1 Deadly attack on Japanese boy in China likely to cast shade on Beijing’s plan to attract foreign investment
Japanese boy stabbed in Shenzhen
On Sept. 18, a 10-year-old Japanese enrolled at the Shenzhen Japanese School was stabbed in the abdomen near his school. The boy died from his injuries in the early morning of Sept. 19 at the hospital where he was receiving treatment, according to Japanese consul-general in Guangzhou Kijima Yoshiko. Local police said that the boy’s assailant was a 44-year-old man surnamed Zhong and that he was arrested on the spot.
Japanese prime minister Fumio Kishida said the attack was “extremely despicable” and added that Tokyo had “strongly urged” Beijing for an explanation “as soon as possible.” The Japanese Chamber of Commerce issued a statement saying it takes the incident extremely seriously.
PRC foreign ministry spokesman Lin Jian said at a regular press conference on Sept. 19 that the case was being investigated and that China and Japan were “in communication.” Lin added, “China expresses its regret and sadness that this kind of unfortunate incident occurred.”
Japanese reactions to stabbing incident
1. Japanese media widely reported on the stabbing of the Japanese boy and connected the incident with the broader backdrop of anti-Japanese sentiment in China.
Sankei Shimbun reported that the incident shocked Japanese citizens living in China. A person involved in Sino-Japanese diplomacy told the newspaper, “In such a situation, it’s only natural that Japanese companies feel they cannot invest [in China].”
Yomiuri Shimbun reported, “It is not clear whether anti-Japanese sentiment was behind the incident. But since the beginning of this year, there have been several cases of Japanese people being victimized in China.”
NHK cited a survey conducted in July by the Japanese Chamber of Commerce and Industry in China that had the participation of more than 1,700 Japanese firms. Some of the respondents called for securing the safety of Japanese nationals after an incident in June where a knife-wielding man attacked a bus serving a Japanese school in Jiangsu’s Suzhou City. The respondents also expressed concern over the PRC’s revised anti-espionage law. Meanwhile, 45 percent of the respondents said they will reduce or make no investments in China in 2024.
Korogi Ichiro, a professor at Kanda University of International Studies, told NHK that investments in China, which are already decreasing, will be affected by the incident, and Japanese tourism will also be impacted.
2. Japanese companies and business groups in China took action to ensure the safety of expatriates in China.
- Panasonic Holdings Corp. said it will allow its employees and their families based in China to briefly return to Japan and cover related expenses. The firm also plans to offer counseling services for its employees over the latest incident.
- Toshiba Corp. issued notices urging its employees traveling to or residing in China to be careful of their safety. Toshiba has around 100 staff in Shenzhen and elsewhere under the Toshiba group of companies.
- Akihiro Fukutome, chairman of the Japanese Bankers Association, said, “We want the Chinese government to take thorough measures to prevent a recurrence” of such an incident.” He also urged member banks to assess the potential risks at their overseas locations and establish safety confirmation systems.
- Toyota Motor said that the care of employees and their families is the top priority, and urged caution.
- Honda Motor said it will “listen to requests from employees with family members and consider the response.” Honda has facilities in Guangzhou near Shenzhen.
- Nissan Motor said it will conduct interviews individually with expats who brought family to China to ease any worries. Nissan will also confirm safety measures at the schools attended by its employees’ children.
- Masanori Katayama, chairman of the Japan Automobile Manufacturers Association, urged the Japanese government to take extra measures to ensure the safety of Japanese living abroad.
- Mitsubishi Heavy Industries issued an email through Chinese affiliates telling employees to “take extra care to stay safe.”
Chinese reactions to the stabbing incident
Some locals in Shenzhen laid wreaths and left messages outside the Shenzhen Japanese School. NHK reported that a message written in Japanese read, “Shenzhen cries for you” and the attacker “does not represent the people of Shenzhen.”
A video circulating on Chinese social media had a Shenzhen resident saying, “Many of us have been taught this kind of hatred for a long time, which led to such evil consequences.” He added, “As Chinese, we oppose this sort of behavior, and we oppose hate education.”
