HK Business News

Japan’s Economy Contracts Due to Diaoyu Islands Issue

Written by Alan Chiu Tsang

Japan’s economy contracted in the latest quarter, further weighing down world growth.

Japan, now the world’s No 3 economy, shrank 3.5 per cent in the July-September quarter, in line with gloomy forecasts after Japan’s territorial dispute with China over the Diaoyu (Senkaku) Islands hammered exports that were already weakened by feeble global demand.

Consumer spending fell 0.5 per cent in the third quarter, as subsidies for auto purchases expired, and corporate capital spending fell 3.2 per cent. Spending on reconstruction from the country’s March last year disasters has also weakened.

To make the dispute even more serious, Tokyo ex-governor, Shintaro Ishihara had tried to buy the islands and make them a resort area. When asked by the Wall Street Journal why he wanted to do so, this is what he answered.

“Think of Tibet — it’s now a dependent territory of China. If Tibet wanted to be an Olympic host could it even apply? They don’t have a country. They don’t have a leader. They’ve even lost their culture. All they have is Dharamsala, India, which is where they have set up their government in exile. I don’t want Japan to end up as a second Tibet.”

After all, his plan didn’t succeed as the islands were finally bought by Japan’s Central Government.


About the author

Alan Chiu Tsang

Alan is a freelancer photographer and author for
He graduated from Hong Kong university in 2005.