Tokyo has displayed admirable restraint in the face of Beijing’s outbursts over the past two months.
When China signaled a 40 percent cut in tourists to Japan, Japanese Prime Minister Sanae Takaichi could have responded — perhaps by rolling back publicly unpopular relaxed visa requirements for Chinese travelers, agreed upon only in 2024. She demurred. When Chinese aircraft locked fire-control radar on Japanese jets, she did not reciprocate; instead, she sought to talk things over via a hotline established in 2023. Beijing did not pick up.
In the face of the last week’s implementation of export controls on so-called dual-use items that could include rare earths, it is tempting to say that Takaichi should respond in kind. China is demanding that she retract comments made in November last year on the potential for the country to be dragged into a theoretical Chinese invasion of Taiwan. Japan might be the junior trade partner, but it is not without options; it could impose like-for-like curbs of on semiconductor inputs or equipment.
Illustration: Yusha
However, there is no need to get emotional. Instead, Takaichi should keep on the path the country has been on for more than 15 years: Keep calm and carry on reducing dependency on Beijing.
My colleague David Fickling has already outlined that there are few countries better equipped to weather a crackdown on rare-earth exports than Japan. In 2010, similar curbs were introduced after the arrest of a trawler captain who crashed into a Japan Coast Guard vessel. They spooked Tokyo badly, and officials worked to reduce reliance on Chinese imports from 90 percent at the time to less than 60 percent today. That is still too high, but Japan has significant stockpiles built up during more cooperative times. It now also imports Australian minerals, processed in Malaysia.
It is not the only way Tokyo has sought to lessen its exposure over the years. Since at least 2005, when anti-Japanese riots erupted across China, it has sought to be less dependent on China as a manufacturing base. It developed the “China Plus One” strategy that encouraged companies to diversify and build factories in Southeast Asia, although it took time for them to come around.
The semiconductor shortage during the COVID-19 pandemic, which particularly affected the auto industry, was the impetus behind Rapidus Corp, the ambitious attempt to rebuild Japan’s chip-manufacturing prowess. Billions of dollars have also been extended to the likes of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co to bring production to Japan’s shores. In the wake of the pandemic, the Japanese government allocated billions to firms to move production out of China, although the ultimate success of the program has been questioned.
The country is also avoiding becoming further reliant on Beijing. While risking the ire of environmentalists, one key reason Japan is reluctant to further increase its solar capacity is the control that China exerts. Instead of, as Takaichi put it last year, “covering our beautiful country with foreign-made solar panels,” she has called for developing perovskite cells, a technology that can use indigenous materials that Japan hopes to commercialize. Similar concerns hang over a reluctance to fully embrace electric vehicles; Chinese dominance of battery technology risks another pressure point.
The Taiwan dispute is a reminder that there is more to do. Japan must stop hoping that one day its neighbor would outgrow its tendency to weaponize trade and economic interdependence. Having endured these steps for over two decades, it is clear that this is a feature, not a bug of Chinese power projection. Expecting otherwise is as naive as the turn-of-the-millennium belief that China would inevitably transition to Western democracy once it got a taste of its wealth.
For manufacturing, that means doubling down on efforts to unplug companies from Chinese entanglement. For those that do not cooperate, in addition to the carrot of subsidies, officials in Tokyo might have to brandish a stick. The tourism sector is so far holding up, with overall visitor numbers higher than 2024, but it too must diversify. Chinese tourists might be the highest-spending on average, but their continued patronage is questionable.
Ultimately, what is needed is foresight. It should not have required the pandemic to understand the danger of depending on Beijing for masks and protective equipment. Nor should it take the latest export curbs to understand that Chinese President Xi Jinping (習近平) would play this card as he sees fit. One pressing need for Tokyo is to reduce the reliance on Chinese inputs for pharmaceuticals and antibiotics.
The goal is not to bring trade with Beijing down to zero — that is impossible. It is to dull Xi’s ability to weaponize it when he wants something — and to have alternatives ready to lessen vulnerability to any single country. Tokyo is not alone; there are an increasing number of neighbors that have been buffeted by similar maneuvers.
This is the third time this decade that Japanese firms have been forced to navigate the tides of unpredictable Chinese policy, after the pandemic-era lockdowns and complaints over the release of treated water from the Fukushima Dai-ichi nuclear power plant. There is no reason to expect that pattern to change, even if relations might temporarily improve. Takaichi can continue to wait this moment out — and keep working to ensure the next one matters less.
Gearoid Reidy is a Bloomberg Opinion columnist covering Japan and the Koreas. He previously led the breaking news team in North Asia, and was the Tokyo deputy bureau chief. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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