In November, China will host the APEC Economic Leaders’ Meeting, drawing attention to Sino-Japanese relations. Compared to China, Japan appears more optimistic, viewing the summit as an opportunity to restart dialogue between the two countries’ leaders. The Japanese Ambassador to China stated that they would “make every effort to facilitate a bilateral summit.” Meanwhile, Japanese media and think tanks have successively reported “good news,” believing that tensions between China and Japan are easing.
However, in late September, the Ministry of Foreign Affairs of China officially dropped the title “Prime Minister of Japan” and addressed Sanae Takaichi directly by name. This change in diplomatic address reflects an escalation—rather than an easing—of tensions in Sino-Japanese relations.
The Canon Institute for Global Studies, a Japanese think tank, suggested that the consecutive meetings between China’s vice premier and foreign minister with a former Japanese foreign minister demonstrate a shift in China’s attitude toward Japan. According to the institute, the primary reason is China’s bleak economic outlook, loss of public confidence in the future, and Beijing’s recent realization that it needs Japan’s advanced semiconductor and AI technology and materials.
Whether China’s semiconductor and AI technologies are constrained by Japan is one question. Whether China would make concessions on the Taiwan issue due to economic and technological dependence on other countries is another question.
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The answer to the second question is crystal clear: no factor could compel China to make concessions on the Taiwan issue. Beijing has refused to yield to Washington, let alone Tokyo. The reason is simple: the Taiwan issue pertains to the ruling legitimacy of the Chinese Communist Party. While economic issues are also vital, they rank lower in priority than the Taiwan issue.
In other words, even if China’s high-tech sector and economy were constrained by Japan, China would not make concessions to Japan. What’s more, China’s technology and economy are not, in fact, constrained by Japan.
The Japanese think tank contends that China’s “physical AI” products extensively use Japanese components. Japan leads globally in high-purity silicon wafers, photoresists, and special chemicals, upon which China relies heavily for imports. Furthermore, AI training requires massive data centers, where heat dissipation technologies, precision parts, and specialized alloys provided by Japanese companies are indispensable.
Admittedly, Japan’s technology in chemicals used in chip production is world-leading, but it is by no means irreplaceable. On the long supply chain list for chip manufacturing, China relies most on Japan for photoresists. However, photoresists are categorized into low-end, mid-range, and high-end products. China has already achieved self-sufficiency in low-end photoresists; for mid-range photoresists, Chinese enterprises have made breakthroughs, and manufacturers have begun incorporating domestic alternatives. As for high-end photoresists, China’s demand is relatively lower because it is banned by the U.S. and the Netherlands from purchasing EUV lithography machines.
The claim that “Physical AI products extensively use Japanese components” is a clear misconception. China’s AI products predominantly use domestic parts, some of which are lower in cost than Japanese ones. Moreover, China can import certain components from Taiwan, none of which are “irreplaceable.”
The core bottlenecks of China’s AI and semiconductor sectors are high-end GPUs/HBM (subject to U.S. controls), followed by EUV and high-end immersion lithography (Dutch company ASML), EDA software for chip design, and lastly, Japan’s “equipment and materials.” Although Japan began restricting equipment exports to China in July 2023, its export volume increased rather than decreased, as China shifted to purchasing large quantities of unrestricted mature node equipment. Furthermore, the localization rate of China’s wafer manufacturing equipment has risen from 10% in 2020 to 21% in 2025 and is projected to reach 26% in 2026 and 43% in 2028.
China’s semiconductor and AI development relies on transforming mature node technology to achieve advanced node chip manufacturing. For instance, Huawei’s “Logic Folding” technology has successfully bypassed advanced process bottlenecks, though further breakthroughs in cost and mass production are still required. Notably, the U.S. firm Qualcomm recently secured a patent licensing agreement for Huawei’s “Logic Folding” chip technology, proving the forward-looking nature of this innovation.
Therefore, the claim by the Japanese think tank that “without Japan’s technological support, China’s AI industry could hardly maintain its current scale” is an over-extrapolation or an overconfident misjudgment. The reality is that China and Japan are mutually dependent at the high-tech level. Looking at future developments from an overarching high-tech perspective, as China rapidly catches up in the chip field, Japan may actually become more dependent on China.
