As tensions continue to escalate between Japan and China over disputed island territories, it remains to be seen whether and how their economies will be affected in the short and long-term. China is Japan’s largest trade partner, while Japan is China’s fourth largest trade partner; bilateral trade volume was over $340 billion US dollars in 2011.
Following our Aug. 31 post on island tensions in Northeast Asia, in this post we focus on Japanese and Chinese commentary on the economic dimensions of this crisis.
Officials in Japan urged both countries to act with restraint, while Japanese companies in China began looking for ways to reduce their dependence on China amidst declining sales across various sectors.
- Prime Minister Yoshihiko Noda warned China on Tuesday that demonstrations in China over the territorial dispute could weaken China’s economy by scaring away foreign investors. PM Noda encouraged both countries to “behave with restraint’, and urged the Chinese government toprotect the safety of Japanese nationals and Japan-affiliated companies.
- Japanese automakers Toyota and Nissan announced on Wednesday that they are cutting back production in China and have dampened their sales outlook for 2012. Koji Endo, auto analyst at Advanced Research Japan, stated that “For the time being I think you’re going to see Japanese automakers’ sales in China down by 20 to 30 percent. The last time we had protests like this in 2010, the effects only lasted about a month, but I think this time is going to be different.”
- Meanwhile, the Asahi Shumbun reported that Japanese businesses are looking for ways to reduce their dependence on China for rare earth elements (more…)