Breakingviews - Tensions Between Japan and China Could Lead to Escalating Aggression

Written by Emily J. Thompson, Senior Investment Analyst

Source: Reuters

Updated: Nov 18 2025

0mins

Source: Reuters

Japan's Stance on Taiwan: Japanese Prime Minister Sanae Takaichi has labeled a potential attack by China on Taiwan as a threat to Japan's survival, increasing tensions and concerns over military buildup in both Japan and China.
Economic Implications: The heightened geopolitical tensions could negatively impact Japanese companies reliant on the Chinese market, such as Trip.com, Toyota, and Shiseido, as fears of economic fallout grow.
Historical Context: The current situation echoes a previous diplomatic crisis in 2017, where tensions between China and South Korea over a U.S. missile defense system led to significant economic repercussions for South Korean companies.
Future Risks: As both Japan and China adopt more hawkish military postures, the risk of economic and diplomatic fallout increases, potentially leading to a cycle of aggression that could harm both nations' economies.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.