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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Tensions between Japan and China are escalating sharply over Taiwan

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Speaker 2: Biden risk. This diplomatic spat shows no signs afe cancy

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Speaker 2: of easing and this back and forth.

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Speaker 3: Relations between China and Japan have never been easy, but

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Speaker 3: right now they're in the dumps.

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Speaker 2: China had canceled this trilateral meeting between the culture ministers,

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Speaker 2: and in the meantime, Japan's Defense minister is saying that

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Speaker 2: Japan will plan to deploy some missiles from Yunaguni, which

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Speaker 2: is an island just one hundred kilometers to the east

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Speaker 2: of Taiwan, a very strategic location.

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Speaker 3: The cause of all this tension are remarked by Japan's

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Speaker 3: new Prime Minister Sanai Takichi. In response to a question

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Speaker 3: in the parliament earlier this month, Takiichi linked Japan's security

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Speaker 3: with the territorial integrity of Taiwan.

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Speaker 2: Takaichi is probably the first prim start to actually explicitly

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Speaker 2: say that an attack on Taiwan could be an existential

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Speaker 2: crisis for Japan, which gives in the legal justification to

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Speaker 2: lean in militarily.

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Speaker 3: Japan and China have a long and tense history, often

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Speaker 3: marked by disputes over wartime grievances and territorial claims. But

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Speaker 3: James Mager, Bloomberg Senior reporter based in Beijing, and Isabelle Reynolds,

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Speaker 3: our Tokyo buer chief, say this dispute is different.

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Speaker 4: Taiwan is the red line. There's a series of different

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Speaker 4: issues between Japan and China. Those are all important, but

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Speaker 4: when it revolves around Taiwan, there is no leeway in

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Speaker 4: the system for just accepting that maybe someone said something

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Speaker 4: and it wasn't a threat.

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Speaker 1: That's right. I think what's happened is she said the

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Speaker 1: quiet part that aloud, the things that people would normally

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Speaker 1: only talk about and plan for behind the scenes. She's

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Speaker 1: publicly acknowledged that we have to think about that.

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Speaker 3: Welcome to the Big Take Asia from Bloomberg News. I'm Wanha.

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Speaker 3: Every week we take you inside some of the world's

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Speaker 3: biggest and most powerful economies in the markets, tycoons and

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Speaker 3: businesses that drive this ever shifting region. Today on the show,

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Speaker 3: China and Japan clash again, but this time the point

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Speaker 3: of contention is Taiwan. We find out why Japan's new

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Speaker 3: Prime Minister has put Taiwan on the table and what

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Speaker 3: it could mean for both sides. Following Takeiichi's comments on Taiwan,

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Speaker 3: Beijing has stepped up its protest and retaliation. The Chinese

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Speaker 3: government has warned its citizens against traveling to Japan and

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Speaker 3: instructed its airlines to reduce the number of flights to

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Speaker 3: the country. Beijing's also suspended imports of Japanese seafood and

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Speaker 3: halted approvals for movies too. China's Foreign ministry has repeatedly

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Speaker 3: demanded Takichi retract her comments on Taiwan. Isabel says Takiichi

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Speaker 3: has refused used to do so, saying there was no

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Speaker 3: change to Tokyo's stance on how it would respond to

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Speaker 3: a major security crisis in the region.

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Speaker 1: So what happened was on November seventh, in parliament, Takeichi

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Speaker 1: said that a conflict in which Beijing was trying to

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Speaker 1: take over Taiwan and was using armed force and was

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Speaker 1: using warships could potentially amount to an existential crisis for Japan.

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Speaker 1: And now that is significant because under Japan's pacifist constitution

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Speaker 1: and the laws it passed subsequently in twenty fifteen, an

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Speaker 1: existential crisis would allow Japan potentially to send in its

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Speaker 1: own military to the defense of a friendly nation.

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Speaker 3: And is that a big shift in Japanese politics for

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Speaker 3: her to say that.

