China sends 1,000 boats armada to disputed island chain

On Monday, protests continued in Beijing, but were significantly smaller.
However, a number of Japanese businesses have suspended their China
operations until the situation calms down.

Panasonic, Canon, Honda, Mazda and Toyota have all stilled their factories,
while almost 200 “7-11” convenience stores have shut and Uniqlo, the clothes
retailer, has removed all the signs from its shop and shut its doors. One of
Panasonic’s factories had been sabotaged by its own workers.

“I want to leave,” said a Nissan executive, who declined to be named, to
Reuters in the southern Chinese city of Guangzhou. “Protests near my home
were horrifying over the weekend.”

Some of the protests have been violent, while others involved vandalism,
looting and arson. A man torched his Honda Civic outside one of the Japanese
carmaker’s showrooms in Shanghai. However, there have been no reports so far
of serious injuries to Japanese citizens in China.

The anger is likely to flare up again on Tuesday, the 81st anniversary of the
Mukden incident, in which the Japanese army blew up a railway in Manchuria
to serve as a pretext for an invasion.

Leon Panetta, the United States Defence secretary, said in Tokyo that both
sides should calm down.

“It is in everybody’s interest … for Japan and China to maintain good
relations and to find a way to avoid further escalation,” he said.

Mr Panetta also disclosed he would meet Xi Jinping, China’s
president-in-waiting, on Wednesday in Beijing. Mr Xi has only recently
reappeared after a two-week unexplained absence from the public eye.

The Chinese media has now called for public calm, and a spokesman for the
Chinese Foreign ministry said the government would protect Japanese firms
and citizens.

However, he added: “The gravely destructive consequences of Japan’s illegal
purchase of the Diaoyu Islands are steadily emerging, and the responsibility
for this should be born by Japan.”

The rising tide of nationalism comes as both China and Japan prepare for
transitions of leadership, and as both struggle with weakening economies.

China also warned there could be an “economic war” between the two countries.

“Japan’s economy will suffer severely if China were to impose sanctions on it.
China’s loss would be relatively less,” said Jin Baisong, an analyst at a
think tank linked to China’s ministry of Commerce. The headline of the
piece: “Consider Sanctions on Japan.”

China is Japan’s largest trading partner, and exports from Japan to China
amounted to 2.7 per cent of Japanese GDP last year. Total bilateral trade
was £212 billion. Already, companies have reported that sales of Japanese
cars and electronics have fallen in the last month.

However, Japan is also China’s third-largest export market, behind the US and
Europe, and is a major investor in China. More than 3.6 million Japanese
tourists visited China last year, while China sent one million tourists the
other way.

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