as part of a so-called “rights enforcement patrol”. Although the islands are administered by Japan, Beijing also claims them. On the same day, Taiwan’s defence ministry confirmed that it had detected 30 Chinese military aircraft and seven navy ships operating around the island over the previous 24 hours. Two days later, on 18 November 2025, a meeting between diplomats from both countries met in Beijing for talks. The negotiations worsened the situation as a result of Senior Chinese Official Liu Jinsong deciding to wear a five-buttoned collarless suit associated with the rebellion of Chinese students against Japanese imperialism in 1919. Japanese media labelled the choice a “symbol of defiance”.

Several days later, on 19 November 2025, China announced that it was reimposing a ban on Japanese seafood imports just a few weeks after lifting restrictions that were imposed in 2023 due to the release of treated radioactive water from Japan’s crippled Fukushima nuclear plant into the sea. Then, on 21 November 2025, China addressed the United Nations, declaring that: “If Japan dares to attempt an armed intervention in the cross-strait situation, it would be an act of aggression”.

Despite growing pressure from China, Japanese officials are refusing to back down. On 23 November 2025, Japanese Defence Minister Shinjiro Koizumi travelled to the military base on the southern Japanese island of Yonaguni and reaffirmed his country’s intention to proceed with plans to deploy medium-range anti-aircraft missiles at the outpost. Such was the extent of the rising diplomatic tensions, US President Donald Trump, relishing his role as a mediator, held talks with Chinese President Xi Jinping, before speaking with Takaichi on a phone call. China has stepped up its efforts to set the narrative by portraying itself as the guarantor of the post-World War II global order, while framing Taiwan and its defenders as challengers. Following the phone call between Trump and Xi, a statement from Beijing emphasised that, with the two countries having “fought side by side against fascism and militarism”, they should now “work together to safeguard the achievements of the victory in World War II”.

A Break From Tradition: Japan’s Foreign Policy Under Takaichi

Takaichi’s comments and actions demonstrate the strongest stance on Taiwan of any Japanese leader since World War II. While her predecessors have expressed concern, they have refrained from publicly stating how Japan would respond. Considering Beijing’s robust response, it is clear that standing against China’s interests will incur consequences. While previous leaders have chosen pragmatism and economic stability, Takaichi appears to be prioritising what she sees as the greater imperative of confronting China’s increasingly assertive posture.

Beyond China, there have also been indications that Japan is interested in building stronger ties with South Korea. Bilateral relations have fluctuated according to who is in power over the years and historical grievances have often proven to be problematic. However, South Korean President Lee Jae-myung was one of the first world leaders to congratulate Takaichi on becoming prime minister. She then reciprocated by highlighting South Korea as an “important neighbour”. It will be in both countries’ interests to set aside their differences and prioritise shared regional challenges. With Takaichi also acknowledging the threats posed by Russia and North Korea, Tokyo and Seoul have further grounds for defence cooperation.

The Worst May Be Yet To Come

China and Japan are major economic partners with significant bilateral trade. China has been Japan's largest trading partner since 2005, with total trade exceeding $308 billion in 2024, making it a critical market for Japanese exports and a key source of Japanese imports. As such, the measures taken by Beijing thus far are relatively minor. With no indication of Takaichi withdrawing her remarks, China could choose to escalate the situation further. Examples of more serious retaliatory actions include restrictions on exports of rare earth metals and intensified maritime activity around the Senkaku Islands. The situation could deteriorate into a trade war.

What Does This Mean for Taiwan?

The irony of China lashing out in response to Takaichi’s comments is that doing so validates Tokyo’s fears. There are only two possible outcomes. Either there will be a rapprochement and an improvement in relations, or the situation will remain tense and potentially escalate further. With little sign of Takaichi backing down, the second option appears more likely. For Taipei, the prospect of Japan adopting a more anti-China stance will be welcome. Given the specific nature of Takaichi’s comments regarding Taiwan’s national security, the potential for Japanese intervention in the event of a Chinese invasion strengthens the island’s security umbrella. This is because the prospect potentially increases the risks of undertaking such an action for Beijing. Additionally, with uncertainty surrounding the Trump administration's position and potential actions (or inaction) in the event of a cross-strait conflict, now is an especially important time for bolstered ties between Tokyo and Taipei. While the Biden Administration pledged to militarily intervene, Trump has declined to answer such questions. Strengthening ties with regional states that share similar security concerns regarding China should become an increasingly important element of Taiwan’s foreign policy.

Business Implications

With a potential conflict destined to have global implications, how to respond in such a scenario has been a subject of intense debate among countries, including the US, Japan, the Philippines, and South Korea, among others. While there is no indication that an attack is imminent, reports indicate that Chinese President Xi Jinping has ordered the People’s Liberation Army to be ready for an invasion by 2027. It is therefore crucial for companies to assess their risk profile in the context of a conflict breaking out and develop contingency plans. With China being the world’s second-largest economy and any conflict likely to involve the US (the largest economy) in some role, business implications will extend far beyond the Asia-Pacific. Risks include severe supply chain disruption, sanctions, financial market volatility, maritime and airspace closures, and cyberattacks. Global SA’s Asia-Pacific desk closely follows cross-strait relations. For stakeholders requiring an enhanced understanding, Global SA’s scenario planning service would be a pertinent solution.