Back on 17 October, before Sanae Takaichi was formally appointed Prime Minister (though her selection was already expected), I argued in a post (#4) that despite her more hard-line stance toward China — and therefore a heightened prospect of heated rhetoric at the geopolitical level under her leadership — the long-term direction of travel between Japan and China remained toward greater connectivity, not retreat. The logic was simple: regulatory and financial infrastructure, cross-border investment flows, and families seeking stability were already knitting the two economies closer together. The conclusion then was clear: these channels would be difficult to roll back, and in some areas were likely to accelerate.
Barely a month later, that view has been placed under a live-fire test after Takaichi’s remarks about Taiwan triggered sharp diplomatic rebuke from Beijing, including travel advisories that have led to a sharp drop in Chinese tourist bookings, threats of trade suspensions, and ripples of concern across Japanese equities about a wider spat — and another quarter of negative growth.
So, was my confidence misplaced? I don’t think so. While the short-term economic impact from a sharp decline in Chinese tourism will be meaningful, the deeper story is not about the volatility of tourism or markets; it is about the resilience of the underlying social and institutional links that continue to draw people, capital, and ideas from China to Japan. As I mentioned in my earlier post, the rise of Run-Ri — the quiet migration of Chinese professionals, entrepreneurs, and semi-retirees to Japan — is unlikely to be disrupted by this latest storm. Their motivations are pragmatic rather than ideological: education, healthcare, personal safety, and the advantages of a weaker yen. They are enrolling children in Tokyo’s international schools, buying property in the city’s bay-area towers or Hokkaidō’s resort towns, and incorporating small businesses that operate comfortably within Japan’s rule-based system. These are not transient tourists. They are households and companies making decade-long commitments — and such decisions are rarely reversed by a season of diplomatic frost.
Indeed, if history is any guide, periods of high-level tension have often coincided with deeper structural integration. The current exchange of words between Tokyo and Beijing feels familiar because Japan–China spats are nothing new. Under the leadership of Shinzo Abe — Takaichi’s political mentor — disputes over history, security, and islands were frequent, sometimes intense. Yet it was during the Abe administration that the most significant liberalisation of Japan’s visa regime for Chinese visitors occurred. I suspect the current episode may well follow a similar script, whereby the short-cycle shock strengthens the long-cycle rationale of Japan’s relative stability premium within an unsettled region.
Moreover, at the institutional level the same continuity applies. The increasing connectivity in the financial “plumbing” between the two countries — the ETF linkages, derivatives cooperation between JPX and CFFEX, Osaka’s commodity listings, and FSA-led dialogues — remains untouched. The logic only becomes clearer when rhetoric heats up.
Diplomatically, both sides are now engaged in a cautious de-escalation. Masaaki Kanai, the Foreign Ministry’s director-general for Asian and Oceanian Affairs, arrived in Beijing this week to meet his counterpart Liu Jinsong and reaffirm that Japan’s position on peace and stability in the Taiwan Strait “has not changed.” Behind the scenes, channels of dialogue continue to function much as they did in earlier flare-ups — another reminder that institutional memory and bureaucratic continuity often outlast political theatre.
So for me, the picture remains the same: Japan’s role as the region’s high-quality, rule-based hub is becoming more valuable, not less. The diplomatic climate may cool, but the gravitational pull of education, lifestyle, and capital stability endures. Each episode of tension tests these ties, but so far every test has revealed their strength rather than their weakness.
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