China-Japan Trade Severely Damaged by Taiwan Comments; Beijing Demands Retraction Amid Escalating Tensions and Economic Fallout

China Declares "Severe Damage" to Japan Trade Over Taiwan Remarks

Trade relations between China and Japan have been severely impacted, the Chinese Commerce Ministry declared on November 20, holding Japan's Prime Minister Sanae Takaichi responsible for her recent comments concerning Taiwan. Beijing has urgently called for a retraction of her remarks, warning of dire consequences should Tokyo persist in its current stance.

The Spark: Taiwan Comments Ignite Diplomatic Spat

The diplomatic rift widened after Prime Minister Takaichi stated in parliament on November 7 that a hypothetical Chinese military action against democratically-governed Taiwan could provoke a military response from Japan. This assertion has been deemed a fundamental affront by Beijing, fundamentally undermining the political foundation of bilateral relations.

Beijing's Strong Rebuke and Warning

Ms. He Yongqian, a spokesperson for the Chinese Commerce Ministry, asserted during a regular press briefing that "Prime Minister Takaichi's openly erroneous remarks concerning Taiwan have fundamentally undermined the political foundation of China-Japan relations and severely damaged bilateral economic and trade exchanges." She further cautioned, "Should the Japanese side persist on its course of action and continue down the wrong path, China will resolutely take the measures required and all consequences shall be borne by Japan."

In response, a spokesperson for Prime Minister Takaichi clarified that her comments on Taiwan do not signify a shift in Japan's existing policy.

High Economic Stakes for Japan

The economic implications of this dispute are substantial for Japan. China stands as Japan’s second-largest export market, trailing only the United States, having absorbed approximately US$125 billion worth of Japanese goods in 2024. Key exports include industrial equipment, semiconductors, and automobiles. Finding alternative markets swiftly could prove challenging for Tokyo, as exemplified by South Korea, its third-largest export destination, which imported only US$46 billion in the same year.

The Chinese ministry spokesperson, Ms. He, refrained from confirming reports regarding a potential comprehensive ban on Japanese seafood imports, stating she had "no information to provide at present." However, China's track record includes using trade as a coercive tool against its neighbor.

History of Trade Coercion

In 2023, Beijing imposed a blanket ban on all Japanese seafood imports following Tokyo’s decision to release treated radioactive water from the Fukushima nuclear plant into the Pacific. This ban was implemented despite the International Atomic Energy Agency (IAEA), a UN body, concluding that the discharge was safe. Earlier, in 2010, China briefly halted rare earth exports to Japan for about seven weeks after a dispute over a Chinese fishing captain detained near the Senkaku Islands (claimed by Beijing as the Diaoyu Islands).

International Support and Business Concerns

Highlighting international support for Japan, US Ambassador to Japan George Glass affirmed via an X post on November 20, "Coercion is a hard habit to break for Beijing. But just as the United States stood by Japan during China’s last unwarranted ban on Japanese seafood, we will be there for our ally again this time."

Japanese seafood businesses, which had just begun to see a glimmer of hope for renewed shipments after the previous bans, now face renewed uncertainty. Kazuya Yamazaki, president of Sanwa Fisheries in Hokkaido, a company that previously exported 200 metric tonnes of scallops to China annually, expressed frustration: "What’s frustrating is that things that were moving forward suddenly went backwards. And given the nature of the issue, this might well happen again." His firm was among nearly 700 that had applied for export permits.

No Easy Resolution in Sight

Analysts and Japanese officials concede there is no simple resolution. Joseph Kraft, a financial and political analyst at Rorschach Advisory in Tokyo, stated, "There is no immediate off-ramp, unless Takaichi retracts her comments which she will not do as it will be political suicide. China has elevated the situation to a level where they can not easily back down." He suggested that the only viable strategy might be to "play the long game and wait it out till China begins feeling the pain as well."

Further underscoring the diplomatic chill, a Chinese foreign ministry spokesperson confirmed on November 20 that there were no plans for Premier Li Qiang to meet with Prime Minister Takaichi on the sidelines of the upcoming G20 summit in South Africa.