Beijing unleashes economic pressure on Japan over escalating Taiwan dispute

Japan dispatched a senior diplomat to Beijing Monday to calm a deepening dispute after Prime Minister Sanae Takaichi suggested that Tokyo might respond militarily to a Chinese attack on Taiwan.

Driving the news: Tensions flared after Takaichi told parliament Nov. 7 that a Chinese attack on Taiwan threatening Japan could represent a “survival-threatening situation” for her country. While her wording was consistent under Tokyo’s 2015 security legislation that would permit deployment of military forces, it marked a departure from predecessors who avoided publicly discussing such possibilities. Her comments also came about a week after she met with Chinese President Xi Jinping and agreed to work toward stable bilateral relations.

In response, Beijing demanded Takaichi withdraw her statements. The following day, China’s consul general in Osaka, Xue Jian, posted on social media that “the dirty neck that sticks itself in must be cut off,” prompting Japan to summon China’s ambassador before the post was removed. China then summoned Japan’s ambassador Thursday for the first time in over two years, warned Friday that Japan would suffer a crushing defeat if it intervened over Taiwan, and declined a G20 meeting between Premier Li Qiang and Takaichi this week. Japanese Foreign Ministry official Masaaki Kanai, the senior diplomat, met his counterpart Liu Jinsong in Beijing this Tuesday, though Liu afterward expressed dissatisfaction with the outcome.

Defusing escalation: Taiwan President Lai Ching-te, whom Beijing recently accused of “prostituting himself” to U.S. President Donald Trump, described China as carrying out a “multifaceted attack” on Japan and called for restraint. “I call on the international community to continue paying close attention and I also urge China to exercise restraint and demonstrate the conduct befitting a major power, rather than becoming a troublemaker for regional peace and stability,” he told reporters. Meanwhile, George Glass, the U.S. ambassador to Japan, criticized Xue’s comments and suggested Saturday it was time to move forward, noting that Halloween had passed after the Chinese diplomat called Takaichi an “evil witch.”

Doubling down: China, for its part, continued to retaliate Wednesday and banned all Japanese seafood imports, reversing a June easing of restrictions initially imposed over Fukushima wastewater discharge. Foreign Ministry spokesperson Mao Ning said Japanese seafood would find no market in China and urged Tokyo to withdraw its statements or face more serious countermeasures.

Beijing has also targeted travel. Approximately 500,000 airline tickets to Japan were reportedly canceled between Saturday and Monday, while multiple airlines suspended routes and offered free cancellations through Dec. 31. This disruption could reduce Japan’s GDP by 0.29% if Chinese visitor numbers decline by 25%, matching the drop during the 2012 territorial dispute over the Senkaku Islands, which China calls Diaoyu.

Broader implications: The economic stakes are significant as China is Japan’s largest trading partner with bilateral trade reaching $308 billion, while Chinese tourists comprise nearly one quarter of foreign visitors. Beyond financial impacts, both countries have issued travel warnings: Japan advised its citizens in China to avoid crowded areas, while China’s Ministry of Education told Chinese students in Japan to monitor the security environment closely. The dispute has also disrupted cultural exchanges and triggered military posturing, with four Chinese coast guard vessels entering disputed island waters Sunday and Japan scrambling fighter jets Saturday after a Chinese drone flight near Taiwan.