Taiwan President Lai Ching-te showed his support for Japan on Thursday with a lunch of Japanese-sourced sushi, after China indicated it would ban all imports of the country's seafood in an escalating dispute over the Chinese-claimed island.

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.

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

China’s benchmark bond yield is poised to fall below Japan’s, a historic crossover that may reignite fears the world’s No. 2 economy is sliding into the deflationary spiral that paralyzed its neighbor in the 1990s.