China Strikes Back: Economic & Strategic Moves Follow Japan PM’s Taiwan Remarks

Beijing flexes muscle after Tokyo's Taiwan comments—markets brace for ripple effects.

Geopolitical tensions spike as China retaliates with trade maneuvers and strategic posturing.

Investors eye Asian markets nervously—because nothing says 'stable returns' like a brewing diplomatic storm.

Japan’s Prime Minister’s comments threaten China-Japan relations

The New York Times reported that China’s consul general in Osaka, Xue Jian, threatened on social media to cut off Ms. Takaichi’s “filthy head” but later deleted the post.

The Prime Minister’s comments earlier this month noted that military force imposed on Taiwan could be considered a “survival-threatening” situation, providing a framework for military deployment to support its allies. China claims Taiwan is part of its territory and has claimed to reunify it with the mainland as per the Chinese constitution. 

Bloomberg reported that the Chinese embassy based in Tokyo issued a travel advisory cautioning its citizens against traveling to Japan, citing “serious safety risks.”

On Sunday, the Chinese government also launched four armed China Coast Guard ships to patrol the Diaoyu and Senkaku islands. Japan controls the Senkaku Islands, but China also claims them as part of its territory.

China’s Education Ministry also cautioned Chinese students about their study arrangements in Japan, citing safety risks. The travel advisory poses a threat to the millions of tourists visiting Japan from China.

Last year, Japan welcomed nearly 7 million Chinese travelers, accounting for approximately one-quarter of the country’s total visitors. The advisory sent a Ripple effect on Japan’s tourism sector, which saw shares in travel-related stocks plummet.

According to an estimate by Takahide Kiuchi, an executive economist at Nomura Research Institute and a former member of the Bank of Japan’s board, the travel advisory on Japan could reduce the country’s economy by as much as 2.2 trillion yen, or approximately $14.2 billion, equivalent to 0.36% of its GDP.

Escalations end brief diplomatic ties between China and Japan

The escalations ended brief diplomatic bilateral ties between the two countries just weeks after Takaichi met Chinese President Xi Jinping in a bid to improve relations between the two countries. The unfolding conflict is a significant blow to Japan, as China is its leading trading partner.

Japan’s local news outlet NHK reported that a senior Japanese Foreign Ministry official, Kanai Masaaki, arrived in China today. The official is expected to meet Chinese officials, including the director-general of the Department of Asian Affairs of the Foreign Ministry, Liu Jinsong, to explain that Takaichi’s remark about a possible Taiwan emergency did not differ from Japan’s position on Taiwan.

The standoff is Takaichi’s first major foreign policy hurdle since she assumed office back in October. 

China is known for its economic retaliation against countries that challenge its political and diplomatic views. In April, China heightened tensions with the United States by warning tourists to assess the risks of visiting the Western country amid deteriorating economic and trade relations between the two nations.

Australia also suffered the same fate in 2020 when the Chinese officials issued a starker advisory to citizens visiting Australia, citing increased racism because of the COVID-19 pandemic. Coincidentally, the Australian government led calls that investigated the origins of the virus at the time the advisory was issued.

The country also deployed trade weapons against South Korea after the latter advanced its missile defense system in 2017. China suspended package tours to South Korea, resulting in a 0.4 percentage point decline in the country’s GDP growth.

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