Korean Tensions Hurt Japan Firms

Under Prime Minister Shinzo Abe, Japan has angered its neighbors with assertive foreign policies and looser restraints on the military, although tensions with China have not returned to levels seen in 2012 when territorial disputes prompted violent anti-Japan protests.

But the results suggest that if relations with Japan’s top and third-biggest trading partners should worsen sharply, that could hinder the fragile economic recovery Abe has engineered. It would also add momentum to a shift by Japanese companies towards investing more in Southeast Asian countries and less in China.

“If political conflict with China and South Korea becomes more serious, moves to avoid new investment in China and South Korea will of course arise,” said a manager at an electronics firm that mainly supplies companies making capital investments.


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