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Riots on Land and Standoff at Sea: Update on Japan/China Dispute

Tensions between China and Japan continue to rise. Japanese factories, shops, and even cars were attacked across China during riots over the past few days. Time has excellent photos of the protests.

Official media warn darkly of more Chinese economic pressure to come as some Japanese firms shut down production in China, Bloomberg reports:

Fast Retailing closed 42 of its Uniqlo stores in China, its second-largest market by outlets, and Aeon shut 30 of the 35 stores it has in the provinces of Guangdong and Shandong. Nissan Motor Co. (7201), the largest Japanese carmaker in China, halted production at two factories in the country…

“If things continue to deteriorate, a possibility, the damage could become serious, recovery might take a year or more, trade could contract,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages about $300 million in assets.

In 2011, China was the largest market for Japanese exports, while Japan was the fourth-largest market for Chinese exports. China’s shipments to Japan totaled $148.3 billion last year while it imported $194.6 billion of Japanese goods, according to Chinese customs data.

Meanwhile, Chinese ships, including at least two government vessels, have entered Japanese waters in the East China Sea. The current whereabouts of the 1,000 strong flotilla of Chinese fishing boats en route to the disputed Senkaku Islands is unknown; the WSJ reports that Japan is “still waiting” for their arrival:

The first line of response remains a small coast guard with no legal authority to expel foreign ships—a situation that has prompted calls from some politicians to beef up Japan’s defense capabilities in the area.

The trouble at sea could turn nasty if Japan and/or China deploy more and bigger ships to protect island claims and repel activists. On land, anti-Japan protests could threaten the $340 billion trade relationship between the two countries. Via Meadia hopes both governments see the wisdom and mutual benefit in calming everyone down.

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