Between US And China, Japan Finds Itself Friendless

2026-01-08 03:19:21

(MENAFN- Asia Times) TOKYO - The year is off to a dreadful start for Japanese Prime Minister Sanae Takaichi and Asia's No. 2 economy.

Though it's not the first blow, news on Tuesday that China is imposing curbs on more than 40% of the goods Japan Inc. exports to Xi Jinping's economy is quite sobering. The move by Xi's Communist Party is aimed at“dual-use” exports that could, at any level, be used in military affairs. Nomura Research Institute thinks we're talking roughly 42% of all goods Japan sends to China.

Ostensibly, this is about Taiwan. In early November, Takaichi enraged Beijing by suggesting Japan might come to Taiwan's defense if China moved against the island. It provoked what's arguably the worst tiff between China and Japan since 2010, when barbs were traded over disputed islands in the South China Sea.

This blow comes at a moment when Japanese wages“hit a wall,” in the words of Moody's Analytics economist Stefan Angrick. Average pay gains slowed to just 0.9% year on year, less than half the 2% rate economists expected and a 3% inflation rate.

At a moment when the Bank of Japan is raising interest rates, this means things are going from“bad to worse,” Angrick notes.

Stagflation is arriving just as Japan appears to find itself standing alone as President Donald Trump's White House pursues an aggressive foreign policy that Tokyo didn't anticipate.

Trump's trade war and the tariffs are one thing. Since taking office in October, Takaishi's government has walked on eggshells to stay in Trump's good graces. In the days since Trump ordered the capture of Venezuelan President Nicolás Maduro, officials in Tokyo have been trying to catch their diplomatic breath.

The daring operation has Chinese cyberspace buzzing with calls for Xi to use Trump's playbook to seize Taiwan, which his party sees as a renegade province. It's also fueling worries that Russia might read Trump's Venezuela adventure as a green light to expand its campaign in Ukraine - and perhaps to a NATO country.

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