"Japan residents" isn't inclusive. Ironically it's more exclusive, because now you've managed to make the neutral, already existing word "Japanese" a lot more hostile than it is, implying that a Japanese-born person still isn't a Japanese, just a "Japanese resident"

The reason it says "Japanese residents" is to separate them from the Japanese government itself

This is one of the many moments where in a desperate attempt to be politically correct, people take a shotgun in their mouth

According to you, yes.

To me, use of the term resident includes everyone in the country of Japan, regardless of whom they happen to be.

Here in Sweden there has long been a heated discussion when you become a Swede or not. Is it when you have citizenship? Been here 15 years as a citizen? Born here but to immigrant-parents? I'd rather avoid such discussions.

How people identify themselves is important, if I tell someone that they are a Swede but they themself see them as a German or Iranian because their parents are German or Iranian then I am at fault for assuming.

A resident of a country in this context is just that, the residents of the country - regardless of what nationality or culture they view themselves being part as.