A Reuters poll of Japanese companies published on Thursday found that more than two-thirds expect economic growth to be negatively affected by tensions with China, highlighting how geopolitical friction is shaping corporate sentiment and investment plans in Asia’s second-largest economy. The survey showed that firms across sectors including manufacturing, technology and services anticipate direct or indirect business disruptions resulting from a deterioration in bilateral relations, especially amid political rhetoric around Taiwan and broader trade frictions.

Companies cited concerns over supply chain vulnerabilities, shifting partner priorities and potential policy barriers as key constraints on growth prospects. These sentiments come as Japan’s broader economic indicators show a mixed picture, with strong stock market performance driven partly by election prospects and stimulus expectations.

Export-oriented firms highlighted the risk of losing access to crucial Chinese demand as tariffs and trade barriers complicate cost and logistics.

Domestically focused businesses said weakening external markets could slow hiring and investment decisions, although some sectors like consumer services remain relatively insulated.

The poll underscores how geopolitical factors are increasingly integrated into corporate risk assessments and capital allocation choices across Asia.

Analysts say that broader regional cooperation and trade diversification strategies may help mitigate some of these risks, but uncertainties persist as geopolitical tensions evolve.

Source: Reuters.