Japan has scrambled fighter jets to head off a Chinese government plane flying towards islands that are the source of tension between the two countries.
The Chinese Y-12 propeller plane went into Japan's air defence identification zone around 99 miles away from airspace surrounding the uninhabited Senkaku Islands, which Japan controls but Beijing claims as its own and calls the Diaoyu Islands. A Japanese defence ministry official said the aircraft headed back towards China without entering the contested airspace after the jets became airborne.
A China plane Y12 flying over international waters, 160km north of disputed islets known as the Senkaku islands in Japan and Diaoyu islands in China, in the East China Sea. (AFP/JOINT STAFF)
The incident in the East China Sea is the first since China created its air defence identification zone (ADIZ) in November, a move which further strained relations. Chinese government ships and planes have been spotted off the islands numerous times since Japan nationalised them in 2012. Earlier this week, a Chinese chef crash-landed into the sea while trying to fly a hot-air balloon to the disputed islands.
The islands are considered to be in a strategically important location
There are fears an escalation in the row could have far-reaching repercussions, drawing in Japan's ally, the United States. The islands are strategically important because they are close to international shipping lanes, offer abundant opportunities for fishing and could potentially lie close to rich oil and gas reserves.
For the past three decades, multinationals have poured in. After the financial crisis, many companies looked to China for salvation. Now it looks as though the gold rush may be over. But for many foreign companies, things are getting harder. That is partly because growth is flagging (see article), while costs are rising. Talented young workers are getting harder to find, and pay is soaring.
China’s government has always made life difficult for firms in some sectors—it has restricted market access for foreign banks and brokerage houses and blocked internet firms, including Facebook and Twitter—but the tough treatment seems to be spreading. Hardware firms such as Cisco, IBM and Qualcomm are facing a post-Snowden backlash; GlaxoSmithKline, a drugmaker, is ensnared in a corruption probe; Apple was forced into a humiliating apology last year for offering inadequate warranties; and Starbucks has been accused by state media of price-gouging. A sweeping consumer-protection law will come into force in March, possibly providing a fresh line of attack on multinationals. And the government’s crackdown on extravagant spending by officials is hitting the foreign firms that peddle luxuries (see article).
Competition is heating up. China was already the world’s fiercest battleground for global brands but local firms, long laggards in quality, are joining the fray. Many now have overseas experience, and some are developing inventive products. Xiaomi and Huawei have come up with world-class smartphones, and Sany’s excellent diggers are taking on costlier ones made by Hitachi and Caterpillar. Consumers will no longer pay a hefty premium just because a brand is foreign. Their internet savvy and lack of brand loyalty makes them the world’s most demanding customers (see article).
Some companies are leaving. Revlon said in December that it was pulling out altogether. L’Oréal, the world’s largest cosmetics firm, said soon afterwards that it would stop selling one of its main brands, Garnier. Best Buy, an American electronics retailer, and Media Markt, a German rival, have already left, as has Yahoo, an internet giant. Tesco, a British food retailer, last year gave up trying to go it alone, and entered a joint venture with a state-owned firm.
Some of those who are staying are struggling. IBM this week said that revenues in China fell by 23% during the last quarter of 2013. Rémy Cointreau, a French drinks group, reported that sales of its Rémy Martin cognac fell by more than 30% during the first three quarters of last year because of a plunge in China. Yum Brands, an American fast-food firm, said in September last year that same-store sales in China had fallen by 16% in the year to date. Its problems were partly the result of a government investigation into alleged illegal antibiotic use by its chicken suppliers.
Investors no longer celebrate firms with big investments in China. Our Sinodependency Index weights American multinationals by their China revenues. Sino-dependent firms used to outperform their peers, but in the past two years their share prices have done worse than others’.
As Jeffrey Immelt, the boss of GE, puts it, “China is big, but it is hard…[other] places are equally big, but they are not quite as hard.” Companies that want to stay in China will have to put in even more effort. Many will have to change strategy.
In appealing to the world community to stop China's encroachment on territory claimed by the Philippines, President Benigno Aquino III evoked Nazi imperialism.
In a wide-ranging interview with the New York Times, the President said, "Remember that the Sudetenland was given in an attempt to appease Hitler to prevent World War II."
Citing his recent readings, Aquino said the West failed to support Czechoslovakia against the Nazi leader Adolf Hitler’s demands for the Sudetenland in 1938, directly relating it to the current situation facing the Philippines, a small country with conflicting territorial claims with China.
After a standoff in 2012, China now occupies Scarborough Shoal, known in the Philippines as Panatag Shoal, which had long been fishing grounds for Filipino fishermen. It lies 200 kilometers from Subic Bay. China is claiming a large swath of the South China Sea.