A Chinese woman told NHK that she has a child who is around the same age as the Japanese boy and that the pain his parents must be feeling must be unbearable. Another woman said that the area where the boy was attacked is a safe place and Japanese companies were first to invest in the area after China’s “reform and opening up” began. The woman added that she empathizes with the Japanese people and is very sad that such a terrible incident occurred.
Additional background
1. Sept. 18 was the 93rd anniversary of the Mukden Incident, a false flag event by Japanese military personnel that gave Imperial Japan the pretext to invade Manchuria (Northeast China).
2. Data from Japan’s foreign ministry showed that there are about 102,000 Japanese expatriates in China, of whom nearly 20,000 are minors. There are 11 Japanese schools in China, with a total of about 3,300 students.
There were over 150,000 Japanese citizens residing in China in 2012, a period of expansion for Japanese firms. However, Japanese citizens began to leave China after the CCP stoked nationalistic fervor over the Senkaku Islands, resulting in large-scale anti-Japanese protests that year.
3. There have been a number of prominent anti-Japanese and anti-foreigner incidents in China or by Chinese citizens in 2024, including:
- May 31: Dong Guangming, a Chinese internet celebrity, urinated on a stone pillar and spray-painted the word “toilet” in English at the Yasukuni shrine in Tokyo.
- June 11: A man with the surname Cui stabbed four Iowa Cornell College instructors at a public park in Jilin Province.
- June 24: A man attacked a Japanese school bus near a Japanese school in Suzhou City. The man injured a Japanese mother and her child, and his attack led to the death of a Chinese woman (Hu Youping) who tried to stop him.
4. The Wall Street Journal reported that a video had appeared on Tencent’s WeChat days before the Japanese boy stabbing incident showing the Japanese school in Shenzhen and urging the local police to “expel” it from China. Many clips on Chinese video-streaming sites carried a similar message, suggesting that Japanese schools in China train spies and are “new colonies” (a description intended to recall the Japanese occupation of parts of China after the 1931 invasion).
Videos on the same theme showing Japanese schools in Beijing, Shanghai, and other parts of China attracted zealous comments calling for them to be closed.
5. On Sept. 21, Chinese short video social media Kuaishou announced that it had “dealt with” more than 90 accounts that “incited confrontation between China and Japan.”
Big picture
Beijing has been trying to court foreign investment amid deteriorating economic conditions and a worsening geopolitical environment for China. Recent measures include issuing a new “negative list” that removed restrictions on foreign investment and opening up the medical sector to foreign-invested enterprises.
Our take
1. The series of anti-Japanese incidents in China is the outcome of the CCP’s long-term propagation of hate-based nationalism. While the CCP has benefited from playing the nationalism card, this tactic is backfiring at an inconvenient time for the PRC.
i) The CCP’s relationship with Japan has shifted throughout history based on the Party’s interests at the time:
- During the Second World War, the CCP (founded as a Soviet front organization) colluded with Imperial Japanese forces on occasion as part of its strategy to weaken the Kuomintang government and eventually seize power.
- After the establishment of the PRC, Mao Zedong repeatedly expressed gratitude to Japan for invading China and providing the CCP with the opportunity to take power. The CCP also renounced its demand for war reparations from Japan in exchange for having the latter recognize its regime. Perhaps partly to reciprocate the CCP’s “goodwill,” Japan would provide substantial economic aid to China, with official development aid (ODA) totaling 3.65 trillion yen (about 255.1 billion yuan) from 1979 to 2018.
- The CCP would begin mentioning the Nanjing Massacre in the 1980s as the PRC courted Taiwanese investments in the early stage of “reform and opening up” and the Party gradually acknowledged the Republic of China’s role in the war against Japan. Thereafter, the CCP would bring up the Nanjing Massacre to stir up anti-Japanese sentiments whenever it needed to play the nationalism card to deflect attention away from domestic problems.
- The CCP’s restrictions on film content before 2013 led to the proliferation of anti-Japanese dramas. Some of these low-cost, high-profit productions would fabricate history and exaggerate events, and would later be mocked for being “anti-Japanese fantasy dramas.”
