(Nov 21): Japan will likely lean more heavily on the US and its allies if China escalates economic pressure, as Tokyo seeks to navigate the fallout from Prime Minister Sanae Takaichi’s remarks linking Taiwan’s security to its own.
China’s swift retaliation — warning tourists against visiting Japan, suspending seafood imports and freezing film approvals — hints at the economic leverage it holds over Tokyo and how limited Japan’s room for manoeuvre remains.
For now, Tokyo has stuck to its usual playbook: avoiding tit-for-tat retaliation, keeping communication channels open and hoping tensions cool over time. But the longer the standoff continues, the more Japan is likely to coordinate closely with Washington and like-minded partners.
“The Japan side is still looking for an off-ramp rather than seeking to escalate,” said Kurt Tong, a former senior US diplomat in Asia who’s now a managing partner at The Asia Group. “That could change if the China side keeps applying deeper pressure.”
The US has signalled its support, with ambassador George Glass saying Washington firmly stands with Tokyo, echoing President Donald Trump’s earlier offer to give Takaichi “anything”. Glass called Beijing’s reaction “outrageous” and said the US-Japan alliance remains focused on ensuring peace in the region.
See also: China asks airlines to extend Japan flight cuts until March next year — Bloomberg
One potential area of cooperation is technology. Japan could consider tightening export controls on semiconductor manufacturing equipment — a key sector that made up more than 10% of Japan’s exports to China last year. But any such move would have to carefully weigh the potential hit to Japan’s own economy.
Japan holds leverage in chipmaking technology, where its firms supply critical tools and materials for both advanced and mature semiconductors. But Tokyo has less control over companies than Beijing, and many with heavy exposure to China may hesitate to comply without clear government enforcement, said Masahiro Wakasugi, senior technology analyst at Bloomberg Intelligence.
“The picture is very different if Japan can get US help,” Wakasugi said. “Together they control some of the world’s key chipmaking supplies. Together they can cause more serious problems for China’s chip sector.”
See also: Taiwan pleased Trump didn’t mention island in readout of Xi call
Beijing’s measures follow Takaichi’s suggestion this month that Tokyo could intervene militarily in any Chinese attack on Taiwan. China has repeatedly demanded she retract her comments, but with her approval ratings high, Takaichi has little reason to back down. If Beijing follows through on its threats of more punishment, the risk of escalation grows with no clear exit in sight.
When asked on Friday if she would retract the comment that angered Beijing, Takaichi reiterated Tokyo’s position, saying the government would assess any threat to Japan’s existence based on all available information and the specific circumstances at the time.
“Any retraction — requested by Beijing — would be seen by her supporters as political weakness and risk alienating right-wing conservatives, her main source of backing. Economic retaliation from China, such as travel advisories, could work in her favor. A decline in the number of tourists could even ease labor shortages and damp inflationary pressure in the services sector,” says Taro Kimura, economist at Bloomberg Economics
The risk in Japan’s strategy of trying to ride out the tension is that China keeps ratcheting it up. That could eventually include curbs on rare earth exports — a tactic Beijing first used during a territorial dispute with Tokyo more than a decade ago. Since then, China has shown it can inflict similar pain on the US and Europe, given the world’s growing reliance on Chinese supplies.
After the 2010 embargo, Japan moved to diversify its sources of rare earths. It provided financial backing to Lynas Rare Earths Ltd — now the single biggest source of mined supply outside China — looked for alternative resources including recycling, and built up stockpiles to cushion against supply shocks.
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“If Beijing tightens supplies, then Tokyo would likely appeal to Washington for its assistance or work to procure critical mineral supplies through third countries,” said Jeremy Chan, a senior analyst at Eurasia Group and former US diplomat in China and Japan.
Even so, Japan remains exposed. Its dependence on Chinese rare earths has climbed back to around 70% this decade, up from about 60% earlier, as demand for electric vehicles and renewable energy surges, according to Tadanori Sasaki, senior research director at the Institute of Energy Economics, Japan.
Rare-earth magnets are central to everything from electric motors to consumer electronics. A looming shortage after China imposed export controls earlier this year was one factor that pushed Trump towarda a rapprochement with President Xi Jinping.
Neither Japanese officials nor companies disclose details about their rare earth stockpiles, but analysts say Beijing is unlikely to go as far as a full ban this time. With a recent diplomatic thaw and a fragile trade truce with the US in place, China would want to avoid triggering instability.
Still, Beijing has room to make life difficult. “China is unlikely to ban rare earth shipments to Japan outright, but it might use administrative measures such as licensing delays or tighter export paperwork,” said Bonnie Glaser, managing director of the Indo-Pacific Program at the German Marshall Fund.
If the dispute drags on, Japan is likely to seek broader diplomatic support. Eurasia’s Chan said Tokyo would turn to its Group of Seven partners for help in criticising China’s actions or pushing for a diplomatic solution. At the same time, Japan would probably step up direct outreach to Beijing, he said, adding that Tokyo remains deeply reluctant to retaliate against Chinese measures.
US State Department deputy spokesperson Tommy Pigott said on Thursday that Washington’s commitment to Japan’s defence — including the Japan-administered Senkaku Islands, which China also claims — remains unwavering.
Still, questions persist over the reliability of the US as a security partner under the Trump administration. “If I was the leader of Japan or South Korea or wherever else, I’d be feeling a lot less confident about American security guarantees,” said Joe Mazur, a senior analyst at consultancy Trivium China.
The dispute highlights Japan’s need to further reduce its reliance on China, which increasingly wields economic pressure over diplomatic disputes, extending beyond rare earths to sectors like tourism, said Hei Seki, a Japan Innovation Party lawmaker and member of Takaichi’s ruling coalition.
Chinese tourists remain a vital part of Japan’s economy. As of October, about 8.2 million travellers had arrived from China this year, the biggest group among foreign tourists.
Seki, who was born and raised in China before becoming a Japanese citizen in 2007 and is now barred from entering the country, said Beijing often blurs the line between politics and commerce to pressure Japan. Doing business with China, he added, has become more unpredictable.
“When it comes to what to do about it, the conclusion is that we have no choice but to accept a certain degree of economic decoupling,” he added.
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