Strongly doubt they can "replace" them.
Maybe we'll see a small studio or two from China, but overall it would take them at least a Gen or two to catch up with Japan.
I think with the success of the Xbox in Gen 7, people forget how Japan used to be like 90% of the industry in every gen prior to that starting in Gen 3 with the NES. That can't exactly be matched overnight, bigger economy or not.
The best chance they would have is if another gaming crash happens which isn't exactly a pipe dream looking at the current budgets for these things.
But to take over, you also need quality top to bottom i.e. dev studios that make hit after hit, and other markets would have to buy into those games much like how the US and EU ate up Japanese IPs once they came to the west via the NES and Sega consoles, and that's something that just can't be predicted.
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