Navigating the Geopolitical Tightrope: The US-Japan Alliance and Japan's Overreliance on China

Japan is in a precarious position as US-China tensions grow. Economically tied to China but deeply dependent on the US for security, Japan could face serious consequences if conflict erupts between the two powers. To reduce vulnerabilities, Japan should pursue economic diversification to lessen its dependence on China, as well as strengthen its defense capabilities to enhance deterrence and the US-Japan alliance. This dual approach offers the best path to safeguard Japan’s interests and its shared worldview in an increasingly unstable geopolitical environment.

Japan's Economic Ties with China
China is Japan's largest economic partner, highlighting significant economic interdependence between them (Ministry of Foreign Affairs of Japan, 2024a). Moreover, both governments acknowledge the mutual economic benefits of close ties (ibid.). As a result, China serves as Japan's biggest import partner and second biggest export partner (Yinru, 2024). This trade facilitates the exchange of essential goods, including semiconductors, industrial equipment, and electronic parts from Japan to China, and telecommunications and computer equipment from China to Japan (Ministry of Foreign Affairs of Japan, 2024b). The Japan-China economic relationship has grown tremendously, with over a 300-fold increase in trade volume since 1970 (Bojiang, n.d.).

In 2022, Japan-China trade totaled $335 billion, accounting for 20.3% of Japan's total trade (Ministry of Foreign Affairs of Japan, 2024b). This volume is substantial when compared to Japan’s second largest trade partner, the United States, which stands at 13.9% (ibid.). The strong economic relationship extends to foreign investment, with China being a primary destination for Japanese private sector investment across various industries, totaling $9.2 billion in 2022 (ibid.).

The US-Japan Alliance
The United States is Japan's most important ally, with significant security and defense ties established under the 1960 Treaty of Mutual Cooperation and Security (Ministry of Foreign Affairs of Japan, 2021). The alliance is built on shared interests, including stability in the Indo-Pacific region and the safeguarding of political and economic freedoms (Bureau of East Asian and Pacific Affairs, 2020), which promote cooperation across various domains. Currently, 55,000 US troops are stationed in Japan, along with advanced military capabilities such as US Air Force F-35s and US Navy carrier strike groups (Bureau of Political-Military Affairs, 2025). Japan provides financial and material support for these deployments, including the provision of military bases (Bureau of East Asian and Pacific Affairs, 2020). 

US and Japanese troops regularly conduct joint training and exercises, like the annual Keen Sword Exercise, to enhance interoperability and coordination (Cropsey and Isomura, 2018, 14-15). Their security cooperation has expanded to include ballistic missile defense, cyberspace, outer space, and maritime security, among others (Ministry of Foreign Affairs of Japan, 2025). The US also assists Japan in modernizing its military capabilities through materiel sales, with over 90% of Japan's foreign-made military equipment purchases coming from the United States (Bureau of Political-Military Affairs, 2025). A notable example is Japan's 2020 order of 105 F-35s, valued at over $23 billion, the second largest US weapons sale in history (ibid.). The US-Japan alliance and US troop deployments in Japan are vital to both parties because they support the US’s ability to counter China in the Indo-Pacific region.

Geo-political Tensions Between China and the US
US-China relations can be characterized as a global strategic competition (Stango, 2024, 15). According to Mearsheimer (2021), China’s rise as a US competitor with a fundamentally different worldview will only lead to pessimistic prospects for their relationship. China aims to displace US influence by leveraging control over modern technologies that can shift the global order (Stango, 2024, 4, 15). Consequently, the US seeks to count on the support of like-minded countries (ibid.), as seen in the US approach to NATO today. The Trump administration has argued that Europe needs to step up, advocating for Europe to take more responsibility for its own security (Hegseth, 2025). As framed by US Secretary of Defense, Pete Hegseth, increased European contributions are absolutely necessary to support the US in placing more focus on countering what it sees as the bigger threat, China (ibid.).

Several factors contribute to US-China tensions. Firstly, China is rapidly modernizing and expanding its military, increasing its influence in East and Southeast Asia (Xiying, 2021). According to 2024 reports, China has a shipbuilding capacity of more than 230 times that of the US (Palmer et al., 2024). While the US still leads in defense spending, China has been closing the gap (Stavridis, 2021). Secondly, China seeks to dominate high-level technological industries, intensifying competition as the US aims to constrain China's self-sufficiency in areas like Artificial Intelligence (Stango, 2024, 4; Graylin and Triolo, 2025). Thirdly, economic relations have significantly deteriorated since 2018, with the US-initiated trade war under the Trump administration, and these tensions continue to persist today (Bown and Kolb, 2025). China also seeks to reduce the US dollar's influence as a global reserve currency (Chivvis, 2024, 67). Finally, Taiwan remains a major point of contention. While China seeks reunification, the US is argued to ambiguously support Taiwan due to several reasons, including its economic importance (especially in the semiconductor industry), strategic positioning in Southeast Asia, as well as its regime status as a democracy (Bellocchi, 2023; Green and Talmadge, 2022). Consequently, China has increasingly threatened Taiwan, especially through offensive simulations such as encirclements and supply route blocks (Ng and Wingfield-Hayes, 2024). Overall, a US-China conflict, particularly over Taiwan, is increasingly viewed as inevitable (Maher, 2023).

