China-Japan conflict hits trade

 
Ben Southwood
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THE FIERCE stand-off between China and Japan has taken its toll on the two countries’ trading, after numerous big Japanese firms temporarily closed operations in China yesterday.

Yesterday saw a continuation of the widespread violent protests that erupted last week, with attacks on well-known Japanese firms including Toyota and Honda, which drove many, including Panasonic, Canon and Mazda, to announce factory shutdowns.

Japan has exported £53.8bn worth of goods to China so far this year, placing its neighbour as its biggest export market, while China sent £66.7bn the other way.

But China threatened Japan with the possibility of “economic war” in an official Communist Party paper, saying that their trade relationship was of more value to the smaller country, and China would “take up the battle” if Japan “continued its provocations”.

The furore erupted last week when Japan bought the Senkaku island chain, known as the Diaoyu islands in China, from its private Japanese owners.

Protests could pick up today, which marks the 81st anniversary of the Mukden Incident, when Japan faked an attack on a Japanese railway company as a pretext to invade mainland China.

US secretary of defence Leon Panetta yesterday ruled out any intervention in the conflict, and urged both countries to calm down and resolve the issue diplomatically.

But neither country seems willing to step down, and a flotilla of some 1000 Chinese fishing boats are advancing on the islands, according to the state-run China News Service.