Territorial Disputes, Trade and Diplomacy: Examining the repercussions of the Sino-Japanese territorial dispute on bilateral trade

ABSTRACT: This paper will examine the repercussions of the Sino-Japanese territorial dispute for bilateral trade. Using interviews with businesses, scholars, and government officials in Beijing, Hong Kong, and Tokyo, and data gathered from policy papers and businesses, this paper argues that the traditional seikei bunri (separation of politics and economics) relationship that existed between Japan and China in the post-World War II period has given way to a more confrontational relationship in which economic pressure can be and has been applied as a means to press Japan on bilateral issues. It argues that understanding the way in which frictions arising from territorial disputes have affected the Sino-Japanese trading relationship may hold implications for the handling of similar disputes across North- and South-East Asia.

KEYWORDS: Sino-Japanese relations, territorial disputes, trade, integration.