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Tuesday, September 18, 2012

Protests Escalate China-Japan Rift - Wall Street Journal

BEIJINGâ€"Protesters turned out in force in Chinese cities on Tuesday, escalating a territorial dispute between China and Japan, while Japanese companies again shut down stores and factories as a precaution against violence.

The demonstrations, while largely peaceful, underscore the sensitivities surrounding the fight over a clutch of uninhabited islands in the East China Sea.

Chinese officials on Tuesday said they reserve the right to take further action to assert their claims, while reports of the arrival of two Japanese nationals on the islands drew a complaint from China's Foreign Ministry.

U.S. Secretary of Defense Leon Panetta, meeting with senior Chinese military leaders on Tuesday as part of broader Asian visit, renewed calls for peace.

"We are urging calm and restraint by all sides and we encourage them to maintain open channels of communications in order to resolve these disputes diplomatically and peacefully," he said at a news conference on Tuesday with China Defense Minister Gen. Liang Guanglie. "It is in no country's interest for this situation to escalate into conflict that would undermine peace and stability in this very important region."

Gen. Liang suggested that China is leaving military options on the table but hoped to resolve the dispute through negotiation. "We do hope the Japanese government will undo its mistakes and come back to the right track of negotiation," he said.

"We reserve right to take further actions," he added. "That being said, we still hope for a peaceful and negotiated solution for this issue and we hope to work together and work well with the Japanese government in properly handling this dispute."

Sony Corp. and Toyota Motor Corp. joined a number of Japanese companies shutting down facilities in China on Tuesday as a precautionary measure.

Others including Seven & i Holdings Co., which owns 7-Eleven convenience stores and closed its outlets in Beijing and the southwestern city of Chengdu. Fast Retailing Co., the operator of Japan's rapidly expanding Uniqlo casual clothing store chain, said 42 of its 145 stores in China were closed Tuesday.

The crowds gathering in China on Tuesday were spurred by the anniversary of a 1931 event that provided the pretext for Japan to invade northern China in 1931, as well as continuous coverage of the islands dispute in China's state-controlled media. Both Beijing and Tokyo claim the islands, which are known as Senkaku in Japan and Diaoyu in China.

The protests appeared to be as big or bigger than protests over the weekend in terms of participants, though there were no signs of the vandalism that marked the earlier demonstrations.

In Beijing, a crowd of roughly 1,000 protesters hurled eggs at the Japanese embassy and held up portraits of Mao Zedong, shouting slogans such as "smash Japanese imperialism!" The protesters were surrounded by heavily armored riot police, who used loudspeakers and megaphones to call for peace even as they said Chinese officials agreed with their concerns.

In Shanghai, hundreds gathered in front of newly erected antiriot fencing in front of Japan's consulate chanting anti-Japanese slogans. Police permitted small groups of about 100 protesters at a time near the perimeter of the consulate.

In the southern manufacturing hub of Shenzhen, several hundred protesters crowded downtown under the watchful eye of still hundreds more paramilitary troops standing guard in front of the local Communist Party headquarters. The mainly young male crowd sang China's national anthem and chanted "10,000 years of life to Chairman Mao!"

"The Japanese are always bullying us," said one woman selling snacks to the crowd. "First they invade, now the Diaoyu islands."

Toyota said Tuesday it temporarily suspended some of its manufacturing operations in China. A Toyota spokesman declined to give further details. A person familiar with the matter said Toyota employees at its Chinese headquarters in Beijing were staying at home on Tuesday and weren't sure when they would return.

Sony said it suspended two of its seven plants in China the same day, but declined to give details of which plants are subject to the suspension.

Fitch Ratings said Tuesday Japanese auto and technology manufacturers' ratings may come under pressure should there be a further escalation of the clash between China and Japan over the islands and if tensions are prolonged.

Mitsumi Electric Co., an electronic parts maker, said Tuesday that anti-Japan demonstrators had broken into its plant over the weekend in the city of Qingdao, damaging part of a building and other facilities there. Another part of the plant has been burned down in an attack, the company said. The extent of the damage has yet to be confirmed, the company said.

Construction machinery maker Komatsu Ltd. halted all its plant operations in China on Monday and Tuesday. Stone-throwing protesters broke windows at one of its facilities on Sunday, the company said.

In Japan, Japan's top government spokesman said Tuesday that two Japanese nationals landed on one of the disputed Senkaku islands earlier in the day, citing the country's coast guard. "We have received a report that two Japanese nationals have landed on Uotsuri Island," Chief Cabinet Secretary Osamu Fujimura said at a news conference, adding that the two have since left the island.

In a statement on the website of China's Foreign Ministry, spokesman Hong Lei said the move "was a gravely provocative action violating Chinese territorial sovereignty."

Demonstrators in Beijing on Tuesday held high red banners urging fellow Chinese to protect China's territorial claims over the Senkaku and to oppose what is described by the government as aggressive moves by the Japanese there.

About 1,000 people marched in a continuous loop past the Japanese embassy in Beijing, while more than a 1,000 others looked on, taking pictures and waving Chinese flags. Hundreds of police, some clad in riot gear, formed a human shield that prevented protesters from approaching the embassy's cement blast walls. Police prevented large groups of onlookers from forming by insisting they keep walking and not stop to take pictures.

"Don't stop here, look out for your safety," police yelled through megaphones.

Portraits of Mao carried by protesters were more prevalent than in days past. Protesters said allusions to the former dictator were a challenge to China's current leaders, whom many protesters see as weak and unable to match actions with its harsh rhetoric directed at Tokyo in recent days.

One 23-year-old looked on from the sidelines of the protest on Tuesday. "The current government is relatively weak," he said, and unlike in the era of Chairman Mao, didn't present China as a strong country to the rest of the world. He said he wasn't optimistic this would improve under Xi Jinping, who is expected to replace Hu Jintao as president and Communist Party chief during an upcoming leadership transition.

He referred to the Foreign Ministry as the "Ministry of Protest," a jab at Chinese leaders' repeated statements that they are strongly protesting Japan's moves on the islands.

--James T. Areddy in Shanghai, Tom Orlik in Shenzhen, China, Dinny McMahon and Yajun Zhang in Beijing and Hiroyuki Kachi in Tokyo contributed to this article.

Write to Brian Spegele at brian.spegele@wsj.com and Julian E. Barnes at julian.barnes@wsj.com

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