Business

China-Japan Tensions Over Taiwan Didn't Hurt Highest Trade Since 2022
By Reuters | 14 Jan, 2026

China imported $16.4 billion worth of goods from Japan in December, the highest total since September 2022.

China bought more from Japan in December than at any point in the last three years, customs data showed on Wednesday, even as Beijing's sharper rhetoric over comments out of Tokyo about Taiwan fueled fears Beijing could restrict trade ties.

The world's second-largest economy purchased $16.4 billion worth of goods from Japan last month, the highest monthly total since September 2022. China's customs administration is expected to publish an itemised breakdown on January 20.

Ties between the Asian neighbours have deteriorated since Japanese Prime Minister Sanae Takaichi suggested to parliament in November that a potential Chinese attack on democratically governed Taiwan could be deemed an existential threat to Japan. China regards Taiwan as part of its territory, a claim that Taiwan rejects.

Takaichi's comments angered Beijing which has since cut flights and banned exports of dual-use items to Japan that can be used for military purposes, citing the prime minister's "egregious" remarks. China has also ramped up rhetoric and diplomatic efforts against Tokyo, warning it of a "crushing" military defeat if it intervened over Taiwan.

Japanese firms, particularly its automakers, are worried China will also ramp up rare earth export controls.

Beijing's export control list of around 1,100 dual-use items and technologies contains at least seven categories of medium and heavy rare earths that are used in magnets to power motors in car parts such as speakers and oil pumps.

They play an even bigger role in electric vehicles. 

But separate customs data showed China's rare earth exports in 2025 surged to their highest level since at least 2014, even as Beijing began curbing shipments from April, a move analysts saw as an effort to showcase its leverage over Washington while negotiators wrangled over a durable tariff deal.

Analysts are not discounting Beijing making moves to frustrate Japanese users' access to the critical minerals, should Tokyo fail to retract Takaichi's comments. 

China is Japan's second-largest export market after the United States, taking in 18% of total Japanese shipments, according to World Bank data.

But there is a big drop-off between the world's top two economies and Japan's third-largest trading partner, South Korea, which buys just $47 billion worth or 7% of Japanese goods each year, underscoring the economic leverage China's $19 trillion economy has over its neighbour. 

For the full year, Chinese shipments to Japan were up 3.5% in dollar terms, while imports rose 5.5%, Chinese customs data showed.

(Reporting by Xiuhao Chen and Joe Cash; Editing by Kate Mayberry)