China cold-handles Tokyo meeting

> China cold-handles Tokyo meeting Tokyo – Two top Chinese officials will not attend this week’s world financial conference in Tokyo, in a thinly veiled move…

> Tokyo – Two top Chinese officials will not attend this week’s world financial conference in Tokyo, a thinly veiled rebuff to express China’s dissatisfaction with Japan’s handling of the two countries’ dispute over island sovereignty.

On Wednesday, Japanese officials confirmed that China had made the above-mentioned decision at the last minute. At the same time, according to a Japanese news agency, the Japanese government may officially recognize for the first time that China has also made sovereignty claims to these uninhabited islands in the East China Sea (called the Senkaku Islands in Japan and the Diaoyu Islands in China) in an attempt to ease the stalemate between the two countries.

China’s finance minister and central bank governor will not attend the annual meetings of the International Monetary Fund and the World Bank. China’s decision is the latest sign that a highly volatile territorial dispute is taking a toll on China and Japan’s far-reaching economic ties. China and Japan are the world's second and third largest economies respectively.

Last month, tensions between the two countries increased when the Japanese government purchased three of the five islands from their owners, who are Japanese citizens. The island purchase triggered fierce demonstrations across China, with protesters attacking Japanese companies and even Japanese-brand cars and their owners.

The current situation is particularly risky for Japan. Japan's long-stagnant economy has become increasingly dependent on China, as China is both Japan's production base and a high-growth market for Japanese goods. Japanese automakers reported a sharp decline in sales of Japanese cars in China on Wednesday amid a boycott of Japanese products by Chinese consumers. Afterwards, Japan's main stock index fell 2%.

Japanese officials said they had expected Chinese Finance Minister Xie Xu and People's Bank of China Governor Zhou Xiaochuan to attend the Tokyo meeting, which would also include financial leaders from 180 countries. They said they were suddenly informed earlier this week that the Chinese delegation would be led by two lower-ranking officials, a deputy governor of the central bank and a deputy finance minister.

Officials also said that executives from China's four major state-owned banks, including the Industrial and Commercial Bank of China and Bank of China, will be absent from the Tokyo meeting.

They said they did not know why Chinese officials canceled their trip to the meeting, and refused to comment on whether the decision was related to the island dispute. However, Japanese Foreign Minister Koichiro Gemba said the decision was "very disappointing."

Genba Koichiro told reporters, "I don't think China will benefit from this. Think about how the international community will interpret this behavior."

Japanese political analysts said that the reason why China changed the established arrangements was to use its growing economic influence to pressure Japanese Prime Minister Yoshihiko Noda and force the latter to make concessions. They say China has gradually shown a willingness to use economic pressure starting two years ago, when it stopped exporting rare earths to Japan and forced Japan to release a Chinese fishing captain detained near the Senkaku Islands. Rare earths are one of the important raw materials for the Japanese electronics industry.

"China is linking territorial disputes and financial matters in order to control Japan," said Koji Murata, a professor of international relations at Doshisha University in Kyoto. "The message China has conveyed is that it is ready to use its influence on the international economic stage to put pressure on Japan."

China has also put pressure on Japan in another way. Since last month, they have sent unarmed maritime surveillance ships to patrol the waters near the disputed islands almost every day. Japan responded by sending dozens of coast guard ships to patrol around the islands, which lie between Okinawa and China.

The islands are little larger than reefs, but the seabed around them is believed to be rich in oil and gas. Restoring sovereignty over the islands has become a widely held patriotic demand in China, which believes Japan illegally plundered the islands through its barbaric imperialist expansion that drove it to invade China in the 1930s.

Japan announced its purchase of the islands last month in an effort to prevent the nationalist governor of Tokyo from buying the islands and to ease tensions. China believes that Japan's move is to strengthen its control over the islands.

On Wednesday, Kyodo News Agency reported that the Japanese government may change its official refusal to acknowledge the existence of territorial disputes, a stance that Chinese officials have long chafed at. This report may be a signal that Japan may soon take measures to ease the situation. According to reports, Japan will insist on denying the existence of disputes on the one hand, and will make small concessions on the other hand to admit that China has also made sovereignty claims. Until then, the Japanese government had refused to acknowledge this.

When asked about the Japanese media reports at a regular news conference in Beijing on Wednesday, Chinese Foreign Ministry spokesman Hong Lei suggested that China was interested in negotiating to a certain extent.

He said, "Japan must face reality, admit disputes, correct mistakes, and return to the path of negotiating to solve problems."

Keith Bradsher contributed reporting from Hong Kong.

Translation: Xu Xin, Chen Liu

"The New York Times Chinese Edition" MARTIN FACKLER reported October 11, 2012