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Speaker 1: There was a huge amount of discussion leading up to

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Speaker 1: the twenty to fifteen legislation. Everyone's been very careful not

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Speaker 1: to point out exactly what sort of situation where which

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Speaker 1: countries might be involved, were where Japan might send an

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Speaker 1: ex military. So to come out and say this very boldly,

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Speaker 1: very frankly, and not really mincing her words in any

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Speaker 1: way is a big step away from how Japan has

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Speaker 1: approached this issue in the past.

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Speaker 3: So certainly other Japanese leaders have been known to stay

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Speaker 3: away from the issue of Taiwan.

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Speaker 1: Yeah, that's absolutely true. They expressed friendliness towards it, but

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Speaker 1: they've had this formal set of words that they want

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Speaker 1: any conflict between the two sides to be resolved peacefully.

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Speaker 4: And I think on that it is important to note

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Speaker 4: that people outside the government, or people who used to

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Speaker 4: be ministers or MPs like Takh before she became the

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Speaker 4: Prime Minister, has said similar things. What's really different here

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Speaker 4: is that the Prime Minister, in her official capacity in

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Speaker 4: parliament made these comments, and I think part of The

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Speaker 4: reaction from China was they were expecting her to do

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Speaker 4: something like this. They did know that she had these

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Speaker 4: views because she has expressed them in the past, and

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Speaker 4: I think for them it was their expectations or their

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Speaker 4: fears about what she would do as prime minister were

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Speaker 4: confirmed and then they reacted to that. So it really

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Speaker 4: is what you can say as a private citizen, what

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Speaker 4: you can say as a very minor MP, and what

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Speaker 4: you can say as the Prime minister tend to be different.

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Speaker 3: And of course we know that Takyishi made history last

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Speaker 3: month when she was sworn in as a country's first

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Speaker 3: woman prime minister. She's barely unpacked her bags right in

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Speaker 3: the PM's office. To your point, why pick this fight now?

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Speaker 1: I think there are some doubts about whether she said

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Speaker 1: this on purpose. She is very new to the job

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Speaker 1: and she's talked about how she only gets two to

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Speaker 1: four hours of sleep at night, so I mean, you know,

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Speaker 1: maybe she was sleep deprived and felt corded into it.

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Speaker 1: And I don't forget this was not something she came

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Speaker 1: in and read out as a prepared statement. This was

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Speaker 1: part of a long session of being grilled by an

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Speaker 1: opposition MP about what exactly would constitute an existential crisis,

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Speaker 1: and at the end of it, she came up with this.

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Speaker 3: How did her comments land in Japan.

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Speaker 1: It's been a very mixed reaction. I mean, we've seen

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Speaker 1: a lot of public commentators sort of on both sides saying,

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Speaker 1: of course she should not have said that, you should

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Speaker 1: have withdrawn it, and the opposition urged her to withdraw

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Speaker 1: those comments. But Herst's public support rate is still enormously high.

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Speaker 1: It's probably the highest for any prime minister in more

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Speaker 1: than two decades. And if you look at the opinion polls,

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Speaker 1: they're also a bit mixed, as you would probably expect.

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Speaker 4: And I think that's also an interesting point that what

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Speaker 4: she's saying isn't unexpected for people in Japan. There has

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Speaker 4: been this debate now since twenty fifteen or a decade

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Speaker 4: on what would happen if China did try to invade Taiwan.

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Speaker 4: Japan is right next door. Obviously Japan is going to

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Speaker 4: be affected by that. If nothing else. There are thousands

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Speaker 4: of Japanese citizens in Taiwan who would need to be

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Speaker 4: helped in some way, assisted out of Taiwan, evacuated, and

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Speaker 4: so there's a public recognition that this is a very

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Speaker 4: important question and the government will have to do something

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Speaker 4: or decide to do something if there is a war

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Speaker 4: in the Strait. You know, it's not like this came

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Speaker 4: out of nowhere, and Japanese people have never thought about this.

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Speaker 3: Now we know the two leaders, President she Jinmping and

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Speaker 3: the Prime ministers in Aataki Uchi just shook hands about

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Speaker 3: a month ago at the APEX summit in South Korea.

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Speaker 3: Are there any warning signs that anyone saw.