- Factions in the CCP elite also appeared to tap into anti-Japanese sentiments as part of their internal struggle. Some Chinese observers noted at the time that the Jiang Zemin faction could have had a hand in at least some of the anti-Japanese protests over the Senkaku Islands in the second half of 2012, citing the presence of protesters in demonstrations with banners declaring “Bo Xilai belongs to the people” (薄熙來是人民的). The observers speculated that the Jiang faction could be attempting to use anti-Japanese sentiment to cause trouble for Hu Jintao and the incoming Xi Jinping after Bo Xilai was purged in March 2012. If CCP factional struggle was indeed one of the reasons behind the 2012 anti-Japanese protests, then this would partly explain why the Xi leadership began restricting anti-Japanese dramas starting from 2013, as well as public gatherings and protests on the anniversary of the Mukden Incident that year.
- In recent years, the CCP has appeared to tap anti-Japanese sentiments to punish Tokyo for increasingly aligning itself with the United States and efforts to counter the PRC, including restricting China’s access to semiconductor technology. In August 2023, the PRC announced that it would completely suspend seafood imports from Japan in light of the latter’s decision to discharge Fukushima wastewater into the ocean. The CCP, however, would flip its stance on the issue after the Japanese boy stabbing incident. On Sept. 20, the PRC announced that it would “gradually resume” importing seafood from Japan after Beijing and Tokyo reached a consensus over the wastewater release.
ii) Xi Jinping has been continuously strengthening the promotion of “red nationalism” since taking power in 2012 as part of a broader effort to tighten the CCP’s control over society and maintain his grip on power. One of the double-edged consequences of encouraging ultranationalism, however, is the rise in anti-Japanese sentiment in Chinese society.
The recent spurt of violence directed towards the Japanese could be partly the result of growing frustrations as economic conditions in China deteriorate. The lower classes, who are more susceptible to being swayed by jingoist rhetoric, would be much worse affected by the economic downturn, making them more desperate and inclined to carry out physical attacks against the Japanese as they search for public sympathy and an outlet for their anger.
We believe that the CCP is now being held “hostage” by the hate-based nationalism that it has propagated over the decades. On the one hand, the CCP is seeing diminishing returns from playing the nationalism card to divert the public’s attention from domestic woes as the regime’s internal problems become increasingly severe. On the other hand, the CCP cannot completely abandon “red nationalism” and suppress the brewing of extreme hatred and actions without being scrutinized and criticized by its supporters.
2. The recent wave of anti-Japanese and anti-foreigner attacks in the PRC is severely damaging the business environment in China. The anti-foreign sentiment would further solidify the resolve of foreigners who are already considering leaving the country and undermine Beijing’s effort to attract foreign investment to stabilize the economy.
i) Foreigners are growing more pessimistic about investing and staying in China. For one, official CCP data shows that the Chinese economy is in a serious deflationary spiral and growth prospects are dimming. Foreigners are also troubled by Beijing’s heightened focus on national security (including the detention of foreigners on espionage charges), the highly politicized business environment, Chinese competitors receiving unfair state subsidies, perennial market access and regulatory barriers, the CCP’s lack of commitment to reform despite many pledges over the years, and China’s worsening geopolitical tensions.
The anti-Japanese and anti-foreigner attacks make foreigners directly concerned about their personal safety in the mainland. This could be a tipping factor that convinces some foreigners to pull investments and leave China, or adopt a more cautious approach towards investing in the country. Either way, foreign concerns about the business environment in China would negatively affect the CCP’s drive to attract foreign investments and prop up the economy.
ii) The rise of anti-Japanese incidents could accelerate the trend of Japanese companies pulling back from or exiting the country.
- In July 2020, Japan’s Ministry of Economy, Trade, and Industry announced a subsidy of 70 billion yen (about $500 million) to assist 87 Japanese companies in relocating their production lines out of China to Southeast Asia or back to Japan. The move aimed to reduce Japan’s dependency on China and establish a more resilient supply chain. According to interviews by overseas Chinese-language media Dajiyuan, about 150 to 200 firms had moved part or all of their production back to Japan as of the first half of 2024, and the number of companies doing so is expected to grow.