Japan's Positioning
Japan benefits from strong economic ties with China and a robust security alliance with the United States. However, shifting global geopolitics could leave Japan in a vulnerable position, especially considering growing US-China divergences. A potential US-China conflict would likely see Japan back the US, particularly in light of shared worldviews and indispensable military ties that serve as the backbone of Japan’s security strategy (Stango, 2024; Tokuchi, 2025). The US also relies on Japan’s contributions to Indo-Pacific stability and would need Japan's fundamental involvement in a conflict with China (Cancian et al., 2023). 

Conversely, Japan’s close economic relations with China give Beijing significant leverage. Japan is highly dependent on China for imports of high-level technological goods, household appliances, and rare earth metals (Read, 2024; Yinru, 2024). Furthermore, imports of key agricultural chemicals from China make Japan's domestic agricultural industry largely vulnerable (Read, 2024). Among G7 members, Japan has the highest dependence on a single foreign economy, China (Nishino, 2024). Currently, China accounts for more than half of the import value across 1400 product categories for Japan, accounting for 30 percent of its total imports (Read, 2024). Should supply chains be disrupted, Japan would also face significant challenges in rapidly finding alternative goods suppliers (Bojiang, n.d.). 

Japan recognizes this vulnerability. In 2024, the Japanese government listed rare-earth elements, semiconductors, and fertilizer chemicals as critical goods (Read, 2024). Despite efforts to de-risk its rare-earth supply chain, Japan’s overall economic dependence on China continues to increase (Magunna, 2024; Yinru, 2024). Its economy is deeply intertwined with and over-reliant on China in key sectors, placing Japan in a precarious position. Experts believe that a US-China conflict could severely impact Japan's economy, a vulnerability that would be difficult and slow to mitigate (Aoyama, 2024). This raises the question: what actions can Japan take in light of this situation?

Economic diversification
Japan should pursue a strategy of economic diversification away from China, focusing on critical sectors and the reduction of overall trade volume. Japan should strengthen trade relationships with key states in the Pacific region, working to actively replace supply chains for critical goods, such as rare-earth elements, with like-minded partners. This would be critical to increasing the resilience of Japan’s economy, especially during times of geopolitical tension, like a potential US-China conflict. 

Existing trade platforms in the Pacific region, like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have already been initiated between Japan and like-minded partners and could be used to facilitate increased trade for critical goods. The CPTPP reduces trade barriers between Japan and ten like-minded Pacific states, including Vietnam, Malaysia, and Canada (Government of Canada, 2023). Vietnam, for example, is increasingly becoming a key player in high-level technology production and has attracted record amounts of investments (Dat, 2025). Moreover, Canada holds some of the largest global deposits of rare-earth elements (Government of Canada, 2024). Further trade partnerships with these countries could help Japan alleviate its dependence on China for critical goods, lessening vulnerabilities during peacetime and in conflicts. The Japanese government should also encourage Japanese businesses to invest more in the markets of like-minded partners, such as the EU and the US, reducing private sector ties to China while boosting the development of the markets of Japan’s partners.

Increasing Deterrence
Japan should also enhance its deterrence capabilities against China to improve regional stability and reduce the likelihood of conflict in the region. This can involve two main approaches: 1) strengthening military capabilities to complement US power in the Indo-Pacific and 2) expanding and strengthening its alliances in the region and beyond. 

Japan should actively bolster its military capabilities, as it heavily relies on the US. While its defense spending has been temporarily boosted until 2027 (Ministry of Defense of Japan, 2024, 9), Japan should aim to sustain high levels in defense investment. This would mirror the target NATO members will soon likely agree on to reach a defense spending of 5 percent of national GDP. Defense spending should target modern technologies like defense systems, unmanned military technologies, and improved intelligence capabilities, among other domains (Ministry of Defense of Japan, 2024, 21).

Japan should also actively expand and strengthen its security and defense alliances, particularly with like-minded states in the Indo-Pacific, many of which are also US allies. Japan already cooperates with several ASEAN nations on maritime security (Ministry of Foreign Affairs of Japan, n.d.), and should promote deeper defense and security cooperation, including joint training exercises. It should also expand its security and defense cooperation with European states, particularly with nations like France and the UK. Promoting further collaboration would enhance Indo-Pacific stability and give Japan greater flexibility in crisis responses.

Conclusion
Japan should pursue both economic diversification and increased deterrence in the Indo-Pacific region. Japan is currently in an exposed position and must reduce its economic vulnerabilities by securing alternative supply chains for critical goods. While deepening trade ties with partners may yield some success, Japan is very unlikely to achieve full diversification (Aoyama, 2024). Therefore, increased deterrence is also necessary to enhance Indo-Pacific stability and increase costs and consequences to reduce the chance of a US-China conflict.

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