China and Japan are respectively the second and third largest economies in the world. In real terms, together they account for 22% of all goods and services traded worldwide. For Japan, China is today both its main source of imports (24%) and primary destination for exports (22%). If trade in value-added is considered, the significance of China's industrial heft is even greater, at over 80%. In 2021, Japan imported more from China than the other way around, resulting in a trade deficit of ¥2.4 trillion for Japan, roughly 5% of its GDP for that year.
For centuries, Japan has remained a close, if wary, observer of its bigger neighbour. In the late 1970s and 1980s, Japan helped China modernise, and Japanese firms were among the first to tap into its growing market. Japanese leaders also raised early alarms over Chinese expansionism, especially after the two clashed between 2010 and 2012 over the Senkaku Islands, which China calls Diaoyu. "We warned the US: this is not a small compartmentalised issue between Japan and China, but a sign of a growing power in the region," said Sasae Kenichiro, a former Japanese ambassador to Washington.
China's zero-Covid policy, which both deliberately and incidentally shuns foreign presence, and the recent agitation about Taiwan (including missiles fired into Japan's EEZ) have raised Japan's alertness about China's next move. How would an invasion of Taiwan affect Japan? How is Japan preparing for different scenarios? Should businesses and Japan residents at large be concerned? At this event we bring some of Japan's most knowledgeable experts on Japan-China relations to discuss a topic that is relevant to all of us living in one of the world's riskiest neighbourhoods.