Beijing, Nov. 7 (Jiji Press)–Japan and China have moved toward selective dependence in the field of economy since Japanese Prime Minister Sanae Takaichi’s parliamentary remarks on a possible Taiwan contingency infuriated Beijing a year ago. On Nov. 7, 2025, Takaichi said at a meeting of the Budget Committee of the House of Representatives, the lower chamber of Japan’s parliament, that a Taiwan contingency could constitute a so-called survival-threatening situation for Japan, in which the country can exercise its right to collective self-defense. This angered China, which in response imposed export restrictions and other measures against Japan. Following the remarks, the two sides have been reconsidering their economic interdependence from the viewpoint of economic security, with China working to diversify supply sources for semiconductor-manufacturing equipment and Japan doing so for critical minerals. Still, the Japan-China relationship over state-of-the-art technologies remains strong, prompting the two sides to pursue selective dependence, in which they look for new opportunities while cutting risks. A report released in October by major Chinese broker Huaxi Securities Co. said that the Chinese chip industry has a long way to go to end its dependence on Japan. About 70 pct of chipmaking equipment used in China was manufactured outside of the country. While the share of Japanese products in overall imports of such machines has fallen to a little more than 20 pct in volume from about 30 pct marked in 2021, the value of imports from Japan surged by about 50 pct. Only about 5 pct of some precision parts were made in China. “Transactions between Japan and China have increased amid an artificial intelligence investment boom,” an official of a major Japanese chipmaker said, indicating that China still relies heavily on Japanese technologies. China dominates the global rare earth supply. Japan is trying to diversify its procurement sources but is still very much dependent on China. After a collision in 2010 between Japan Coast Guard patrol ships and a Chinese fishing boat off the Senkaku Islands in the southernmost Japan prefecture of Okinawa, Japan reduced the proportion of rare earth imports from China to some 60 pct from around 90 pct. Although Japan is the second-largest producer of high-performance magnets in the world, an official of a major Japanese machinery maker said that the country “still relies on China for refining and processing raw materials.” This year, procurement difficulties hit some raw materials for magnets for electric vehicles due to China’s tighter export restrictions imposed on Japan. This has led to Japanese companies securing such materials from Australia and developing alternative technologies. Amid moves to review supply networks, some Japanese companies are seeking new business opportunities in China. Conveyor-belt sushi restaurant chain Sushiro has expanded the number of its outlets in mainland China to 135, while Mister Donut returned to the Chinese market in September this year after a hiatus of some seven years. Meanwhile, Sumitomo Electric Industries Ltd. and Koito Manufacturing Co. have reviewed their auto parts operations in China. An official of credit research company Riskmonster China Inc. said that there were sharp contrasts in the way Japanese companies responded to changing Japan-China ties, depending on industry. Chinese companies, such as EV giant BYD Co. and major e-commerce firm Alibaba Group Holding Ltd., are actively pursuing opportunities in the Japanese market. Foreign direct investment in China has sunk to its lowest level in the past 10 years. The executed investment amount in 2025 decreased by about 40 pct from its peak in 2022. As the reasons for this, China’s Commerce Ministry cited geopolitical conflicts and protectionism. The number of Japanese firms operating in China dropped more than 20 pct in the past two years due to business consolidation and withdrawals amid the fallout of the U.S.-China trade war. While trying to attract foreign capital to stop FDI declines, the Chinese government plans to tighten economic security regulations. Wang Guangtao, an associate professor of Japanese studies at Fudan University in China, predicts that Japan-China relations will move to a new normal characterized by low-intensity conflicts. With political tensions between the two nations expected to become the norm, the Japanese and Chinese governments and companies in the two countries will likely face the difficult task of balancing practical gains and security. END [Copyright The Jiji Press, Ltd.]
