The Takaichi Fallout: Japan's election gamble and the collapse of rational choice

Editor's Note: Lin G. is a CGTN economic commentator. The views expressed in this article are the author's own and do not necessarily reflect those of CGTN.

With Japan moving toward an early election scheduled for February 8, the political gamble taken by Prime Minister Sanae Takaichi deserves careful scrutiny — not only for its domestic implications, but for the broader regional and economic consequences it entails. At the center of this moment is not merely an electoral calculation, but a deeper and more troubling departure from rational decision-making that has long underpinned economic and policy analysis.

In November 2025, Takaichi made extremely wrongful remarks concerning China's Taiwan region. These remarks crossed a clear red line from China's perspective, touching upon an issue that the Chinese government has long defined as its core interest and political bottom line.

China's position on the Taiwan question has been explicit, consistent, and repeatedly stated over decades: Taiwan is regarded by China as an inalienable part of its sovereign territory. This position has been clearly communicated to the international community, particularly in East Asia. Against this background, Takaichi's remarks cannot be interpreted as a misunderstanding or a diplomatic slip. Any attempt to encourage separatist tendencies — let alone to invoke the idea of external military alignment against the Chinese mainland — cannot be dismissed as accidental or exploratory.

This was a deliberate act, undertaken with full knowledge of its consequences. From China's perspective, such behavior places its author beyond the scope of political trust. Any additional provocation would simply push bilateral relations into a deeper and more damaging confrontation. Restraint at this stage cannot restore trust; it merely prevents the situation from becoming even worse.

Chinese authorities have made it clear that Takaichi's inappropriate political conduct will carry economic implications. These include adjustments in export controls on dual-use items,  implementation of stricter standards and inspections on certain Japanese imports, and a cooling down of Chinese public sentiment toward travel and consumption in Japan.

Some observers have noted that restrictions on dual-use exports extend to rare earth materials. This is a critical point. China is a critical player in the global supply of rare earths, particularly at the high-end segment where substitutes do not exist. Without access to these materials, Japan's advanced manufacturing — ranging from precision electronics to defense-related industries — cannot function. Performance, durability, and technological feasibility depend on the quality of rare earth materials. A disruption in this supply chain would strike at the foundation of Japan's high-end manufacturing sector.

Despite these well-known realities, Takaichi proceeded with her remarks, fully aware that they would inflict tangible economic costs. Even after facing clear signals of potential countermeasures from China, she chose to accelerate rather than ease the situation by announcing an early election in an apparent bid to consolidate her hold on power.

This raises a fundamental question: What explains such behavior?

From an economic standpoint, it is difficult to reconcile these decisions with the rational actor model. The assumption of a rational choice — that decision-makers seek to maximize welfare and minimize costs — does not hold here. The foreseeable outcome of this political line is a contraction of economic benefits and an expansion of risks. No standard cost-benefit analysis can justify it.

Recent data already hints at the direction of travel. According to figures released by Japan's Tourism Agency on January 21, Chinese tourist spending on accommodation and shopping in Japan fell by 17.9 percent year on year between October and December 2025. Trade frictions are also emerging. Japanese media have reported that certain exports to China, including alcoholic beverages, are facing longer customs clearance procedures, sometimes delayed by weeks. These developments remain limited in scope for now, more warning than punishment — but they are unmistakable signals.

Yet the most telling aspect of this episode lies not in policy, but in psychology. What we are witnessing is the breakdown of rational choice not merely at the level of individual leadership, but within a significant segment of the Japanese society itself. Support for such a high-risk political stance suggests that emotional impulses are increasingly overriding economic rationality.

This emotional undercurrent has been accumulating for years. On one level, there is deep-seated anxiety over China's rise. Japan once held a dominant economic position in Asia, and its failure to fully confront and come to terms with its own history of aggression has contributed to a distorted and emotionally charged response to China's growing influence. As China's rise has become an irreversible reality, fear and insecurity have, for some, displaced sober assessments of national interest. In such a climate, calls for pragmatic cooperation give way to confrontational gestures that offer emotional release but no material gain.

At the same time, there is a second, often overlooked layer of frustration: Japan's long-standing sense of constraint under the US-led security and economic framework. Anti-American sentiment exists within the Japanese society, but it has rarely found an open political expression. The memory of Japan's failed attempt to challenge US dominance in the late 1980s remains vivid. Since then, Japan has largely accepted a subordinate position under American protection, suppressing resentment rather than resolving it.

When negative emotions lack a legitimate outlet, they do not disappear — they are redirected. In this case, externalization has taken the form of hostility toward China. While China and the United States are fundamentally different actors, emotional politics does not operate on analytical precision. It operates through displacement.

This is how groups — not just individuals — can drift into collective irrationality. Behavioral economics and psychology have shown that rational assumptions frequently collapse under fear, resentment, and long-term emotional suppression. Japan's current political moment reflects exactly this phenomenon.

But emotional choices do not suspend reality. Political rhetoric carries real costs. The "Takaichi fallout" is not a theoretical concept; it is the measurable economic price of irresponsible political positioning. These costs will accumulate if Japan continues down a path driven by emotions rather than interests.

At this critical juncture, Japan should abandon its illusion of luck and recognize a basic truth: When rational choices give way to emotional impulses, the bill will always arrive.