Japan urges resolution on nationals held in China

Japan urged China today to quickly settle the case of four detained Japanese and said Beijing would also suffer from a worsening of ties in a bitter territorial feud between Asia’s two biggest economies.

Tokyo and Beijing have been bickering over Japan’s detention of a Chinese fishing boat skipper whose trawler collided this month with two Japan Coast Guard ships near uninhabited islands in the East China Sea that both sides claim.

The trawler captain was released on Saturday, but Beijing wants compensation and an apology, a demand Japan has rejected.

In a sign that tensions might be easing, a Japanese trading firm source said China had ended a de facto ban on exports to Japan of rare earth minerals vital to products from electronics to cars.

Japan’s foreign minister called on Beijing to deal quickly with the case of four nationals held in China since last week on suspicion of violating a law protecting military facilities. Tokyo has said the incident was not linked to the islands row.

“It is important to seek a smooth and swift resolution of this issue,” Seiji Maehara said in an interview with Reuters and other media.

The four, employees of a construction company, were in China in connection with a project to dispose of chemical weapons abandoned by the Japanese military at the end of World War Two.

Maehara also said it was important for the two sides to nurture a “win-win relationship”, adding: “The Chinese side would lose greatly if ties with Japan do not go well.”

Japanese Prime Minister Naoto Kan is set to attend an Oct. 4-5 Asia-Europe summit in Brussels but it is unclear whether he will meet Chinese Premier Wen Jiabao -- who snubbed the Japanese leader at the United Nations last week -- on the sidelines.

The islands, called the Diaoyu in China and Senkaku in Japan, are near rich fishing grounds and potentially large oil and natural gas reserves.

EXPORTS STILL DELAYED

The spat has raised concerns about damage to Sino-Japanese trade ties. China has been Japan’s biggest trading partner since 2009 and bilateral trade reached 12.6 trillion yen ($150 billion) in the January-June period, a jump of 34.5 percent over the same time last year.

China has denied imposing an export ban on the rare earth metals, essential for a raft of products from electronics to cars, in retaliation for the fishing boat captain’s arrest, but Japan’s government has been investigating the situation.

The Japanese trading firm source said China had ended a de facto ban, although exports were still being delayed by preshipment checks. “There is a long line at the customs office,” the source told Reuters.

China accounts for about 97 percent of the world’s total production of rare earth elements, about half of which are exported to Japan.

Total export quotas for 2010 had already been cut by about 40 percent from last year’s level, raising concerns not just in Japan but Europe and the United States, since a ready supply is crucial to several key industries.

Japanese prosecutors’ decision to release the Chinese skipper followed mounting worries about worsening ties between the region’s two biggest economies and high-profile pressure from Beijing, including a halt to top level diplomatic contact.

Zhou Jimo, a researcher at the China Centre for International Economic Exchanges in Beijing, expected relations to come back on track because Japan needed China’s economy.

“China has a vibrant and enormous emerging market with all sorts of possibilities. It has already become Japan’s most important source of overseas economic growth,” Zhou wrote in the Global Times, a popular tabloid with a nationalist bent.

Japanese Trade Minister Akihiro Ohata said on Tuesday that Japan should minimise the risk of supply shortages by diversifying rare earth mineral suppliers to other countries including Canada, Vietnam and the United States.

“We haven’t put enough effort into risk management,” Ohata told reporters.