As the Takaichi administration marks one year since its formation, Japan-China relations remain strained, and the security implications surrounding a Taiwan contingency are spilling over into economic and people-to-people exchanges. A leaders’ meeting at November’s APEC meeting could become a focal point. Attention is focused on the latest developments and their impact on corporate activity.
As the Takaichi administration marks one year since its formation, the established framework of maintaining economic interdependence while continuing dialogue between Japan and China has become increasingly difficult, and disputes over security in the Taiwan Strait, the supply of critical minerals and the Japan-US alliance have come to the fore. Security concerns are also spilling over into economic and people-to-people exchanges, bringing the relationship to a stage at which they are influencing Japanese companies’ management decisions and diplomatic strategy.
A major turning point came in November 2025, when Prime Minister Takaichi (高市) expressed in Diet testimony the view that a contingency in Taiwan could constitute a situation threatening Japan’s survival. China reacted strongly and demanded that the remarks be retracted. Japan places importance on peace and stability in the Taiwan Strait and says that whether the remarks are retracted could affect the direction of Japan-China relations.
The repercussions extend beyond diplomacy and security, affecting corporate activity through calls concerning travel to Japan, tighter controls on exports of dual-use goods to Japan, and supply concerns over critical minerals such as rare earths. They are also spreading across the supply chain as companies diversify procurement sources, revise production plans and build up inventories.
The focus going forward is whether a leaders’ meeting can be held at the Shenzhen APEC meeting in November and how dialogue and cooperation develop thereafter. Difficult policy management will be required to maintain dialogue while securing deterrence and managing economic dependence.