China-Japan islands dispute dampens trade relationship

Photo: AP

Japan’s nationalization of Senkaku islands (Diaoyu islands in Chinese) erupted Chinese anti-Japan protects. Within three days, many Japanese stores, restaurants and factories have been smashed in China. And several major Japanese companies have suspended operations in China as a result.

Despite the crisis, the two Asia giants’ economies have been increasingly integrated in the past four decades. China is Japan’s top exports, accounting to 21% of Japan’s overall trade; and Japan is China’s second export destination, making up of 9%. of China’s. One of Japanese business representatives remarked that to abandon Chinese markets is not an option. But, clearly, the crisis happened early this week has hampered the hard-won economic ties developed over the years. Researchers suggest that the crisis may not result in significant economic impacts  in the short-term, but it may trigger Japanese firms rethink their international business strategies.

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