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Speaker 4: Then that meaning went pretty well? I was there at

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Speaker 4: the venue, not having the meeting itself, but everyone I

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Speaker 4: spoke to you afterwards, the Japanese side, they seem to

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Speaker 4: think the meeting had gone pretty well and there any

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Speaker 4: real hiccup or wrinklin That was Takachi sound tweeted that

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Speaker 4: she had met the Taiwanese representative to APEX, and the

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Speaker 4: Chinese reacted to that quite badly, so they said she

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Speaker 4: was flaunting it and hyping it up on Twitter, which

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Speaker 4: kind of speaks to how I what I said earlier

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Speaker 4: that they were primed for her to do something that

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Speaker 4: they see is being provocative, and when she did that,

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Speaker 4: I think they were like, we knew it. She's exactly

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Speaker 4: what we thought she was going to be, and now

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Speaker 4: we have to react.

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Speaker 3: And what's interesting, though, is the reaction. Even if they

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Speaker 3: were expecting that at some point she would say these things,

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Speaker 3: the reaction from Beijing hasn't been your standard diplomatic speak

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Speaker 3: at all. Right, it's gotten actually quite hostile and personal,

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Speaker 3: including a rather shocking post from China's consule general there

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Speaker 3: in Osaka, Isabelle. I wonder if you can tell us

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Speaker 3: about that and what the reaction to that was.

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Speaker 1: Yeah, So the concert general in Osaka, Shuri Jian. Forgive

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Speaker 1: my Chinese, I don't speak at all. So the very

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Speaker 1: day after this debate in parliament, he started posting messages

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Speaker 1: on x on Twitter saying things about the dirty neck

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Speaker 1: that sticks in where it's not wanted, will we sliced

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Speaker 1: off with no hesitation. He's known for that kind of rhetoric,

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Speaker 1: so it wasn't all that surprising from him, and he

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Speaker 1: did delete it, but by that time it had already

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Speaker 1: been reported by the Japanese media, and of course there

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Speaker 1: was a complete Twitter storm about it, and it seemed

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Speaker 1: as though it was only after that the mainline government

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Speaker 1: in Beijing started to really weigh in and follow his

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Speaker 1: lead as to how they should deal with this issue.

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Speaker 3: And what do you think that indicates? Does China then

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Speaker 3: take this threat quite seriously?

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Speaker 4: Taiwan is the red line when it revolves around Taiwan.

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Speaker 4: There is no leeway in the system for just accepting

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Speaker 4: that maybe someone said something and it wasn't a threat.

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Speaker 4: They have to react the way they think about Taiwan

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Speaker 4: that it is and they will get it back, and

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Speaker 4: everyone is trying to keep them from getting it. Means

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Speaker 4: that they have to react and stamp down on these

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Speaker 4: things immediately, Otherwise if they don't, then six months later

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Speaker 4: someone else's They think someone else is going to get

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Speaker 4: bright ideas about saying something else about Taiwan. And there

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Speaker 4: may also be a calculation that Tokayi sign Is knew

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Speaker 4: she's weak. She doesn't have a majority in either house

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Speaker 4: of parliament. The last couple of prime ministers haven't lasted

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Speaker 4: that long. There may be an expectation that she's not

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Speaker 4: going to last, and it may will be that kind

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Speaker 4: of thinking as driving the Chinese reaction to Tokhan as well,

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Speaker 4: that if we push, then she'll be gone and we'll

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Speaker 4: have someone less hawkish.

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Speaker 1: To deal with that sounds very likely to me as well.

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Speaker 1: I mean, whether she actually is weak or not, that

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Speaker 1: remains to be seen. Obviously, her position at the moment

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Speaker 1: isn't all that strong, but some people say she could

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Speaker 1: call an election pretty soon. She's got massive public support,

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Speaker 1: and she could even manage to grab back a majority

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Speaker 1: for her LDP on its own without any coalition partners

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Speaker 1: if her support rate stays how it is. And honestly,

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Speaker 1: the things that China's saying, it's hard to say right

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Speaker 1: now because the economic effects have not filtered through yet,

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Speaker 1: but just that kind of rhetoric I think is much

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Speaker 1: more likely to add to support for Takeitu than the

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Speaker 1: other way around.

