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China’s Drama Continues

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After international news was alight with the recent changes in the decades-old dispute between China and Japan concerning a group of tiny islands in the South China Sea, the repercussions continue. The sale of the islands in question to the Japanese government has angered the Chinese enough to riot in some parts of the country, and the fear that this would eventually hit trade between the two powers has come to fruition.

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English: US Secretary Gutierrez meets with Chi...
English: US Secretary Gutierrez meets with Chinese Minister Bo Xilai (Photo credit: Wikipedia)

China is currently in an interesting predicament with their upcoming once-a-decade elections, which have already been rocked by scandal, with the former head of the communist party in Chongqing, Bo Xilai

, and his wife being charged with offences ranging from bribery, corruption, sexual improprieties and murder. This is a huge deal for the Chinese, and the current dilemma with Japan only heightens the drama.

At a recent high-profile meeting in Japan between the International Monetary Fund and the World Bank, China was conspicuously absent from the proceedings. This is undoubtedly a snub at the Japanese for the recent islands dispute, causing Hilary Clinton to issue the matron-like statement “urging cooler heads to prevail,” according to the BBC, but the real damage is already hitting the Japanese in the form product boycotts in China. The BBC reports that, “Toyota reported a 49% drop in sales in September, while Honda and Nissan’s sales fell 40% and 35% respectively…Other carmakers such as Mitsubishi Motors and Mazda have also reported a sharp drop in Chinese sales. The protests had led to various Japanese firms temporarily suspending their operations in China.”

The tension is escalating and a protest of such magnitude might make the purchase of the islands seem a very silly move, if the Chinese continue to look elsewhere for cars and electronic goods. This is a political stalemate that could turn increasingly ugly.

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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

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