China is stuck with zombie sanctions against Takaichi government

The resounding electoral victory of Japan’s Liberal Democratic Party (LDP) in the snap election on February 8 confirms that China’s attempt to punish Prime Minister Sanae Takaichi has backfired.Beijing was angry about Takaichi’s Taiwan-related remarks in November.

Beijing presumably hoped that, as manyobserverspredicted, Takaichi’s tenure as prime minister would be short, perhaps making way for a successor who would take greater care to avoid antagonizing China – someone like Takaichi’s predecessor, Shigeru Ishiba.But the LDP has just gained 118 additional seats and a supermajority in the Diet, and now Takaichi looks more like a long-term leader.

This leaves the PRC with a problem: the economic sanctions Beijing imposed on Japan since November have become zombie sanctions.They have failed to achieve their objective, yet removing them is politically difficult for the Chinese government.

The row began when Takaichi, under persistent questioning from an opposition party politician,saidthat a PRC attempt to conquer Taiwan by military force might constitute a situation that would threaten Japan’s survival.Her statement implied possible Japanese military action against China.

The PRC government responded with fury – not because Japanese intervention in a cross-Strait war is a new idea, but because it was unprecedented for a Japanese prime minister to speak publicly about it.

Beijing demanded that Takaichi “retract” her statement and launched a campaign that included diplomatic, military and economic pressure.PRC officials condemned what they called Japan’s interference in China’s sovereign affairs.Takaichi had “crossed a red line,”according toPRC Foreign Minister Wang Yi. “Wolf warriorism” erupted again, with the PRC consul general in Osakathreateningto decapitate Takaichi.

In the days following the prime minister’s remarks, the Japaneseobservedincreased Chinese Coast Guard incursions near the disputed Senkaku Islands, a PRC drone near Japan’s Yonaguni Island, and several rounds of live-fire PLA military exercises in the Yellow Sea.

The most persistent form of pressure imposed by China has been the economic sanctions: slowing supplies of rare earth minerals and magnets to Japan, a ban on Japanese seafood and fewer Chinese tourists.

Beijing overreached in this case, throwing too much into a losing battle, because the Chinese government feared an adverse shift in the status quo from strategic ambiguity toward strategic certainty in Japan’s policy toward Taiwan.

Takaichi “retracting” her comment would signal that Tokyo accepts Beijing’s ground rule that the executive branch should never again publicly mention Japan’s hypothetical intervention in a Taiwan Strait war.That would be a significant win for the PRC.It would reduce the chances of an actual Japanese intervention, because the government would be unable to psychologically prepare the Japanese public for this contingency.

Conversely, acquiescence by Beijing would allow Japan to unilaterally reframe the Taiwan issue as an international question in which Japan has a national security interest.

Outside of Chinese domestic public opinion, however, the PRC’s approach appears unreasonable. Takaichi was merely acknowledging a reality well known to all sides.More transparent discussion of Japan’s Taiwan contingencies arguably reduces the chances of a dangerous miscalculation and strengthens deterrence.

In any case, even before the election there was no realistic possibility that Takaichi would publicly commit to Japan never getting militarily involved in the Taiwan Strait or that she would promise never to mention Taiwan again, if this is what Beijing meant by a “retraction.”

Moreover, thei mpact of the PRC’s economic sanctions is limited.The restriction of supplies of rare earth exports to Japan is the biggest problem but, in response to a temporary total ban on Chinese rare earth exports to Japan in 2010, Japandiversified its supplyto reduce dependence on China from 90 percent to 60 percent.

Beyond this, Japan coped by stockpiling supplies prior to the restrictions going into effect, adapting to the new and more stringent Chinese application requirements and buying from other countries.

Thus far Japan has avoided a crisis, and the new Chinese attempt to exploit a key economic dependency has caused Japan to accelerate its effort to de-risk its rare earth supply chains, which might become feasible in three to five years.

Japan hardly feels the effect of the Chinese ban on imports of Japanese seafood. Food products of all kinds account for less than one percent of the value of all Japanese exports to China.Furthermore, China reimposed the seafood ban only a few weeks after partially lifting a previous 2023 ban caused by Japan’s release into the ocean of radioactive wastewater from the crippled Fukushima nuclear power plant.Japan has by nowdiversifiedits seafood exports to Southeast Asia, the US, South Korea and Taiwan.

The Chinese government officially discourages Chinese tourism to Japan, which has reduced the number of Chinese tourists by half.The shock of a drop in visitors from China is cushioned, however, because of greater numbers of tourists from other countries such as South Korea, Taiwan and the US in recent years. Some Japanese haveexpressedapproval that fewer Mainland Chinese tourists are coming, given theirunfavorablereputation.

Despite all this, since the LDP’s landslide victory, Beijing has only doubled down on its injudiciousness.The PRC Minister of Foreign Affairs spokespersonsaidon February 9, “We once again urge Japan to retract the erroneous remarks of Sanae Takaichi on Taiwan, and take concrete actions to demonstrate the necessary sincerity to uphold the political foundation of China-Japan relations.”

A few days later Wang Yi regaled a European audience with the over-the-topclaimthat “The erroneous remarks by the Japanese leadership on the Taiwan question reveal … Japan’s ambition to invade and colonize Taiwan.”

Past experience suggests three models for what might happen after China finds itself in a useless escalation.

In the first model, Beijing takes advantage of a reputed concession by the other side to make a face-saving climbdown.

