The China-Japan Situation Just Got Worse…

The China-Japan Situation Just Got Worse…

Tensions between China and Japan just got a lot worse China has already begun damaging Japan’s struggling economy warning its citizens not to visit Japan and freezing imports of Japanese seafood and beef but instead of backing down Japan retaliated its defense minister announced missile deployments on Yonaguni Island just 110 kilometers from Taiwan to defend Taiwan from China Chinese officials blasted the move as extremely dangerous warning that more substantive retaliation is coming next and that Japan’s economy will feel it but here’s what the headlines miss Japan also holds a hidden economic weapon one that could hit China where it hurts the most within days of China issuing a travel warning on November 15th more than 500,000 flight bookings from mainland China to Japan were cancelled and it didn’t stop there Beijing then told airlines to cut flights all the way through March 2026 right across Chinese New Year the peak travel season for Japan this is catastrophic Chinese tourists are its biggest customer base they make up roughly a quarter of all foreign visitors and about 27% of all tourism spending in just the first nine months of 2025 7.49 million Chinese tourists entered Japan so when China shuts that tap off the impact hits immediately Japan’s markets reacted instantly Shiseido a makeup company that relies heavily on Chinese shoppers plunged about 11% Oriental Land which runs Tokyo Disneyland fell 5.8% major department stores dropped between 6 to 11% this was a complete panic fest and tourism isn’t the only pressure point China froze Japanese seafood imports blocked Japanese beef and halted Japanese film releases these aren’t just symbolic moves Japan relies on Chinese demand across many of these sectors Bloomberg estimates the tourism damage alone could cost Japan up to $14.2 billion shaving 0.36% off their GDP that might sound small but it’s actually a lot for an economy that’s already in big trouble in fact Japan’s economy actually shrank 1.8% in the last quarter inflation is currently at 3% and food prices are up 7.6% Japan’s debt highest debt to GDP ratio in the developed world at a whopping 248.7% now cost 192 billion dollars a year just in interest payments Japanese workers are feeling it too wages after accounting for inflation have already dropped for nine straight months the government knows the situation is bad that’s why on November 21st Prime Minister Sanae Takaichi announced $135 billion stimulus package trying to cushion the blow and China isn’t just Japan’s biggest tourism source it’s Japan’s largest trading partner overall we’re talking about hundred and twenty five billion dollars in Japanese exports to China annually this problem is bigger for Japan than most people think yeah they can try to attract tourists from other countries to replace Chinese visitors but it can take years to build up the marketing flight routes and country to country relationships meanwhile businesses are hurting now and political pressure is building now pushing Takaichi to back down and that’s exactly what Beijing wants all their moves are calculated China wants Japanese business leaders voters and opposition politicians to turn against Takaichi to force her to retract her statement to make an example out of Japan because from Beijing’s perspective what she said on November 7th was crossing the red line by declaring that the Chinese invasion of Taiwan would be a survival threatening situation for Japan she effectively signaled that Japan might join a war against China China cannot afford to let that go unpunished if they do nothing it sends a signal to every US ally in the region like the Philippines, South Korea or Australia that standing up to China carries no cost and so Beijing is hitting Japan where it hurts the most the economy but while China’s pressure is landing hard Japan is sitting on something far more dangerous a weapon that could hurt China in ways it absolutely cannot afford it’s something China desperately needs and can’t get anywhere else computer chips are the building blocks of AI smartphones and modern technology and the valuable currency in China’s current tech competition with the US but these chips can’t be made without a set of very specific materials and Japan quietly dominates a lot of them the most important is called the photoresist a special chemical that works like ink to print the tiny circuits on the chip without it you can’t make the chips just four Japanese companies control 70 to 90% of the world’s supply depending on the type so almost every advanced chip China makes still relies on these Japanese chemicals and here’s the critical thing about photoresist it has a short shelf life around six months which means you can’t really hoard and stockpile Chinese chip production depends on constant regular shipments from Japan but Chinese dependency doesn’t stop there Japan also controls more than half of the world’s silicon wafers market these are the blank discs the chips are built on if photoresist is the ink wafers are the paper Japan also dominates ultra pure hydrogen fluoride the cleaning chemical used throughout chip making and produces many of the precision tools chip factories rely on everyday these are not glamorous products but they are the basic ingredients of the modern tech world and China cannot replace them anytime soon now here’s a key thing to understand about Japan’s leverage China’s dependency for making chips has two layers equipment and materials the equipment is the giant chip making machines used to build new factories think of this as ovens in a bakery if you can’t buy new ovens you can still bake bread with the ones you have but you can’t really upgrade your kitchen or open new branches the US Japan and the Netherlands have already restricted selling these machines to China that’s hurting China but they’re working hard to find ways around this restriction but the materials like the photoresist the wafers and the ultra pure chemicals are different in the bakery these are the flour, sugar and butter they get consumed every day once the factory runs out production stops immediately that’s why Japan’s leverage in this domain is so powerful restrict the materials and China’s chip industry is severely threatened and that’s why Japan hasn’t touched the materials yet unlike the chip making equipment ban this isn’t a slow squeeze it’s an attempt to shut down China’s chip production it’s so powerful a weapon that Japan can only use it once and only in the most extreme scenario China knows this and despite all the money it has poured into chips more than $150 billion over the last decade it still can’t escape the dependency China is improving its chip designs its tech companies like Huawei have even found workarounds to train AI models without American tech but chip manufacturing remains the bottleneck China’s domestic production of advanced photoresist is near zero even the older kinds from the 1990s are still mostly imported from Japan China can design more chips but Japan controls whether those chips can actually be manufactured that’s the choke point almost no one talks about and it gives Tokyo enormous leverage but here’s the twist that leverage cuts both ways because if Japan ever uses this economic weapon China has more ways to strike back that could devastate Japan’s entire economy China can escalate its economic pressure far more and if it does Japan pays an enormous price let’s start with what’s at stake about 31,000 Japanese companies operate in China Toyota factories, Uniqlo stores electronics manufacturers entire supply chains built over decades now China’s not going to literally take over these factories that will put Chinese workers out of jobs and scare off every foreign investor but here’s what China can do they can make life miserable for these Japanese companies customs delays can take weeks instead of days there might be sudden safety violations or environmental fines that come out of nowhere as well as endless tax audits and if a company tries to leave China good luck getting its money out of the country and sometimes they make it personal in 2023 China arrested a top executive from Astellas Pharma a big Japanese drug company and locked him up for 3.5 years on spying charges that sent shock waves through every Japanese company in China because China showed them they can arrest their people anytime they wanted then there’s what Japan depends on from China the most important of all is that they still get 58% of its rare earth minerals from China rare earths are special materials you need to make pretty much any modern electronic device your smartphone, electric cars wind turbines, military weapons they all need rare earths they are hard to mine and process and China controls 85% of the world’s supply if China stops selling rare earths to Japan it will cripple Japan’s electronics industry and China can put pressure on other Japanese products too remember that Japan exports $125 billion dollars worth of goods to China every year like cars, electronics cosmetics and more we can’t forget the Japan’s economy is already struggling and can’t survive an all out economic war with its biggest trading partner which means for Prime Minister Takaichi using the nuclear option of cutting the chemicals China needs to make computer chips would be political suicide because everyone’s already putting pressure on her to back down starting with Japan’s business world the chairman of the Keidanren Japan’s most powerful business lobby met with Takaichi and told reporters political stability is a prerequisite for economic exchange and they urged the government to pursue constructive dialogue with China to resolve tensions what he really meant was simple stop provoking China or Japanese companies will pay the price the heads of Japan’s largest business groups were there too all delivering the same warning to Takaichi these are the same people behind companies like Toyota, Sony and Uniqlo they’re now pressuring the government to cool things down with China before the damage gets worse then of course you have the political opposition coming after Takaichi the leader of the main opposition party the CDPJ is hammering her in parliament demanding she explain the damage her Taiwan comments have caused Takaichi is getting squeezed from all sides if she resorted to the chip materials ban over Taiwan the business world would turn on her completely and the opposition in parliament would destroy her not to mention the regular people who would suffer the most as the economy tanks couldn’t stand for it that’s why she’s keeping that option in reserve it’s not for responding to seafood or tourism bans it’s for extreme scenarios only like if China actually invaded Taiwan but here’s where China has to be careful too if they go too far with their economic pressure they might push Takaichi into a corner where she has no choice at that point all their political pressure will flip around she would have to hit back hard even if it means using their hidden weapon the whole situation is like a very intricate and high stakes game of chess one wrong move and you might lose because neither leader can easily back down if Takaichi took back what she said about Taiwan after all this pressure she would look like she gave in to China’s bullying if Xi Jinping backs down publicly after coming on this strong he would look weak at home this standoff is a real test of power in Asia right now can China pressure a major US ally to back down on Taiwan or will Japan hold firm despite the pain proving that China’s economic leverage has limits if China succeeds it sends a message to every other US ally in the region step out of line on Taiwan and your economy pays and for Japan’s hidden chip manufacturing leverage that isn’t just an economic tool it’s the question at the heart of China’s future whether it can ever become technologically independent or remain dependent on the very countries it sees as adversaries because this tech race not the missiles, not the diplomatic headlines is what will ultimately shape the balance of power in the world but there’s one place watching this crisis more closely than anywhere else Taiwan because everything we just talked about directly shapes what happens to the island which raises the question we know about China’s undying resolve to reunify with Taiwan whether by force or otherwise but what are China’s actual plans to take Taiwan because it’s not what most people think I break down the most likely scenario and why it’s already starting in this video right here

