Island Dispute Turning into Ugly Trade War Between China and Japan
Chinese protests against Japan escalated over the weekend as angry demonstrators violently attacked Japanese businesses, forcing several of them to suspend their operations in the country. Protests of varying size and intensity broke out all over China on Sunday, with some taking the form of attacks on Japanese products and companies. Japanese car dealerships and grocery stores were looted and a factory belonging to Panasonic was set on fire. All of this because of the ongoing dispute over the Senkaku (or Diaoyu) island chain, which sits between the nations and is claimed by both.
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As a result of the outbursts, some of those Japanese companies have suspended their operations in China, canceling business trips and ordering all non-essential employees to stay home. Even many of the flights between the two countires have been canceled. Things could get even worse on Tuesday when China marks its memorial day for the Japanese occupation of China during World War II. According to The New York Times, the Chinese government has called for the protest to be orderly and peaceful, while at the same time stoking the fires in the media, by praising the patriotism of its people and urging them to stand up for themselves.
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An economic disruption is the last thing either country needs at the moment. Despite the animosity between the two nations, they are heavy trading partners and share the pain when the largest East Asian economy struggles. Yet, China is threatening economic sanctions of Japan over the the islands.
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Meanwhile, the United State is adding to drama by announcing it will file a complaint with the World Trade Organization this week over China's auto industry, which the Americans accuse of receiving unfair subsidies from their government. (Naturally, China responded with a complaint of their own.) At the same time, Defense Secretary Leon Panetta announced on a visit to Japan that the Americans will help deploy a missile defense system around the islands. Panetta will visit China, too, and says the U.S. isn't taking sides in the dispute, but it's a sure bet the Chinese won't appreciate more provocations. One fight at a time is enough.