In 2010, imprisoned Chinese dissident Liu Xiaobo won the Nobel Peace Prize.The Norwegian government appoints members of the Nobel Prize selection committee but does not control whom the committee selects as the prize winner.Nevertheless, Beijing punished Norway by suspending direct government-to-government contact and by halting purchases of Norwegian seafood.

A new government that came to power in Norway in 2014 prioritized reconciling with China.That year Norway’s prime minister tried to appease Beijing by refusing to meet with the visiting Dalai Lama, himself a previous Nobel laureate.Eventually China agreed to re-normalize relations as the Norwegian government signed onto a joint statement expressing contrition, including promises not to “undermine” China’s “core interests” and to “avoid any future damage to bilateral relations.” Wang Yideclaredthat Norway had “deeply reflected,” which is CCP-speak for repentance.

Another example comes from China-South Korea relations.In 2017, the South Korean government announced it had decided to deploy the US-made THAAD anti-missile defense system despite objections from China.The deployment was a response to a robust North Korean missile threat, but Beijing said THAAD’s radar could compromise Chinese national security by helping the Americans detect missile launches inside China.

The PRC government encouraged the Chinese public to boycott Korean products, resulting in a sharpfallin sales of Korean cars in China, as well as theclosureof 75 Lotte supermarkets in China due to purported fire code violations.A “Hallyu ban” led to the cancellation of K-dramas and concerts by Korean stars in China.

Beijing began to lift the punishment a few months later, after the Moon Jae-in Administrationtoldthe Chinese that South Korea did not intend to deploy additional THAAD batteries, to integrate into the US global missile defense network or to join a trilateral alliance with the US and Japan – the “Three Noes.”

Chinese officials have played up the importance of the Three Noes.A major concession by the other side justifies declaring victory and ending the economic coercion campaign.While South Korean governments have said the Three Noes merely restated pre-existing policy and were not a formal bilateral agreement, Chinese officials havespoken of the Three Noesas a binding commitment by South Korea.A PRC Ministry of Foreign Affairs spokespersonsaidin 2023, for example, that South Korea sharing North Korean missile data with the US and Japan would violate “relevant common understandings between our two countries,” an indirect reference to the Three Noes.

In the second model, Beijing quietly moves to restore normalcy in a relationship even though the other side has not demonstrated contrition or submission.

The classic example here is Australia.In April 2020, Canberra called for an independent investigation into the origin of the Covid-19 pandemic.Beijing took exception.Beginning in May, China imposed restrictions against importing several kinds of Australian products, including beef, wine, barley, coal, lobsters, timber and copper – but not including Australia’s two biggest exports to China, iron ore and liquified natural gas, because these were too important to the Chinese economy.

China implausibly claimed these restrictions were based on technical violations such as dumping or biosecurity issues.

In November, Chinese officials publicized alist of complaintsthat they said Canberra must address to repair China-Australia relations (and, implicitly, to end the sanctions).This list was a wildly impractical overreach.

Among other demands, it called on Australia to stop using national security as a criterion for approving Chinese investment,allow Chinese companies Huawei and ZTE to supply components of Australia’s telecommunications network, cancel new laws against foreign interference in Australia’s political process (laws that were spurred by multiple Chineseattemptsto buy political influence), cease “peddling lies” about Chinese repression of Uyghurs in Xinjiang, desist from accusing China of cyber-attacks, end criticism of the CCP by members of Parliament, and halt “unfriendly” reports about China in the Australian media.

The economic restrictions China imposed on Australia, however, proved to be zombie sanctions.Not only did Australia make none of the policy changes Beijing demanded, but the Chinese coerciondid little damageto Australia’s prosperity.Simultaneously, Australia continued tostrengthen its alliancewith the US against Beijing’s wishes.

China gradually removed the trade restrictions in 2023 – 2024.As justification, PRC officials simply said bilateral relations had “stabilized” and “turned around.”

Most unfortunate is the third model, in which China remains permanently trapped in escalation mode.The Japanese have direct experience with this scenario.

In 2012, Japan’s government purchased the disputed Senkaku Islands from a private Japanese owner.Tokyo Governor Shintaro Ishihara planned to buy the islands on behalf of the Tokyo Metropolitan Government and build infrastructure on them.The national leadership’s intent was to pre-empt Ishihara’s plan, fearing it would provoke China.

Ironically, Beijing decided that the central government’s “nationalization” of the islands was itself provocative, a unilateral attempt to strengthen Japan’s sovereignty claim.The PRC began a campaign of more frequent encroachments by Chinese government vessels in and near the territorial waters of the Senkakus.

The apparent Chinese objective was to force the Japanese government to officially recognize the islands as disputed territory.Beijing calculated that Tokyo would find the increase in tensions intolerable and back down.Fourteen years later, Japan still says the Senkakus are indisputably Japanese, but China cannot de-escalate without appearing to acknowledge its policy has failed.

The current China-Japan spat is similar to the China-Australia case. There is reason to hope, therefore, that Beijing will lift the sanctions and seek a reset after a decent interval.

After all, the Chinese need a constructive relationship with Japan, China’s third largest trade partner.Japanesedirect investmentin China amounts to $136 billion.The PRC relies on Japanese technology and machinery to increase the productivity of Chinese industry. Japanese companies in China help their Chinese employees gain managerial expertise.

Furthermore, Beijing must manage its strategic relationship with Japan to avoid pushing Tokyo toward hostility, a military buildup and perhaps acquisition of nuclear weapons.

In the meantime, however, China has the worst of all worlds: ineffective and unjustifiable sanctions with no hope of surrender by the Takaichi government.

Denny Roy is a senior fellow, East-West Center, Honolulu.