Executive summary
This report examines the political implications of Sanae Takaichi’s election as Prime Minister of Japan and its impact on regional security and international relations.
On October 21, 2025, Takaichi secured the leadership of the Liberal Democratic Party, reinforcing the party’s control over the government. Her appointment enhances Japan’s strategic partnership with the United States in countering China and North Korea, the latter having conducted a missile test on November 7, 2025.
Strengthened Japan–US ties may heighten instability in the Asia-Pacific and further complicate diplomatic engagement with Beijing.
Key Takeaways
- Takaichi’s appointment is an important sign of the consolidation of power by the Liberal Democratic Party, which has governed the nation since 2012.
- For the United States, Japan is an essential partner in containing the rise of the PRC within the First Island Chain, while the militarisation of Tokyo and Beijing could damage their trade relations.
Background information
On October 21, 2025, Sanae Takaichi became Prime Minister of Japan, after winning the Liberal Democratic Party (LDP) leadership election on October 4 against Shinjirō Koizumi.
Politically close to Shinzo Abe, Takaichi shares his views on Abenomics and the reform of Article 9 of the Constitution to strengthen the military capabilities of the Japan Self-Defence Forces to support the US effort to contain the military rise of the PRC within the First Island Chain.
After the withdrawal of support from the Komeito party, she negotiated an agreement with the Japan Innovation Party, obtaining a majority in both houses: 237 votes out of 465 in the lower house and a similar majority in the upper house.
Geoeconomic scenario
Japan occupies a strategic position on the northern side of the First Island Chain, bordering the Russian Federation, the Korean Peninsula and the island of Taiwan.
Its proximity characterises its geography to key sea straits — Korea, La Perouse, Taiwan and Miyako — which connect the Sea of Japan, the East China Sea (ECS), the South China Sea (SCS) and the Pacific Ocean.
Over the past decade, Washington, Tokyo and Beijing have progressively come to regard the ECS as a maritime area of geo-economic importance, for two main reasons.
- The presence of vast deposits of fossil fuels in the seabed, estimated at approximately 22 million barrels of oil and 482 billion cubic feet of natural gas; while, in 2020, the US Geological Survey (USGS) estimated that the East China Sea could hold between 1 and 160 oil fields, with resources ranging from 310 million to 1.7 billion barrels. It estimated 1 to 10 natural gas fields, with reserves ranging from 1.3 to 7.3 trillion of cubic feet (Tcf).
- The most important Sea Lines of Communication (SLOC cross the East China Sea), which connect the economies of Japan and the PRC to the markets of Europe and America. Among these, we can mention the Northern Sea Route (NSR), which in 2024 recorded a record cargo volume of approximately 37.9 million tonnes, with transit shipments increasing from 40 to 46% compared to the previous year, highlighting the importance of maritime corridors in northern Asia.
The PRC and Japan’s economies are highly interdependent and depend heavily on the ECS’s fossil fuel reserves and the trade routes that pass through it for growth and stability. After the pandemic subsided in 2020, bilateral flows recovered in 2021–2022, slowed slightly in 2023, and then stabilised in 2024, when total trade in goods reached 44.2 trillion yen (£292.6 billion), with Beijing accounting for 17.6% of Japanese exports and supplying 22.5% of Japan’s imports.
Tokyo continued to export semiconductor-related machinery and high-precision components, while the PRC continued to ship ICT hardware, electronics, and consumer goods, a pattern OEC bilateral composition data reflected.
Military scenario
In the Asia-Pacific region, the major threats to stability come from tensions between Beijing and Tokyo, as well as provocations by the DPRK. Beijing and Tokyo’s military buildup in the East China Sea, driven by a desire to control valuable energy resources and shipping routes, poses an economic threat to both nations, damaging trade and investment.
Prime Minister Takaichi introduces a further element of ambiguity into diplomatic and trade relations with Beijing. On the one hand, Tokyo remains dependent on the PRC for its economic functioning; on the other, it aligns itself with the United States in containing China’s growing military presence in the ECS, driven by the wealth of fossil fuels and pressure on Taiwan, to break the encirclement of the First Island Chain. This dual necessity creates tension between economic and strategic interests, undermining regional stability and complicating the management of diplomatic and trade relations between Japan and the PRC.
Indicators to Monitor
- Upcoming joint military exercises involving the United States, Japan, and China in the East China Sea, along with potential instability on the Korean Peninsula.
- Energy resource exploration and extraction programmes in the ECS seabed.
- The Takaichi government’s planned foreign and defence policy.
Conclusions
The ECS is a complex space, with military, economic and diplomatic risks closely intertwined. Japan’s dependence on the PRC for trade and investment contrasts with its alignment with Washington in containing China’s growing military presence, motivated by energy resources and tensions over Taiwan. Although the overall risk is high, careful diplomacy, economic engagement and regional security cooperation can help mitigate instability.
*Cover Image: Prime Minister of Japan Sanae Takaichi (Credits: 内閣広報室｜Cabinet Public Affairs Office, CC BY 4.0, via Wikimedia Commons)
