FOR MOST, the trauma of trying to collect debts owed by China's provincial international trust and investment corporations (Itics) has faded into a bad memory. But it could yet destabilise Sino-Japanese relations, the most important bilateral relationship in Asia.
Most bankers are focused on the next round of giant defaults by Asian issuers of high-yield debt - most, that is, except Japanese bankers, who remain infuriated by what they see as official Chinese indifference to their Itic plight.
Compared with the more than 30 trillion yen (about HK$2 trillion) in bad loans weighing down Japanese banks' balance sheets, the sums tied up in mainland Itics are a trifle, a few billion US dollars at most.
But the issue is as much about bad feelings as bad loans.
Japan's Foreign Minister, Yohei Kono, said last month that Japanese companies' interest in China could 'dry up' if the Itic-default issue was not resolved. Populist politicians want to tie future overseas development aid (ODA) to China to the successful negotiation of a settlement. A senior Foreign Ministry official cited 'a lack of sincerity from the Chinese side' and damage to the 'feelings of the Japanese people'.
Given the ever-prickly nature of Sino-Japanese relations, that hardly ranks as sabre-rattling. But a breakdown in commercial links between Asia's two giants bodes ill. Other frictions are also testing relations. Japan's politically powerful farmers are ticked off about a flood of cheap Chinese agricultural imports: the mainland's trade surplus with Japan last year rose to US$25 billion (about HK$195 billion). Meanwhile, mainland consumers have engaged in angry Japan-bashing, after Toshiba refused last year to pay compensation for dud laptop computers, despite reaching a settlement in the United States.