Tensions between China and Japan remain elevated due to Prime Minister Sanae Takaichi’s 2025 statements on potential Japanese involvement in a Taiwan contingency, prompting Beijing’s sustained diplomatic freeze, export restrictions, and coast guard patrols near the Senkaku Islands. Recent activity includes repeated Chinese vessel entries into disputed waters and surveillance of U.S.-Japan exercises, alongside Tokyo’s accelerated defense spending and missile deployments on southern islands. These gray-zone measures have not produced direct military engagements or escalatory incidents in the past month. Traders assign 98.1% probability to no clash before 2027, reflecting the absence of acute triggers, continued economic interdependence, and U.S. alliance deterrence. A rapid Taiwan crisis drawing in Japanese forces or an accidental collision during patrols could still shift odds before year-end.