Japanese trade hit hard by Diaoyu dispute

The Japanese government’s illegal purchase of China’s Diaoyu Islands is hurting trade between the two countries. A poll shows a large number of Japanese companies are paying the price. And the row is also hitting Japanese stock markets.

Suffering from the dispute.

According to a new poll from Reuters, about 41 percent of Japanese firms are seeing the row with China affecting their business.

Some are even considering pulling out of China and shifting operations elsewhere.

Shares of Chinese market-related Japanese retailers and automakers are also bracing for losses.

By September the 20th, 14,000 Japanese cars were lost during a factory suspension in China. That means a loss of 250-million US dollars.

Global ratings agency Fitch warns in a research note that “Japanese companies’ sales and reputation with Chinese consumers are likely to be affected”.

Global investment banking company Goldman Sachs has also lowered the expectation of Japanese listed companies’ yearly gain by 8 to 10 percent.

Japan also saw its yen trading lower in London and New York exchange markets, with investors dumping it for safer currencies.

China ranks as Japan’s largest trading partner, with the latter being China’s fourth largest.

Trade between the two countries accounts for about 20 percent of Japan’s total foreign trade.

From 2002 to 2011, the annual total trade volume between the two countries reached 345 billion US dollars.

Japanese economists say if the relationship with China doesn’t get better soon, the Japanese economy could be badly affected.

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