News Summary: Island standoff hits Japan business
ISLAND HOPPING ... MAD: Economic shockwaves are striking Japan after it nationalized tiny, uninhabited islands, which were already under Tokyo's control but are also claimed by Beijing. The claim on the islands, called Senkaku in Japan and Diaoyu in China, set off violent protests in China, and a widespread call to boycott Japanese goods.
INTERNATIONAL CAR CRASH: Sales of Japanese cars in China are in a free-fall. A report by J.P. Morgan, released Tuesday, projected Japanese auto exports to China will crash 70 percent during the October-December period. The export of auto parts will slip by 40 percent.
THIN AIR: Chinese tourists are cancelling trips to Japan in droves. Ayumi Kunimatu, spokeswoman for Japanese carrier All Nippon Airways, said 43,000 seats had been cancelled for flights from September through the end of November — 28,000 of them from China to Japan, and 15,000 from Japan to China. A person who answered at China International Travel Service in Beijing confirmed group tours to Japan had been called off. The Chinese state-run news agency Xinhua reported that more than a hundred thousand Chinese cancelled Japan trips, and the number of tour groups to Japan had plunged by 40 percent.
MACRO OOPS: Some analysts believe Japan's economy will shrink in the last three months of the year. The aftermath of the latest phase of the sizzling territorial spat with China will cause Japan's economy, the world's third biggest, to shrink 0.8 percent in the fourth quarter, according to J.P. Morgan. It had previously forecast no growth in the quarter.