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Japanese firms shut China plants as violence continues

Honda,Mazda,Nissan,Panasonic,Canon among those stopping production

Written by Reuters | Shanghai,beijing | Published: September 18, 2012 1:19:37 am

Some major Japanese firms announced factory shutdowns in China on Monday and urged expatriates to stay indoors ahead of what could be more angry protests over a territorial dispute between Asia’s two biggest economies.

China’s worst outbreak of anti-Japan sentiment in decades led to weekend demonstrations and violent attacks on well-known Japanese businesses such as car makers Toyota and Honda,forcing frightened Japanese into hiding and prompting Chinese state media to warn that trade relations could now be in jeopardy.

Another outbreak of anti-Japan sentiment is expected across China on Tuesday,the anniversary of Japan’s 1931 occupation of parts of mainland China.

Chinese Foreign Ministry spokesman Hong Lei said the government would protect Japanese firms and citizens and called for protesters to obey the law.

“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,” he told a daily news briefing.

China and Japan,which generated two-way trade of $345 billion last year,are arguing over the uninhabited islets in the East China Sea,a long-standing dispute that erupted last week when the Japanese government decided to buy some of them from a private Japanese owner. In response,China sent six surveillance ships to the area,which contains potentially large gas reserves.

The weekend protests not only targeted Japanese diplomatic missions but also shops,restaurants and car dealerships in at least five cities. Toyota Motor Corp and Honda Motor Co said arsonists had badly damaged their stores in the eastern port city of Qingdao over the weekend.

Toyota said its factories and offices were operating normally.

Honda said it would suspend production in China starting on Tuesday for two days. Mazda Motor Corp will halt production at its Nanjing factory for four days. Nissan Motor Co suspended production for two days,starting Monday.

Panasonic said one of its plants had been sabotaged by Chinese workers and would remain closed through Tuesday. Canon Inc too will stop production at three of its four Chinese factories on Tuesday.

Japan also warned its citizens about large-scale protests in China.

Japanese PM Yoshihiko Noda,who met visiting US Defence Secretary Leon Panetta on Monday,urged Beijing to ensure Japan’s people and property were protected.

Dispute over uninhabited islets in East China sea

What is the dispute about? Asia’s two biggest economies are fighting over a group of uninhabited islets in the East China Sea. The current unrest is over the islands — called the Senkaku by Japan and Diaoyu by China — which are also claimed by self-ruled Taiwan.

Why are the islands important? The two sides have also been at odds over China’s search for natural gas and oil in the area. They agreed in 2008 on principles to resolve the feud by jointly developing gas fields,but efforts have foundered.

What is the trigger of current unrest? Ties deteriorated sharply last September when Japan detained a Chinese skipper whose trawler collided with Japanese patrol boats near the islands. The dispute erupted last week again when Japan decided to buy the islands from a private Japanese owner for $26 million. In response,China sent six surveillance ships to the area.

What is the economic impact? Two-way trade between the countires last year was to the tune of $345 billion. China is Japan’s biggest trade partner and Japan is China’s third largest. Any harm to business and investment ties would be bad for both economies.

What to expect? Tuesday is the anniversary of Japan’s 1931 occupation of parts of mainland China,a date that Tokyo fears could trigger another outbreak of anti-Japan sentiment.

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