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Japan-China row to harm Asian economy

Publication Date : 19-09-2012

 

Representatives of two powerful business interests in Thailand - Japanese and American - yesterday shared the view that the territorial row between Japan and China will affect the Asian economy.

They hope the two countries will quickly find a compromise to end the conflict in order to continue growth in the region amid worries over the euro zone financial crisis.Setsuo Iuchi, president of Japan External Trade Organisation Bangkok (Jetro), and Joe Mannix, president of the American Chamber of Commerce in Thailand (AmCham), both voiced worries over the row between Japan and China over a chain of small islands, known as Senkaku in Japan and Diaoyu in China.

"The impact of the conflict depends on how long the situation continues," Iuchi said. "The worsening situation has created negative feelings. I don't want to see a big impact from the conflict. Hopefully, both sides will agree to a compromise solution."

However, the conflict may have a positive affect on Thailand and Southeast Asia as Japanese firms are looking to Asean in order to shift investments from China. Thailand, with its favourable business climate and integration with other Asean countries, will continue to be considered a major centre for Japanese investment, Iuchi said.

Nonetheless, China is considered as an important manufacturing base for Japanese firms due to its huge domestic market.

Mannix worried that the Japan-China conflict will affect the Asian economy, which up to now has been largely stable in the midst of the euro zone crisis and the slow recovery of the US economy.

"China's and Japan's economies have major implications on the region. The conflict could lessen the ability of Asian growth," Mannix said.

The AmCham president voiced hope that the governments of Asia's two economic giants will hold talks and come up with a positive solution in the short term in order to ensure continued economic growth in Asia.

Mannix voiced concern about the euro zone crisis, saying it would inevitably affect the US and other countries. Asia should strengthen growth to keep the global economy stable.

He also mentioned the controversy over the "Innocence of Muslims" film, which has sparked a deadly wave of anti-American violence across the Middle East. However, US and Mideast business relations were strong and the controversy should not have a major impact on the global economy.

"Unfortunately, the issue on the film has led to conflict between America and Muslims, although the issue is not related to the government. Normally, we have a good relationship. This too shall pass soon," Mannix said.

Meanwhile, news agencies yesterday reported closures of Japanese-owned businesses in China following widespread protests over the Senkaku-Diaoyu islands. Scores of Japanese-owned factories and stores were shuttered as anti-Japanese demonstrations raged in dozens of Chinese cities.

At stake are billions of dollars in investments and far more in sales and trade between the world's third and second-largest economies. The two countries are so closely entwined that both will suffer from any long-term disruptions.

According to Associated Press, big-name brands and retailers appeared to suffer the brunt of protests, with companies in lower profile sectors less affected.

Tokyo was pressing China through diplomatic channels to protect Japanese citizens and firms in China, Agence France-Presse reported, quoting the Japanese government's top spokesman.

Toyota, the world's biggest automaker, declined to offer specifics on shutdowns at its three assembly plants and six other factories in China. "Some [factories] will operate and some will not," a spokesman said.

Honda, which makes about 970,000 vehicles a year in China, said it had closed all five of its plants in the country, while Nissan temporarily shut two of its three factories.

Electronics giants Canon and Panasonic also said they were temporarily shutting some China operations, AFP reported.

 

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