Japanese companies are increasingly abandoning an approach to business in China that once seemed immune to politics, a stark shift after years when they were the biggest single investors in their neighbor’s economy.

In an era defined by geopolitical risks and worry over China’s faltering growth, the economic math no longer adds up for the likes of Nippon Steel Corp., which said in July it was exiting its joint venture in China. Mitsubishi Motors Corp. suspended its local operations indefinitely last year, a casualty of slumping car sales and China’s rapid shift to electric vehicles.

Almost half of Japanese firms in China polled in a recent survey said they won’t spend more or will cut investment this year. Companies listed rising wages, falling prices and geopolitics as the biggest issues they faced.

“We are now past Japan’s peak economic engagement with China,” said Robert Ward, director of geo-economics and strategy at the International Institute for Strategic Studies in London.

The hurdles range from the US-Chinese tech competition to rising tensions in the Taiwan Strait, according to Ward. “Geopolitics is a significant factor” in the changing attitudes, he said.

The slow-motion rupture threatens an economic bond that dates back more than four decades, when Japan started to extend trillions of yen in development assistance to China by way of low-interest loans. Commerce and trade have been a pillar of an otherwise contentious relationship between the two Asian giants — summed up among academics by the catchphrase “hot business, cold politics.”

This time, the chill of geopolitical winds is proving hard to contain.

New foreign direct investment is on track to stagnate near 2023’s multi-year low after volumes in the first quarter fell to the lowest since 2016. It’s a turnaround for Japanese companies that had built up an FDI stock of almost $130 billion in China through the end of last year.

This is a turnaround from previous periods of bilateral tension, which didn’t affect investment much. Even in 2010-2012, when the territorial dispute between the two sides was hot and Beijing temporarily blocked shipments of rare earths to Japan, companies still increased their stock of investment by an average of 13% each year.