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Exodus of Japan Inc. Slams China

The Japanese-Chinese imbroglio over the Senkaku Islands – or Diaoyudao Islands, as they’re called on the other side of the pond – has been artfully kept on the front burner with a mix of symbolic gestures, carefully orchestrated military provocations and reactions, “scholarly” papers, articles in the media, government pronouncements, and all manner of other artifices. And Japanese businesses, particularly automakers, have paid a steep price in China, where sales collapsed following the outbreak in the fall of 2012.

But now, decisions made one at a time by Japanese businesses are hitting the Chinese economy, at a moment when it can least digest such hits.

It didn’t help that the Shanghai Maritime Court seized a Japanese-owned iron-ore cargo ship. The owner, Mitsui O.S.K Lines Ltd., “still refuses to perform its obligations,” the court ruled, according to the Asahi Shimbun. These “obligations” date back to 1936, just before the Second Sino-Japanese War, when Zhongwei Shipping Co. in China leased two ships to Daido Kaiun, a predecessor of Mitsui O.S.K. The two ships were promptly confiscated without compensation by the Japanese military and sank in 1944.

Family members of Zhongwei’s founder first filed suit in Japan, but lost. In 1988, they filed suit at the Shanghai Maritime Court. In 2007, the court ordered Mitsui O.S.K. to pay $28.3 million in damages.

Other lawsuits have been filed in China against Japanese companies, demanding compensation for various wartime damages, including forced labor. Chinese authorities, adhering to the 1972 Japan-China joint communique by which China had relinquished its right to demand compensation for wartime damages, have long dismissed these lawsuits. But in March, as an indication that the honeymoon was over, a Beijing court allowed such a lawsuit to move forward for the first time.

And so the seizure of the ship was another “demonstration that the judicial authority is willing to take a hard line,” a source in Beijing told the Asahi Shimbun.

“Extremely regrettable,” is how Chief Cabinet Secretary Yoshihide Suga called the seizure during a news conference on Monday. “The move can undermine the spirit of the 1972 Japan-China joint communique from its very foundation and discourage Japanese corporations from doing business in China.”

And that’s exactly what has been happening for months – in a most dramatic way, and where it hurts China the most.

Read the rest of this post at Testosterone Pit.  View original post.

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