China is trying to impose economic costs on Japan for wading into the issue of Taiwan. But experts say the escalating dispute could ultimately hurt China too.

The workaholic new prime minister is riding high despite the perils of a fight with Beijing.

Chinese Foreign Minister Wang Yi says Japan has "crossed a red line” with comments by the country's new leader suggesting a potential military intervention over Taiwan.

If Japan’s hawkish new prime minister, Takaichi Sanae, has her way, Japan’s security evolution will quicken. The country’s military build-up is a response to increasingly aggressive neighbours in China and North Korea and to an ever more unreliable ally in America.

China and Japan are two of Asia’s most powerful nations and the region’s biggest trading partners. Yet centuries of intense rivalry mean their economic embrace can never be taken for granted.

China stepped up its economic war with Japan on Wednesday as a dispute between Asia’s two biggest economies intensified over a remark by Tokyo's new leader about a Japanese response to any Chinese military move against self-ruled Taiwan.

Conditions are ripe for a strong rally in the 'safe haven' Japanese yen, with a global stock market selloff sparking volatility across asset classes. But the Japanese currency is falling fast, calling into question its long-perceived role as a preferred hiding spot for spooked investors.

The remarks come amid the two countries’ worst diplomatic crisis in years, after the Japanese prime minister said a Chinese attack on Taiwan could trigger a military response from Tokyo.