BEIJING – Trade cooperation between China and Japan has come under significant strain, according to the Chinese Commerce Ministry, which urged Japanese Prime Minister Sanae Takaichi to retract her comments on Taiwan or face consequences.

The diplomatic tension escalated after Takaichi told Parliament on November 7 that a hypothetical Chinese attack on Taiwan could trigger a military response from Tokyo. A ministry spokesperson, He Yongqian, said that her remarks had fundamentally undermined the political foundation of China-Japan relations and caused serious damage to bilateral economic and trade exchanges. He warned that if Japan continued on this path, China would take the necessary measures, and all consequences would be Japan’s responsibility. A spokesperson for Takaichi stated that her comments did not change Japan’s existing policy.

China is Japan’s second-largest export market after the United States, purchasing around US$125 billion worth of Japanese goods in 2024, mainly industrial equipment, semiconductors, and automobiles. Japan could face difficulty finding alternative markets if China restricts its imports. By comparison, South Korea, Japan’s third-largest export destination, imported US$46 billion worth of goods in 2024. When asked about reports that China might ban all Japanese seafood imports, He said she had no information to provide.

China has a history of using trade as leverage. In 2023, Beijing imposed a blanket ban on Japanese seafood after Tokyo decided to release treated radioactive water from the Fukushima nuclear plant into the Pacific, despite the International Atomic Energy Agency deeming it safe. In 2010, China halted rare earth exports to Japan for about seven weeks after Japanese authorities detained a Chinese fishing captain involved in a collision near the disputed Senkaku/Diaoyu Islands.

The U.S. has pledged support for Japan. Ambassador George Glass stated that just as the U.S. supported Japan during China’s previous seafood ban, it would do so again. Before the 2023 ban, China was Japan’s top scallop buyer and a major importer of sea cucumbers.

Relations between China and Japan had appeared to improve, with Xi Jinping and Takaichi agreeing at the October APEC summit in South Korea to build a constructive and stable relationship. Now, Japanese seafood companies worry that past restrictions may return. Kazuya Yamazaki, president of Sanwa Fisheries on Hokkaido, noted the frustration of sudden setbacks, explaining that his firm previously exported around 200 tonnes of scallops annually to China before imports ended.

Japanese officials and analysts acknowledge that there is no easy solution. Joseph Kraft, a financial and political analyst at Rorschach Advisory in Tokyo, said that unless Takaichi retracts her comments—a politically impossible move—China is unlikely to back down. The only viable approach, he suggested, is to wait until China begins to feel the economic impact of its actions.

When asked whether China’s Premier Li Qiang would meet Takaichi at the upcoming G-20 summit in South Africa, a Chinese foreign ministry spokesperson said no plans were in place.