Editor-in-Chief Atul Singh and FOI Senior Partner Glenn Carle, a retired CIA officer who now advises companies, governments and organizations on geopolitical risk, unpack the escalating tensions between China and Japan over the status of Taiwan. These tensions have reached dangerous levels, marked by a profound diplomatic crisis, significant economic repercussions and the specter of future military conflict. At the heart of this confrontation are fundamentally opposing worldviews regarding sovereignty, history and regional security.
Japan’s warning and the weight of history
Atul opens by going through the facts. Japanese Prime Minister Sanae Takaichi declared in Parliament that an attack on Taiwan by China’s People’s Liberation Army (PLA) would create “a situation threatening Japan’s survival”. This public statement confirmed what Japanese diplomats, intelligence officials and military officers had previously discussed only in private: Japan could intervene militarily if China were to invade Taiwan, exercising “collective self-defense.”
Why is this important? Atul dives into the deeper history fueling this contemporary crisis: Japan ruled Taiwan from 1895 to 1945, an often-overlooked fact. China views Japan’s 1895 takeover of Taiwan as the first step in Japanese imperial expansion, an act Beijing has neither forgiven nor forgotten. In the 19th century, Japan decided that it needed to industrialize, modernize and imperialize. The “sudden expansion doctrine” aimed to transform Taiwan into a “showpiece model colony”.
Although the Japanese administration implemented some improvements in the economy, public works and industry, it also imposed a cultural “Japaneseization” on the island, which is what the Chinese, being so proud, deeply resent. Furthermore, Chinese citizens retain painful memories of the long Japanese occupation of the mainland, including events like the Rape of Nanjing.
In light of this history, Beijing has demanded that Japan “fully repent for its war crimes” and “stop playing with fire on the Taiwan question”. This has resulted in a full-blown diplomatic crisis. China suspects that Japan is going to remilitarize. The latest example of this is Japan’s plans to deploy missiles on an island near Taiwan — a plan that China has criticized.
Rising Chinese nationalism, economic repercussions and military tensions
Emotions on Chinese social media are running high. Furthermore, there has been a massive rise in Chinese nationalism over the past few years. These feelings now go beyond rhetoric and have turned into action. China has suspended visa processing for Japanese travelers and issued warnings to its own citizens against visiting Japan. Note that Chinese tourism is a major source of revenue for Japanese airlines, hotels and retail stores. Japan will “obviously suffer” as a result of China’s actions.
The economic impact of this crisis is significant. According to the Japanese Ministry of Finance, the country’s net foreign direct investment into mainland China plummeted by 30.6% in the first three quarters of 2025, reaching the lowest level recorded since the data series began. Furthermore, only a fraction (10%) of 8,300 Japanese firms surveyed by the Japanese Chamber of Commerce in China indicated plans to increase investments.
Japan has also warned its citizens in China about their safety as the crisis deepens. Additionally, Japan has scrambled aircraft after detecting a suspected Chinese drone near its southern island of Yonaguni, which is close to Taiwan.
Why do we have a crisis and what is Japan doing?
At the heart of this dispute are two contrasting geopolitical philosophies. The Chinese Communist Party (CCP) considers the “one China policy” its “holy grail.” Beijing views any Taiwanese declaration of independence or outside support for that independence as a direct threat to China’s sovereignty. Atul points out that this could all also be a “cynical play for popularity” because, at the end of the day, the CCP is “no longer communist” in the traditional way. The CCP has now become a repository of Chinese nationalism and wants to return the Middle Kingdom to its former glory. As a result, the rhetoric, both from the regime and within Chinese social media, directed at Takaichi has been “extremely aggressive.”
Conversely, Japan views Taiwan as a de facto independent state. Tokyo is increasingly nervous about China as an “aggressive revisionist power.” Japan views a Chinese threat to Taiwan as a risk to its own national security. Should China gain control of Taiwan, many islands claimed and owned by Japan would fall within threatening proximity of the PLA and its Navy.
In 2020, a Chinese and Russian fleet circumnavigated Honshu Island, which Atul and Glenn viewed at the time as a “wakeup call for Japan”. Atul makes the case that this circumnavigation was the “equivalent of someone waving a gun and walking outside your front door.”
To counter the threat of an assertive China and an aggressive Russia, the Japanese have increased their defense spending and have abandoned self-imposed restraint. However, this increase has occurred during a period when the yen has depreciated substantially against the dollar, meaning that a higher budget does not translate into more US arms. Demography is also a constraint. Despite these barriers to military development, a new determination to invest in defense and prepare against external threats is evident. Tokyo also recognizes that it can no longer rely on the US, so it must “beef up.”
The Japanese are also tired of living with post-World War II guilt. They believe that 80 years of saying “sorry” is enough. The Chinese would claim otherwise. Many Japanese still visit Yasukuni, a very controversial shrine that honors some war criminals. The Japanese do not think this is a big deal. They believe that they have recognized and atoned for their war guilt. Today, the Chinese have emerged as the provocateurs and aggressors. Many Japanese believe that if they do not act against China now, then Japan’s security and sovereignty will be at risk.
Nationalism, a political instrument for the CCP, and a new regional order
Glenn argues that Chinese nationalism should be viewed as a “spigot” that is controlled by the CCP, or really, Xi Jinping. The CCP consciously utilizes nationalism to turn up the pressure when it seeks to exert international influence — particularly on Japan in this instance — or to rally domestic support for the position of the Beijing government. However, this tool carries the inherent risk of becoming uncontrollable. The “tub” into which this nationalist “liquid” pours has no emergency “drain pipe,” and it can overflow.
Atul points out that, despite this official rhetoric, many educated Chinese individuals, and even officials, privately express admiration for the Japanese, citing their organization, culture and courtesy. The Japanese will also similarly say nice things about the Chinese. The economic relationship between the two countries is symbiotic.
Glenn explains that Takaichi is a disciple of the late Japanese prime minister Shinzo Abe, and that her comments regarding China are no different from what Abe said, or what she herself has said for many years. The Chinese have chosen to make this a bigger issue because they fear increasing Japanese defense capabilities. Tokyo realizes that Japan can no longer rely on the US. Therefore, Japan is increasing its defense capabilities and views Chinese actions as “dramatically significant to the sovereignty, wealth and independence of Japan.”
The CCP’s interpretation of its sovereignty extends 1,500 kilometers and more from its coast into the shores of the Philippines and other states in the South China and East China Seas. Notably, Chinese nationalists (who moved to Taiwan after losing the civil war in 1949) had an 11-dash line (a visual representation of China’s claims), which the CCP reduced to a nine-dash line, but has recently increased to a ten-dash line. Expansionist Chinese claims are not just a CCP problem; they stem from Chinese nationalism.
While China denounces Japan’s increasing defense budget and rising militarism, it is fair to say that Tokyo is largely reacting to Beijing’s aggressive nationalism and challenges to the status quo. The Xi-led CCP is actively moving to resolve the ambiguity surrounding Taiwan, with the clear intent to absorb the island. This includes dramatically increasing military activity, such as launching missiles, conducting exercises with the world’s largest navy and escalating the number of overflights around Taiwan, and also actions on the Pacific side of Japan.
Japanese nationalism is also on the rise. Takaichi wants a stronger Japan and is more up for a fight with China than her predecessors. She is a “different kettle of fish” than her previous leaders. She is, after all, the first female prime minister of Japan and a self-proclaimed Thatcherite nationalist. Regardless of whether Takaichi is really different from her predecessors, we are certainly seeing a “more assertive Japan in a more dangerous environment.” China-Japan tensions are on the rise, and conflict is a real possibility.
[Kaitlyn Diana edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
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