Aquino appealed to the international community in the interview with the Times, one of the world's most influential publications. "If we say yes to something we believe is wrong now, what guarantee is there that the wrong will not be further exacerbated down the line?..... At what point do you say, ‘Enough is enough?’ Well, the world has to say it," Aquino said in the report published on Tuesday.
He was interviewed by the Times' Asia correspondent Keith Bradsher, a 2013 Pulitzer Prize winner who has filed numerous reports on the impact of Typhoon Yolanda. Bradsher's report described Aquino’s comments as "among the strongest indications yet of alarm among Asian heads of state about China’s military buildup and territorial ambitions."
Russian President Vladimir Putin, left, and Japanese Prime Minister Shinzo Abe meet for talks in Sochi, Russia on Saturday. (Mikhail Klimentiev / Ria Novosti/EPA / February 8, 2014)
Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe continued their quiet negotiations Saturday to bring an end to their nations’ World War II dispute over four Pacific islands, a disagreement that has hampered relations between the two nations for nearly 70 years. Amidst shifting diplomatic dynamics in the Asian Pacific region, Putin and Abe met on the fringes of the Winter Olympic Games in the southern Russian resort of Sochi to discuss improving trade ties and how to resolve conflicting sovereignty claims to the islands.
No breakthrough agreements were reached between the two countries that both count ascendant China as a regional rival. But the positive spin attached to the fifth Putin-Abe meeting in just over a year heralded new possibilities to put an end to one of the region’s longest-running disputes. Abe was quoted by reporters in Sochi as saying the pace of negotiations over the islands in recent months "has been very fast" and that Tokyo is keen to maintain that momentum.
Russian President Vladimir Putin (centre) toasts guests in the presidential lounge as Deputy Prime Minister Dmitry Kozak (right) looks on following the opening ceremony of the 2014 Winter Olympics on Friday, Feb 7, 2014, in Sochi.
"We should not kick this can down the road,” Abe said, the Associated Press reported from the one-day summit venue. Likewise, Russian media cast the meeting as another advance in warming ties between Moscow and Tokyo. "Our bilateral relations are developing consistently and in a constructive manner, we cooperate in a number of international organizations, and this cooperation is very successful and fruitful," Putin said.
Resentment over the dual claims to the islands remains high. Soviet troops seized the islands that Russians call the Southern Kuriles just before the Japanese surrender in 1945 and expelled some 17,000 Japanese who called the rugged islands home. Tokyo, which considers the islands its historic Northwest Territory, had dealt with the loss in silent suffering since the war’s end.
Seagulls soar in the sky near Liancourt Rocks, April 21, 2005. The islets are located in disputed waters referred to as the Sea of Japan and the East Sea.
Virginia's House of Delegates voted 81-15 to approve the two-line bill, which requires "that all text books approved by the Broad of Education ... when referring to the Sea of Japan, shall note that it is also called the East Sea." The bill had already been approved by the state Senate. Governor Terry McAuliffe, a Democrat, has veto power but spoke on behalf of the Korean perspective during his campaign for governor and is widely expected to sign the measure.
It was a significant victory for vocal campaigners among Virginia's 82,000 Korean-Americans, who greatly outnumber the state's 19,000 ethnic Japanese and showed up in the hundreds to cheer the vote in the state capital, Richmond. The vote followed intense lobbying not only by Korean-Americans but the governments of South Korea and Japan more than 7,000 miles away, which have been squabbling for years over the name for the sea, which separates their countries.
Japan's campaign included warnings that Japanese investment in Virginia could be hurt by a negative outcome, while Japanese officials voiced concern that what they call a "test case" could spark similar campaigns elsewhere. Peter Y. Kim, a Virginia resident and president of the Voice of Korean Americans, said he hoped what happened in Virginia would spread. "I hope that other Korean-Americans in other states will try to correct their textbooks," he said. "It's not just good for Korean-American children ... it's good for all Americans."
It is a source of intense bitterness for Koreans that the name "Sea of Japan" was standardized worldwide while Korea was under Japanese colonial rule, after the International Hydrographic Organization, or IHO, published its definitive "Limits of the Oceans and the Seas" in 1929.
Japan argues that "Sea of Japan" is recognized by the United Nations and most big states, including the United States, Britain, France, Germany and China. A long Korean campaign for recognition of the "East Sea" has so far failed to gain much traction. On Tuesday, Japanese Foreign Minister Fumio Kishida said that the "Sea of Japan" was the only internationally established name and said the U.S. government recognized it as the sole official name. "We must continue to firmly explain the correct way of thinking about the name Sea of Japan and our country's position on the issue," he said at a regular news conference in Tokyo.