Japan Has Angered Their Largest Trade Partner: Can They Afford Beijing’s Wrath Right Now?

Japan Has Angered Their Largest Trade Partner: Can They Afford Beijing’s Wrath Right Now?

China and Japan are face to face like never before in recent history. One statement from Tokyo has set off alarms in Beijing and what happens next could redraw Asia’s balance of power. I’m Ananya Data. Let’s get started. [Music] Let’s quickly get you up to speed with what has happened so far. Sanitaka was nominated as Japan’s first female prime minister on October 21st. Her hawkish stance in China was well known. But to everyone’s surprise, within 10 days for taking the top seat, she invited Chinese President Xiinping to meet in South Korea. The meeting went well and both leaders agreed to work together. The next 10 days went by quietly and then this happened. If China were to deploy battleships and involve the use of force, I believe this could be deemed a situation threatening Japan’s survival. That was Takayichi’s response to an opposition lawmakaker’s question on under what circumstances a contingency around Taiwan would be a survival threatening situation for Japan. In Tokyo, a survival threatening situation is just a legal way of saying that the military is allowed to use force. And this is the first time a Japanese prime minister has referred to the Taiwan confrontation in those many words. For years, Beijing’s ambition in Taiwan has made Japan very worried because by the looks of it, Japan and China might not seem like neighbors, but they are. mainland China has the sea of Japan, Russia, North Korea and South Korea in between. And the broad East China Sea divides the Nagasaki coast to the Shanghai coast. But the more you zoom in, you realize the southernmost Japanese island is less than 100 kilometers away from Taiwan’s coast. So even though former prime ministers in Tokyo have steered clear of discussing the scenario of Taiwan being attacked, it has definite foreign policy repercussions for Japan. And Takahayi understands that and her direct acknowledgement of the scenario has made Beijing furious. In fact, one of its diplomats even used undiplomatic language against her. He threatened to decapitate anyone who interfered in China’s affairs, Dhaka included. This was China’s council general in Osaka. He has deleted his tweet since and this incident has snowballed into a public fallout with far greater repercussions. First is trade. China is Japan’s largest trading partner. Chinese consumer brands like Sheen have found a foothold in Japan. Even electric car manufacturers like BYD have found their customers in a market cluttered by Japan’s automakers. The spat threatens to damage businesses operating across both economies. And Japan seems to be on the losing end here. Its investment in China and Hong Kong are at record low while Beijing is expanding its footprint in machinery, cars, and chemicals. These uncertainties are confusing the investors who are bracing for what’s to come. The declining stock prices reflect the market concerns over the deterioration of China Japan relations. China is indispensable as it is Japan’s largest trading partner. Yet the Japanese prime minister’s statements seem to have completely ignored the important relations between the two countries. Third is defense. Prime Minister Takayi has made it clear that she wants to expand the Japanese military even though its constitution calls for pacifism, a decision that was taken post World War II. But with changing geopolitics, Takayi has decided to increase her defense spending target to 2% of the GDP. A decision that was lauded by the United States, who is the largest defense partner of Japan. But now that the situation has become quite real between Tokyo and Beijing, Washington has pulled one of its most efficient missile systems, Typhon from one of Japan’s islands. And this is according to South China Morning Post. Under a security treaty, the US is obligated to defend Japan if it is attacked. And with Typhoon capable of launching missiles that could reach far beyond Beijing and Shanghai, Washington couldn’t have risked escalating the situation. That being said, Takayichi is extremely wary of China Russia ties and her country falling victim to US China rivalry. Teach’s remarks prove that the desire among Japan’s right-wing to revive militarism has never gone away. Many political parties in Taiwan are questioning her motives, believing this is an attempt to drag Taiwan into a conflict. Her statements have completely crossed the red line. Now, tourism has also been hit. China has issued a travel advisory against visiting Japan in the near future due to the bilateral spat. According to Japan Tourism Agency, Chinese tourists were the top spenders among all foreign visitors last quarter, accounting for around 27% of total inbound consumption. So first of all, this is a huge loss for us. Additionally, our fixed monthly expenses are about 10 million yen. If this lasts for one or two months, we can manage. But if the situation continues to worsen, it will obviously have a major impact on our business operations and management. Now, Takayi is a prodigy of former Prime Minister Shinszu Abbe who once had famously said, “A Taiwan emergency is a Japanese emergency.” The ongoing row with China is proving to be Takai’s first foreign policy test. She has gone on record to say that she will not budge down from her statement on Taiwan. And Beijing on the other hand is using this to make a case for any other country that plans to challenge its one China policy. So the question now is how far will they go just to make a point. I’m Ananya Data. Thanks for watching. [Applause] [Music]

China and Japan are face to face like never before in recent history. One statement from Tokyo has set off alarms in Beijing – their largest trade partner, and the repercussions are already visible. What happens next could redraw Asia’s balance of power.

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