China, Japan dispute: what next for businesses after Takaichi’s election sweep?

Neither side likely to want escalation in months-long dispute but near-term outlook uncertain, analysts say

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The dispute between Beijing and Tokyo erupted on November 7, 2025, after Takaichi became the first Japanese prime minister to explicitly state that any use of force by Beijing against Taiwan could be a “survival-threatening situation” for Japan, suggesting that the country’s military could intervene. Photo: Reuters

Frank Chenin ShanghaiandRalph Jenningsin Hong Kong

Published: 7:30am, 10 Feb 2026Updated: 10:24am, 10 Feb 2026

Japanese Prime Minister Sanae Takaichi's landslide election victory has dimmed hopes that ties between Tokyo and Beijing will significantly improve in the near term, analysts and businesspeople said, though some expect tensions to stabilise over time.

Her ruling coalition secured the win on Sunday, strengthening the hand of a leader who infuriated Beijing by outlining how Tokyo might respond to a mainland attack on Taiwan.

Enterprises caught in the middle of the dispute would have to tread cautiously, even as Beijing weighed the risks of maximising pressure, analysts said.

“Japanese voters have given Takaichi a strong mandate to continue her policy on security and diplomacy,” said Kazuto Suzuki, a professor at the University of Tokyo’s Graduate School of Public Policy. “If China continues to strengthen pressure on Japan, it would strengthen public support for her.”

He added that Beijing could decide against further leveraging its dominance in rare earths. “China has not explicitly imposed export controls, but it has slowed down the issuing of licences. I don’t think it will change as a result of the election.”

Charles Chang, a finance professor at Fudan University in Shanghai, said businesses would likely operate as normal, albeit with greater caution. “People in trade are like, ‘We’ll just keep doing it unless we’re being asked to stop’,” he added.

China, Japan dispute: what next for businesses after Takaichi’s election sweep?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Neither side likely to want escalation in months-long dispute but near-term outlook uncertain, analysts say

Neither side likely to want escalation in months-long dispute but near-term outlook uncertain, analysts say