Japan firms warn China tensions threaten economy as BOJ rate hike wins support

More than two-thirds of Japanese companies expect the domestic economy to suffer from deteriorating ties with China, based on a Reuters corporate survey. Nearly half of the firms reported experiencing direct business impacts or expect to do so soon. Tourism and manufacturing sectors are notably vulnerable, with some firms already reporting decreased visitor numbers and strategic risks from China's control over rare earth supplies. On the monetary policy front, sentiment is more settled, with most supports for the Bank of Japan’s recent rate hike to a 30-year high of 0.75%, emphasizing the need for normalizing policy to avoid further yen depreciation.