Souring Sino-Japanese ties spread to business

Trade interests have kept political tempers at bay, but rising tension may change situation

Chilly relations between Tokyo and Beijing have spilled over into economic ties, crossing a line previously protected by mutual interest.

Relations have soured over the disputed Diaoyu Islands and Japanese Prime Minister Junichiro Koizumi's remarks on a controversial shrine for Japan's war dead.

The discord surrounding these issues carried over into a signing ceremony last Tuesday of an agreement that will see Japan extend low-interest loans to China. Vice-Foreign Minister Wang Yi pulled out of the signing. His withdrawal was interpreted by Japanese media as being related to the detention and expulsion of seven Chinese activists who landed on one of the Diaoyu Islands last month. The agreement was signed and exchanged without key officials meeting each other.

This incident further irritated the sombre mood surrounding Japanese Foreign Minister Yoriko Kawaguchi's two-day visit to Beijing at the weekend.

In a surprise change of plans, a meeting with Premier Wen Jiabao was added to her schedule. The two emphasised their respective positions on the sovereignty of the Diaoyus, and Mr Koizumi's repeated pilgrimages to the Yasukuni Shrine where some Japanese war criminals are honoured.

State councillor Tang Jiaxuan and Foreign Minister Li Zhaoxing took hardline positions in meetings with Ms Kawaguchi on these issues.