China and Japan are locked in an escalating economic war that could reshape Asia’s balance of power. After Japanese Prime Minister Takaichi’s declaration that a Chinese invasion of Taiwan would constitute a survival threatening situation for Japan, China retaliated with devastating economic pressure—banning tourism, blocking seafood and beef imports, and triggering a stock market panic that wiped billions off Japanese companies. But here’s what the headlines are missing: Japan controls a hidden weapon that could cripple China’s entire semiconductor industry overnight. This video reveals the invisible chokepoint at the heart of China’s tech ambitions, why neither country can afford to fully escalate despite holding devastating leverage over each other, and how this economic standoff—not military conflict—is actually determining who controls Asia’s future. Discover the strategic trap both nations are stuck in, the secret components to its tech rise China desperately needs but can’t replace, and why this quiet economic war matters more than any missile deployment.

Sources list for this video: https://docs.google.com/document/d/10_c6vttiVSI91xKB3QDa-gazD4vpz1RdEvfNcVwXvBk/edit?usp=sharing

Watch this for the most likely way China will invade Taiwan

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0:00 Japan’s hidden economic weapon
0:43 China is damaging Japan’s economy
4:40 China depends on Japan for this…
8:17 China can escalate further to destroy Japan’s economy
12:37 What this crisis means for the world

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Related topics: China Taiwan war, world war 3, Japan rearms, US military bases Japan, Asia Pacific conflict, China vs USA, military news, geopolitical analysis, Taiwan independence, China economy, international relations, China Japan relations