China says tensions with Japan likely to hurt trade
By Ben Blanchard and Xiaoyi Shao ,Reuters Friday, September 14, 2012, 12:07 am TWN
BEIJING -- China warned on Thursday that trade with Japan could be hurt by the sudden flare-up in tension over a small group of disputed islands that is threatening relations between Asia's two biggest economies.
The United States earlier this week urged both sides to tone down their increasingly impassioned exchanges over an issue that has been simmering for years.
The latest volley of warnings from China follows Japan's announcement on Tuesday that it had bought the disputed islands in the East China Sea from a private Japanese owner, an act that Beijing called a violation of its sovereignty.
"With Japan's so-called purchase of the islands, it will be hard to avoid negative consequences for Sino-Japanese economic and trade ties," Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing.
The islands were at the center of a chill between the two in 2010 after Japan arrested a Chinese trawler captain whose boat collided with Japanese coast guard vessels near the disputed islands.
China is Japan's largest trading partner. In 2011, their bilateral trade grew 14.3 percent in value to a record US$345 billion.
Jiang hinted that his government saw nothing wrong with peaceful boycotts of Japanese goods. China is a major market for Japanese cars and electronics, and China's National Business Daily newspaper said that travel agents have reported cancelled bookings for tours to Japan.
"I still haven't seen any actions by Chinese consumers in response to the Japanese violation of Chinese territorial sovereignty, but if we do see them expressing their stance and views in a reasonable way, I think that would be their right," Jiang said.
A Nissan Motor Co. Ltd. executive said last week that the tensions are affecting business with China.
The row is the latest episode in troubled relations between the two neighbors. Their long-running territorial dispute erupted again last month when Japan detained a group of Chinese activists who had landed on the disputed islands, known as Senkaku in Japanese and Diaoyu in China.
Compounded by Domestic Politics
The row has been compounded by domestic political concerns on both sides, with China's ruling Communist Party preoccupied with a looming leadership handover, while Japan's ruling Democrats struggle with poor poll figures ahead of elections expected late this year.
Those political complications could make it even harder for the two governments to find a quiet way to back down.
"The Diaoyu islands dispute is pushing China and Japan towards confrontation, and Japan has chosen the wrong opponent at the wrong time and in the wrong place," said a commentary in the Global Times, a popular Chinese tabloid.
"The Diaoyu Islands conflict is a new turning point in the deterioration of Sino-Japanese relations."
On Thursday, protesters gathered at the Japan Embassy in Beijing, waving banners and the Chinese national flag while singing the country's anthem and shouting slogans.
Police allowed them to pass by the embassy in groups of around 40.
"Down with Japanese imperialism! Get the hell out of the Diaoyu Islands! Boycott Japanese goods," some of them shouted.
In 2005, an earlier surge of anti-Japanese resentment spilled over into sometimes violent protests in Chinese cities, and demonstrators trashed Japanese-owned shops.
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