TRADE
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Canton Fair

Diaoyu dispute to hurt Japan attendance at Canton Fair

PUBLISHED : Monday, 15 October, 2012, 12:00am
UPDATED : Monday, 15 October, 2012, 3:43am

The lingering territorial dispute between China and Japan over uninhabited islands in the East China Sea is set to deal yet another blow to the already gloomy outlook for China's biggest trade fair amid weak global demand and rising protectionism.

Prospects for trade between Asia's two biggest economies were "not optimistic", fair spokesman Liu Jianjun warned yesterday, with the number of Japanese buyers attending the Canton Fair, which starts today, likely to drop as a result of the diplomatic row over the disputed Diaoyu Islands, known as the Senkakus in Japan.

More than 6,200 buyers from Japan attended the previous fair in April, ranking eighth among 213 countries. Liu expects there will be fewer arriving in Guangzhou for the fair, which runs until November 4 but was reluctant to give a specific estimate.

"Both China Southern Airlines and China Eastern Airlines have cut flights between China and Japan, and that will of course reduce the number of Japanese traders," he said.

Two of Japan's biggest airlines, Japan Airlines and All Nippon Airways, have also cut back on flights between the two countries.

"This year, we actually made greater efforts in the hope of attracting more buyers from Japan, but the Diaoyu Islands incident has disrupted the plan, which will also lead to a drop in trade volumes between the two countries at the fair and hurt Chinese exporters," Liu said.

"Japan should take full responsibility for the current situation. But the Canton Fair still welcomes businesspeople and traders from Japan, as boosting economic ties is in the interests of both countries," he said, adding that 22 companies from Japan will be exhibitors at the fair.

Analysts said it was further evidence of the economic fallout from the diplomatic row.

Professor Wang Yuesheng, from Peking University, said a trade war between two sides would result in a "lose-lose" situation, despite Japan's dependence on China for export sales.

"China may have the leverage to drag down Japan's economy if a trade war happens, but its own industrial growth will also be deeply affected," Wang said.

China's exports rose 9.9 per cent year-on-year last month to a record high, but Liu couldn't yet say whether the worst is over.