Japan firms stop China operations after protests

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BEIJING: Japanese firms including Panasonic suspended operations at plants in China, companies and reports said Monday, after mass anti-Tokyo protests at the weekend over disputed islands in the East China Sea.

 

Speaking in Tokyo, US Defense Secretary Leon Panetta called for diplomatic  efforts to resolve the worsening spat, a day after warning “misjudgement on one  side or the other could result in violence, and could result in conflict”.
 
China is Japan’s biggest trading partner and the stoppages came as the  ruling Communist Party’s mouthpiece warned Japan’s economy could suffer for up  to 20 years if Beijing chose to impose sanctions over the territorial row.
 
Trade sanctions between Asia’s two biggest economies could cast a pall over  growth on the continent, which major Western countries are counting on to drive  recovery from the global slowdown.
 
Panasonic said it was halting work at a factory in Qingdao in northeast  China “for the time being” after a fire. The electronics giant had also  reportedly temporarily suspended two other plants, but no immediate  confirmation was available.
 
The camera and printer maker Canon, meanwhile, suspended three of its four  main plants Monday and Tuesday to ensure the safety of its employees, a company  spokesman told Dow Jones newswires.
 
Widespread anti-Japanese protests, some of them violent, have been held in  recent days over a group of small islands known as Diaoyu in China and Senkaku  in Japan. They are claimed by both but controlled by Tokyo.
 
The row intensified last week when the Japanese government bought three of  the islands, effectively nationalising them, and China responded by sending  patrol ships into the waters around them.
 
China and Japan have close trade and business ties, with numerous Japanese  companies investing in its larger neighbour and two-way trade totalling $342.9  billion last year, according to Chinese figures.
 
But the two countries’ political relationship is often tense due to the  territorial dispute and Chinese resentment over past conflicts and atrocities.
 
A new wave of protests is expected Tuesday, the anniversary of the 1931 
“Mukden incident” that led to Japan’s invasion of Manchuria, which is  commemorated every year in China.
 
A commentary in the People’s Daily newspaper on the possibility of economic  sanctions said: “Amidst a struggle that touches on territorial sovereignty, if  Japan continues its provocations China will inevitably take on the fight.”
 
The Japanese economy has already experienced two lost decades from the  1990s and was suffering further weakness in the aftermath of the world  financial crisis and 2011 earthquake, it added.
 
Japan in 2010 lost its title as the world’s second-biggest economy to  China.
 
“Japan’s economy lacks immunity to Chinese economic measures,” the  state paper said — although it added that given the interdependency of the  two, sanctions would be a “double-edged sword” for China.
 
The commentary — which only appeared in the paper’s overseas edition —  said possible targets could include Japan’s manufacturing and financial  industries, exports and investments in China.
 
“Strategic material imports” could also be affected, it said, an apparent  reference to rare earth metals used in many high-tech products including iPads  and iPhones.
 
“Would Japan rather lose another 10 years and even be ready to fall back 20  years?” it asked.
 
Shares of Chinese companies with business ties to Japanese firms fell in  trading in Shanghai as investors sold on worries that the territorial dispute  could hurt demand for their products.
 
Guangzhou Automobile Group, which has manufacturing joint-ventures with  Japan’s Toyota and Honda, was down 7.13 percent in afternoon trading. 
 
Dongfeng Automobile, controlled by a joint venture of Japan’s Nissan, fell  2.44 percent. -- AFP

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