- China used to be Japan’s largest export destination. But after the pandemic, China’s weak domestic demand and sluggish economic recovery saw the U.S. surpass China as Japan’s top export market. In 2023, Japan’s exports to China fell by 6.5 percent (17.765 trillion yen) from the previous year, while exports to the U.S. grew by 11 percent (20.267 trillion yen) from a year ago.
- A Bloomberg News report from Sept. 8 noted that Japanese companies are increasingly souring on China after years of ignoring geopolitical risks and economic malaise in China. Bloomberg noted that Nippon Steel Corp. announced in July that it was exiting its joint venture in China, Mitsubishi Motors Corp. suspended its local operations indefinitely in 2023, and nearly half of Japanese firms in China polled in a recent survey said they would not spend more or would reduce investment in 2024.
- A Japanese Chamber of Commerce survey published on August 30 had over 60 percent of the over 1,700 companies polled saying that the current economic conditions in China are worse than the previous year.
iii) We believe that Sino-Japanese relations are likely to worsen alongside Sino-U.S. tensions. If anti-Japanese sentiments in China do not improve, a vicious cycle could emerge where Sino-Japanese relations are continually strained by Tokyo becoming more willing to confront the PRC, the CCP retaliating against the confrontation, and more Japanese companies being spooked into joining the exodus from China.
2 Washington keeps pressure on Beijing in the lead up to November election
Biden officials warn about China
Sept. 10
U.S. Deputy Secretary of State Kurt Campbell told reporters in Brussels after meetings with European Union and NATO counterparts that Beijing is directly aiding Russia’s military.
Campbell said that the latest materials that the PRC has provided to Russia are “not dual-use capabilities” and are “basically being applied directly to the Russian war machine.”
Campbell added that “these are component pieces of a very substantial effort on the part of China to help sustain, build, and diversify various elements of the Russian war machine.” He also said, “We’re seeing efforts at the highest levels of both governments to try to both hide and protect certain elements of this worrisome collaboration … Most of these activities have been driven underground.”
Campbell said Russia has started giving China submarine, missile, and other sensitive technologies in exchange for Beijing’s aid. Campbell added that the new technologies that Beijing is receiving will present a danger to the U.S., India, Australia, Japan, and South Korea “if China was able to receive greater engagement from Russia in perfecting certain military capabilities.”
Sept. 16
In a keynote address at an Air & Space Forces Association convention, Secretary of the Air Force Frank Kendall said, “I’ve been closely watching the evolution of [China’s] military for 15 years. China is not a future threat; China is a threat today.”
Kendall also said he observed an increasing concern and even alarm from countries in the Indo-Pacific region concerning the PRC’s growing capabilities and intentions. These include the PRC undertaking larger and more sophisticated exercises geared for an invasion and blockade of Taiwan.
Kendall said, “I am not saying war in the Pacific is imminent or inevitable. It is not. But I am saying that the likelihood is increasing and will continue to do so.”
Sept. 17
The Wall Street Journal reported that a group of senior U.S. officials led by the Treasury Department’s undersecretary for international affairs Jay Shambaugh would travel to Beijing from Sept. 19 to Sept. 20 to raise Washington’s concerns about Chinese goods flooding international markets.
Shambaugh told the Journal, “During our trip, we will further our discussions on China’s macroeconomic imbalances and industrial policies that risk causing significant harm to workers and firms in the U.S. and around the world.”
Sept. 18
Kurt Campbell told a House of Representatives Foreign Affairs Committee hearing, “Frankly, the Cold War pales in comparison to the multifaceted challenges that China presents. It’s not just the military challenges. It’s across the board. It’s in the Global South. It’s in technology.”
Washington maintains ‘tough on China’ posture
Sept. 11
The Financial Times reported that SEAL Team Six has been secretly planning and training for more than a year at its headquarters in Virginia Beach to aid Taiwan if it is invaded by the PRC. SEAL Team Six was the elite Navy special forces unit that killed Osama bin Laden in 2011.
Sept. 12
The Biden administration announced new measures to reduce the range of low-value imports eligible for duty and tax exemptions. The measures are largely aimed at Chinese e-commerce platforms like Shein and Temu.
