China and Japan seek closer trade links to help ease political tensions

In many ways, it's the key relationship in Asia, that between China, the world's second-largest economy, and the country it displaced in that role, Japan. At the China-Japan Asia CEO Forum in Tokyo last week, business leaders said it was the responsibility of the corporate community to ensure relations improved and they pledged to find mutual understanding.

Trade links between the two are strong, but tensions between Tokyo and Beijing are running high as the Asian giants spar over the ownership of an uninhabited archipelago in resource rich waters in the East China Sea, known as the Senkaku islands in Japan and the Diaoyu islands to the Chinese. Last week Chinese foreign ministry spokesman Qin Gang was urging the Japanese "to face up to history and respect truth, and avoid stirring up enmity and confusing the public."

Brutal occupation

China also complains that Japan has not done enough to atone for its invasion in 1931 and often brutal occupation of China until the end of the war in 1945.

While the politicians thrash it out, Chinese and Japanese business leaders tend to be more sanguine and say that ultimately the mutual benefits from trade will outweigh the political concerns.

"Relations between China and Japan are in a state to be very concerned [about]," Charles Yin, the founder of the China-Japan Asia CEO Forum, told the gathering, quoted by Kyodo news agency.

It's the first time in about three years that the event, which began in 2009, has taken place because of tensions between China and Japan. About 60 senior corporate leaders from all over the region, including Japan, China, Thailand and Singapore, gathered for the forum and discussed ways to boost business. "So I thought economic leaders need to stand up and hold dialogues to deepen mutual understanding and communicate with each other so as to contribute to the prosperity and peace of the Asian economy and society," said Mr Yin, who is executive chairman of the Chinese investment and advisory firm Worldwide City Holdings.

The Japanese delegation included Takashi Kawamura, former chairman of Hitachi, and Masahiko Uotani, president of Shiseido. The Chinese delegation included company executives but no one from the State-owned Enterprises (SOEs), which is a sign of how deep political tensions are now.

Smartphone components

Japanese exports to China rose 9.8 per cent year-on-year in April, with shipments of smartphone components tripling ahead of the planned summer release of new products, and with car exports rising 26 per cent. In May, Japan, China and

South Korea

signed an agreement for the promotion, facilitation and protection of investment, which is widely seen as a prelude to a free trade agreement (FTA) among the three countries.

Yasuchika Hasegawa

, co-chairman of the forum and president and chief executive of

Takeda Pharmaceutical

, called for more dialogue on the political front. “But when there is no such chance, continuing business cooperation is so beneficial,” said Mr Hasegawa, who is also chairman of the

Japan Association

of Corporate Executives. “We want to contribute to developing win-win relations not only between Japan and China but also in the [Asian region] by holding this kind of dialogue as much as possible,” he told Kyodo.

During the meeting, China’s ambassador to Japan said political tensions between China and Japan were “not in line with the benefit of people of the two countries and expectations of the international community”.