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Speaker 3: After the break the historical beefs between China and Japan,

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Speaker 3: and how the legacy of World War two underpins the

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Speaker 3: current tensions between Beijing and Tokyo, I wonder if we

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Speaker 3: can step back a little and James, you kind of

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Speaker 3: preface this a little before us, but I wonder if

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Speaker 3: we can talk a little bit about the historical beefs

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Speaker 3: between the two countries, because that obviously underpins perhaps a

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Speaker 3: lot of the reactions on both sides. What are the

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Speaker 3: old scabs, the old wounds in this relationship that might

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Speaker 3: be now being bloodied right now.

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Speaker 4: Obviously, the biggest issue between Johanna and China is left

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Speaker 4: over from World War Two. And by World War two,

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Speaker 4: I mean not ninety thirty nine to ninety forty five.

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Speaker 4: The Chinese definition of World War two, or they're fight

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Speaker 4: against the Japanese now is nineteen thirty one to ninety

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Speaker 4: forty five. Because Japan was a colonial power. Japan held Korea,

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Speaker 4: Japan held Taiwan, Japan took over a large chunk of

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Speaker 4: northern China, and then they gradually took more and more,

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Speaker 4: and then they've invaded Shanghai and Nanjing and southern China

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Speaker 4: in ninety thirty seven. And so that history of being

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Speaker 4: invaded by Japan over decades and millions and millions of

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Speaker 4: Chinese people being killed by the Japanese or dying because

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Speaker 4: of the effects of those wars at that conflict. So

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Speaker 4: there's this resentment and hatred because of the events of

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Speaker 4: that period to ninety forty five. And then there is

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Speaker 4: this belief that Japan is now trying to not take

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Speaker 4: back Taiwan as a colony, but it's trying to separate

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Speaker 4: Taiwan from its rightful place on the mainland, and also

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Speaker 4: this idea that the Japanese government, the Japanese people haven't

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Speaker 4: really repented sincerely on their actions during those various conflicts,

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Speaker 4: and so all that is bound together. It can be

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Speaker 4: incredibly angry, resentful attitude towards Japan. The historical question at

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Speaker 4: this story of a match live and it's made much

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Speaker 4: worse with the Chinese because of this. Status of Taiwan

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Speaker 4: is still very much contested.

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Speaker 3: Yeah, and Isabelle I wonder how does Japan see this?

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Speaker 1: Even within Japan, this is a hugely divisive issue. I

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Speaker 1: think going back to when ties were restored in nineteen

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Speaker 1: seventy two, from there on, Japan contributed huge amounts of

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Speaker 1: aid and there was lots of technological transfer, and I

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Speaker 1: think the feeling behind that for a lot of people

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Speaker 1: was we want to try and make up for the

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Speaker 1: things that we did wrong in the past. But there's

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Speaker 1: also a part of the population who feels like there

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Speaker 1: was nothing wrong. We waged a war. All countries wage wars.

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Speaker 1: We shouldn't be single alert for criticism just because we lost.

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Speaker 1: But I think nowadays, to be honest, people are not

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Speaker 1: looking so much at history in Japan. They're just thinking

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Speaker 1: we have this giant economic and military might right next

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Speaker 1: door to us, How are we going to manage to

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Speaker 1: sort of get along with them getting the economic benefits?

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Speaker 1: However we can without fooling under their sort of influence

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Speaker 1: too far.

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Speaker 3: Now it is about this back comes at a time

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Speaker 3: when Japan's economy is WOBBLI. We've seen GDP shrink, the

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Speaker 3: yen is weak, there's persistent inflation. China issued a travel

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Speaker 3: advisory warning its citizens not to travel to Japan. Is

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Speaker 3: there a risk there to the Japanese economy?

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Speaker 1: To a certain extent, there certainly is. Chinese people make

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Speaker 1: up a quarter of visitors to Japan at least so

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Speaker 1: far this year, and that's just really started to recover

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Speaker 1: in the last year or two from the pandemic period,

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Speaker 1: So yes, that could be quite damaging. On the other hand,

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Speaker 1: there have been a lot of complaints in Tapan about

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Speaker 1: over tourism and about poor manners on the part of

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Speaker 1: Chinese tourists in particular, so that might not damage take

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Speaker 1: support rates in particular.

