Skip to main content

China warns Japan on economic fallout of island dispute

By Kevin Voigt, CNN
updated 3:06 AM EDT, Fri September 14, 2012
This disputed islands in the East China Sea are known as Senkaku in Japan and Diaoyu in China.
This disputed islands in the East China Sea are known as Senkaku in Japan and Diaoyu in China.
STORY HIGHLIGHTS
  • Chinese official warns island dispute will hurt economic relations with Japan
  • Beijing is Tokyo's largest trading partner, accounting for nearly 20% of Japanese exports
  • Sales of Japanese automobiles are down, despite booming car purchases in China
  • Control of the disputed islands would allow for commercial rights to the surrounding waters

Hong Kong (CNN) -- A Chinese official warned Thursday that Tokyo's move to "buy" a disputed island chain in the East China Sea would hurt trade between Asia's two largest economies.

The battle over ownership of the island chain, called Diaoyu by China and Senkaku by Japan, will "inevitably" have a negative impact on Sino-Japan economic ties, Vice Minister of Commerce Jiang Zengwei said Thursday, state-run Xinhua reported.

The islands sit among popular fishing waters and are also believed to be rich in oil resources. Ownership of the chain would allow exclusive commercial rights to the seas surrounding the islands.

There are signs the dispute is already hurting Japanese companies. Despite booming auto sales in China, sales of Japanese car brands are down 2% in China compared to a year ago, according to the China Association of Automobile Manufacturers. Meanwhile, sales of car brands from other foreign countries, including Germany, the U.S., South Korea and France, are up 25%, 19%, 12% and 4% respectively.

Disputed islands in East China Sea
Why is Japan feuding over islands?
U.S. in middle of China-Japan flap

Luo Lei, deputy secretary-general of China Automobile Dealers Association, said earlier this week that Toyota purchases have fallen 15% while Mazda sales are down 6% year over year.

Tensions between China and Japan -- the world's second and third largest economies, respectively -- escalated on Friday as Chinese surveillance vessels entered the disputed area to begin patrols and "law enforcement," according to Chinese state-run media.

China dispatched the ships after the Japanese government bought several of the islands from a private Japanese owner earlier this week.

The Chinese vessels entered Japan's territorial waters despite warnings from the Japanese Coast Guard, said Shinichi Gega, a spokesman for Japan's 11th Regional Coast Guard Headquarters.

Meanwhile Japanese Prime Minister Yoshihiko Noda said Tokyo would "take all possible measures to ensure security" of the islands, located between Okinawa and Taiwan.

China is Japan's largest trading partner. Nearly 20% of Japanese exports last year were sold to mainland China, compared to 15.3% exported to the U.S., according to figures from the Japan External Trade Organization.

At a meeting Tuesday, the Japanese government approved the purchase for 2.05 billion yen ($26.2 million) the group of small islands from the Kurihara family, a private Japanese owner, according to Chief Cabinet Secretary Osamu Fujimura.

China says its claim to the islands goes back hundreds of years. However Japan says it saw no trace of Chinese control of the islands in an 1885 survey, so formally recognized them as Japanese sovereign territory in 1895.

Japan sold the islands in 1932 to descendants of the original settlers. The islands were administered by the U.S. occupation force after World War II. But in 1972, Washington returned them to Japan as part of its withdrawal from Okinawa.

CNN's CY Xu contributed to this report

ADVERTISEMENT
Part of complete coverage on
updated 4:04 AM EDT, Thu October 9, 2014
Liberia, Sierra Leone and Guinea -- the three countries facing the biggest health crisis -- are also facing huge bills to try and contain the virus.
updated 9:16 AM EDT, Mon September 22, 2014
Twitter has lost its position in the top 20 coolest brands for the first time in three years.
updated 11:54 AM EDT, Thu September 25, 2014
As the crisis in Iraq escalates, CNN looks at how Iraq could crack down on ISIS' oil riches under the guidance of its new oil minister, Adel Abdul Mahdi.
updated 4:42 AM EDT, Fri August 29, 2014
Recep Tayyip Erdogan is Turkey's new president . So can he revitalize its economic fortunes?
updated 1:24 PM EDT, Fri September 19, 2014
Experts share their tips on cities they see as emerging financial hubs...they're not where you think.
updated 11:11 AM EDT, Thu October 9, 2014
Growing numbers of us are willing to serve as bank, teacher or travel agent to people we have never met, and entrust them to serve us in turn.
updated 8:44 AM EDT, Thu August 28, 2014
The European Union is stepping in to save its dairy from going sour.
updated 8:36 AM EDT, Mon August 18, 2014
Europe's deteriorating relationship with Russia has hit the region's growth, even before new food sanctions begin to bite.
updated 12:34 PM EDT, Wed July 16, 2014
With cyberattacks on the rise and here to stay, it's a modern-day challenge for people and businesses to get smarter about preventing them.
updated 9:24 AM EDT, Thu August 14, 2014
Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
updated 7:24 AM EDT, Fri September 19, 2014
Peer-to-peer finance lets businesses bypass bank loans. Creative companies with quirky ideas find new lending models advantageous.
updated 11:24 AM EDT, Sun July 20, 2014
Evidence points to pro-Russian separatists as perpetrators of the attack and Vladimir Putin is facing questions, David Clark writes.
updated 5:52 AM EDT, Wed September 3, 2014
CNN's Jim Boulden looks on the future of online shopping.
updated 10:40 AM EDT, Tue August 5, 2014
The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
ADVERTISEMENT