Why Japanese planners still expected a fleet battle

Did Japan understand that Britain could strangle its trade while avoiding a decisive battle?

Yes, but Japanese planning expected Britain to advance in order to impose blockade, creating an eventual opportunity for fleet action.

Japanese planners understood that Britain could threaten trade and supply routes, but expected a British fleet to move forward in support of blockade. The Royal Navy did possess plans for such an advance, although it probably would have moved cautiously. British carrier reconnaissance and night-flying doctrine created a different tactical problem from the daylight carrier contest Japanese planners usually anticipated. During the 1942 Indian Ocean raid, a navigation error helped prevent a British night attack after near-contact. Assumptions about the enemy's pace and operating methods shaped Japan's expectation of a decisive battle.