The Foreign Ministry has set up a new agency to manage "economic diplomacy" in yet another sign that China intends to continue flexing its economic muscle to pursue its international goals. The newly established department of international economics is to "ensure China will be better involved in global co-operation and governance … in a bid to safeguard national interests and economic security", Foreign Minister Yang Jiechi said at the agency's inaugural meeting in Beijing yesterday. State Councillor Dai Bingguo told the meeting that economic matters were becoming ever more important to China's overall foreign policy. Until now, overseas economic affairs had been shared by the ministries of agriculture, commerce, finance and others. Analysts said the move, which comes at a time of increasing territorial disputes between China and its neighbours, showed that its leaders intended to keep leveraging on the country's status as the world's second-largest economy in international conflicts. Japanese carmakers reported tumbling Chinese sales last month after Tokyo bought the disputed Diaoyu, or Senkaku, islands, leading to calls for boycotts of Japanese products. Both Toyota and Suzuki saw monthly sales drops of more than 40 per cent from a year earlier, leading to concerns that the market share of Japanese brands in the world's biggest car market would continue to shrink. Shi Yinhong , an expert on foreign relations at Renmin University, said China had used economic weapons to punish some countries in the past, but "they were mainly ad-hoc reactions instead of a conscious strategy". For instance, China blocked imports of Philippine bananas during a flare-up in the country's territorial dispute in the South China Sea earlier this year. Analysts said Beijing had adopted a more aggressive approach because its economic sweeteners, such as foreign aid and favourable trade policies, failed to achieve desired results.