In October, Nikkei Asia reported that Japanese automaker Suzuki “is expanding its adoption of Chinese-made components. Beyond EV batteries, Suzuki has decided to use Chinese-made semiconductors in its upcoming Advanced Driver Assistance Systems (ADAS). While this move helps enhance cost competitiveness, it also risks triggering the hollowing out of Japan’s domestic supply chain.”
This is not an isolated case. Japan’s two major automakers, Toyota and Honda, are also adopting automotive SoC chips from China’s Horizon Robotics, not to mention China’s absolute dominance in EV batteries and rare earth magnetic materials.
Semiconductors, automobiles, and AI-derived applications—such as robotics—are all industries with vast supply chains and domains where highly industrialized nations depend on one another. Thus, rather than saying China is constrained by Japan, it is more accurate to say that both sides need each other’s technology and markets, and neither dares to lightly execute a full decoupling. This also explains why restrictions imposed by both China and Japan are often vague, localized, and soft, rather than public, comprehensive embargoes.
However, as stated above, none of these mutual containment factors can cause either country to override the Taiwan issue. For Beijing, this concerns regime legitimacy; for Tokyo, this is a pivotal issue to constrain China’s rise and enable Japan to achieve “national normalization.”
When former Foreign Minister Takeshi Iwaya led a 50-member delegation to China as Chairman of the Japan Association for the Promotion of International Trade, he was granted rare consecutive meetings with Chinese Foreign Minister Wang Yi and Vice Premier He Lifeng over two days. Rather than interpreting this as a warming of Sino-Japanese relations, it should be viewed as a signal that Beijing intends to isolate Prime Minister Sanae Takaichi.
Since Xi Jinping took office, a defining characteristic of Beijing’s diplomatic strategy is that no matter how strained relations become, it will not “sever ties” with any country. For instance, with the Philippines, regardless of how Manila challenges China’s sovereignty in the South China Sea, opposition on security issues has not become an obstacle to bilateral trade, which continues to grow. Another nation that severely offended Beijing on the Taiwan issue is Lithuania, yet diplomatic relations were not severed.
Beijing’s approach toward hostile countries is to stabilize bilateral economic and trade relations while attempting to influence the political realm through the business community—effectively narrowing the scale of hostility. Former Japanese Foreign Minister Takeshi Iwaya is a pro-China politician, and the Japanese business community is not a target of Beijing’s retaliation; both serve as leverage for China in its attempt to isolate right-wing political forces in Japan.
In other words, far from shifting toward a thaw, Sino-Japanese relations are engaging in a more subtle and covert struggle.
It is primarily the United States that wishes to see a complete falling out between China and Japan. As Washington’s position along the First Island Chain weakens, it requires proxies to clash with China to accumulate more diplomatic leverage against Beijing. However, Japan is a highly industrialized, mature economy with a dense web of economic interdependence with China, unlike the Philippines, which has fewer reservations. Consequently, Sanae Takaichi has limited means for anti-China maneuvers.
Currently, Japan is accelerating its military deployment in regions adjacent to China and deepening military cooperation with Australia to fill the vacuum left by the U.S. “retreating” toward the Second Island Chain. This serves as the most accurate bellwether for observing Sino-Japanese relations, rather than seeking answers in the economic and technological spheres.
Contrary to the Taiwan Strait scenarios hyped by the United States, Beijing strongly prefers not to resolve the Taiwan issue by force—at least at the current stage. However, Sanae Takaichi leaves Xi Jinping with little choice but to continuously vary tactics to suppress Tokyo’s military ambitions. Beyond isolating Takaichi economically, China is also attempting to mitigate Japan’s tendency toward “re-militarization” by managing U.S.-China relations.
Therefore, rather than monitoring the interactions between Chinese and Japanese leaders at the APEC Summit, one should watch the interactions between Xi Jinping and Donald Trump. If China and the United States reach a consensus on the Japan issue, then Tokyo will become far less significant.