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Speaker 4: And also tourism is an important source of foreign currency

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Speaker 4: revenue for the country, but a slight reduction in tourist

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Speaker 4: revenue isn't going to be as damaging as the risk

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Speaker 4: or the possibility of Japanese companies in China being targeted

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Speaker 4: or seeing boycotts. Japanese car companies still have billions of

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Speaker 4: dollars of investments here. Other Japanese companies have billions and

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Speaker 4: billions of dollars of investment here, seven to eleven, Uniclo Family, Panasonic,

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Speaker 4: Canon Fujitsu. You know, these are huge companies that do

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Speaker 4: a lot of revenue here. And if you start to

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Speaker 4: see real consumer boycotts, if you start to see businesses

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Speaker 4: pulling back from doing business with Japanese companies, then the

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Speaker 4: hit to Japan Inc. Could be substantial. While tourism is

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Speaker 4: very vivid in your face, the bigger thread is going

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Speaker 4: to be if this goes on for a long time

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Speaker 4: and Toyota sales in China crater even more than they've

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Speaker 4: already been falling. They're already falling because of competition from

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Speaker 4: Chinese companies. If those crater, then the effect of that

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Speaker 4: is going to be quite big for Japan's economy and

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Speaker 4: for those companies.

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Speaker 3: James, what's been the public mood in China over this?

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Speaker 4: Obviously the press and the government reactions is one thing.

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Speaker 4: But I think the thing that sticks out for me

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Speaker 4: so far at least, is there hasn't really been a

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Speaker 4: public reaction. Japanese restaurants are still full, and unlike previous times.

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Speaker 4: I was speaking to someone who's lived here for more

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Speaker 4: than twenty years, and they were saying, in two thousand

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Speaker 4: and five or in twenty ten, you saw Japanese restaurants

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Speaker 4: putting up signs in that windows saying where are in

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Speaker 4: by Chinese people? This is a Chinese restaurant. We just

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Speaker 4: sell Japanese food, and I haven't seen any sign of

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Speaker 4: that yet.

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Speaker 3: President Donald Trump has now entered the conversation as well,

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Speaker 3: speaking directly with both she and Takeichi. This week, Trump

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Speaker 3: and she held the first talk since agreeing to a

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Speaker 3: tariff truce, and Trump's readout of the phone call, they

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Speaker 3: discussed trade and Russia's war in Ukraine, but he made

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Speaker 3: no mention of Taiwan. Meanwhile, China's Foreign Ministry says she

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Speaker 3: told Trump on the call that Taiwan's return to China

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Speaker 3: is essential a cornerstone of the post World War two

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Speaker 3: international order. Hours after that conversation wrapped, spoke with Takeichi.

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Speaker 3: She said the US president reached out to reaffirm ties

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Speaker 3: with Tokyo and said she could call him any time.

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Speaker 3: The back to back calls show the US is tricky

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Speaker 3: balancing act managing tensions between a key US ally and

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Speaker 3: its biggest rival for most Japanese people, Though Isabelle says

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Speaker 3: they'd rather move past this issue altogether, I.

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Speaker 1: Think from the japan side, they will just continue making

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Speaker 1: these very sort of low key and modest but steady

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Speaker 1: efforts to try and smooth things over.

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Speaker 4: I do think it matters how well Takaichi San does

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Speaker 4: in any election that she calls. There's talk that election

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Speaker 4: might happen in January next year, and if that happens,

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Speaker 4: as she does win a majority, especially if she wins

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Speaker 4: a majority with her own party, that puts her in

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Speaker 4: a really good position to be the prime minister for

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Speaker 4: three years or more. And so if she can show

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Speaker 4: that she has domestic political stability or there is domestic stability,

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Speaker 4: she has domestic political strength, and couple that with not

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Speaker 4: saying things like this again or being vague when you

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Speaker 4: need to be vague, and that continued low key kind

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Speaker 4: of work by diplomats. Maybe over time there can be

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Speaker 4: an improvement in this, but I think if I don't

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Speaker 4: see any prospects of real improvement or change this year.

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Speaker 3: This is The Big Take Asia from Bloomberg News. I'm wanha.

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