Daleep Singh, the deputy national security adviser for international economics, said in a briefing that the administration’s actions “seek to remove de minimis eligibility for products subject to trade enforcement actions under Section 301, Section 201, and Section 232, bringing consistency across our U.S. trade laws.” Singh added, “Since approximately 70 percent of Chinese textile and apparel imports are subject to Section 301 tariffs, this step will drastically reduce the number of shipments entering through the de minimis exemption.”
Sept. 13
The Office of the U.S. Trade Representative announced the completion of its four-year review of China tariffs enacted under the Trump and Biden administrations. U.S. Trade Representative Katherine Tai said that the finalized tariff increases would target the PRC’s “harmful policies and practices” that “continue to impact American workers and businesses.”
Week of Sept. 9
The U.S. House of Representatives passed 25 bills during the so-called “China Week” to “protect Americans against the military, economic, ideological, and technological threats posed by the Chinese Communist Party,” according to a press release by the House Select Committee on the CCP.
Politico reported in its newsletters that the “China Week” had been scaled back in a number of areas (see here and here).
Sept. 17
The Financial Times reported that the U.S. and Japan are close to an agreement to restrict technology exports to China’s chip industry.
The Biden administration wants to introduce new export controls before the November presidential election, including a measure to get non-U.S. companies to obtain licenses to sell products to China that would aid its tech sector. Washington has been engaged in talks with Japan and the Netherlands in past months to establish complementary export control regimes that would see to it that Japanese and Dutch companies are not targeted by the U.S. “foreign direct product rule.”
Sept. 21
Leaders of the Quad — Australia, India, Japan, and the United States — met in President Joe Biden’s hometown in Wilmington, Delaware for the latter’s farewell summit.
The summit joint statement did not mention the PRC by name. However, the leaders said they were “seriously concerned about the situation in the East and South China Sea,” including “the militarization of disputed features” and “coercive and intimidating maneuvers in the South China Sea.” The leaders also condemned the “dangerous use of coast guard and maritime militia vessels, including increasing use of dangerous maneuvers” and efforts to “disrupt other countries’ offshore resource exploitation activities.”
The leaders announced joint coast guard operations in 2025, including having Australian, Japanese and Indian personnel spend time on a U.S. coast guard vessel. They also announced plans to expand the Indo-Pacific Partnership for Maritime Domain Awareness launched in 2022. Officials said that the countries plan increased military logistics cooperation.
Western media reported that Biden said in what were supposed to be behind-closed-door remarks to the other leaders that “China continues to behave aggressively, testing us all across the region, and it’s true in the South China Sea, the East China Sea, South China, South Asia and the Taiwan Straits.”
Biden also said on hot mic, “We believe Xi Jinping is looking to focus on domestic economic challenges and minimize the turbulence in China diplomatic relationships, and he’s also looking to buy himself some diplomatic space, in my view, to aggressively pursue China’s interest.” But Biden insisted that Washington’s recent “intense efforts” to lower tensions, including his call with Xi in April, were helping to prevent conflict.
Our take
The Biden administration is likely continuing with U.S-China diplomatic efforts and sounding the alarm about the CCP threat to deter Beijing from taking advantage of perceived political chaos in the U.S. to cause mischief. America appears to be particularly vulnerable now during President Joe Biden’s lame-duck period and before a contentious presidential election in November. Senior Biden administration officials would not want Beijing to exploit this vulnerability to double down on supporting Moscow, make menacing moves against Taiwan or spark trouble in the South China Sea, and interfere in U.S. domestic elections.
The Biden administration is likely also concerned with and attempting to push back on the CCP’s longer term plans to compete geopolitically with the U.S. and advance its domination agenda. For instance, Beijing appears to be directly supporting Russia’s war effort in Ukraine at a time when things are looking critical for Kyiv, and could potentially cause a “China Shock 2.0” through exporting its overproduction. Diplomacy aside, senior Biden administration officials also want to prepare the U.S. militarily to be ready to confront and compete with the PRC over the next decade and beyond.
Meanwhile, the passage of a slew of “counter-CCP” bills in the House of Representatives during the “China Week” indicates that Washington will continue to “get tough” on Beijing regardless of the outcome of the November presidential election.
