Tension between Japan and China has escalated over the new Japanese leader's suggestion Tokyo could intervene militarily if Beijing attacks Taiwan.

Japan has now warned its citizens in China to be careful of their surroundings and to avoid big crowds amid a diplomatic row over Prime Minister Sanae Takaichi’s comments on Taiwan.

Less than a month into her term, Japan's conservative leader has stirred tensions with China by suggesting a Chinese move against Taiwan could prompt a Japanese military response.

Beijing is flexing its military and economic might to show its displeasure with the Japanese leader’s comments about defending Taiwan. But its aggressive approach risks backfiring.

Takaichi has called China an "important neighbor" and faces the challenge of balancing ties with both Beijing and Washington, Japan’s top trade partners, amid tensions over Taiwan and a territorial dispute over an island group in the East China Sea.

The first formal meeting between BOJ Governor Kazuo Ueda and new Prime Minister Sanae Takaichi could shape Japan's interest rate strategy. With market focus on potential rate hikes and currency volatility,