Anyone who thought that anti-Japan protests would quietly go away on the 81st anniversary of the Japanese invasion of Manchuria may have to reevaluate. First, overnight the HKEJ said that China is preparing economic sanctions against Japan, and as the situation again escalates, Reuters reports that at least two of 11 Chinese ocean surveillance and fishery patrol ships sailing near East China Sea islets claimed by both Tokyo and Beijing have entered what Japan considers its territory, public broadcast NHK said on Tuesday, quoting Japan's Coast Guard. Subsequently, NHK reported that "a Chinese fisheries patrol ship has departed after approaching Japan's territorial waters off the Senkaku Islands in the East China Sea. The Japan Coast Guard remains on the alert, saying the Chinese vessel may enter the area again. The Coast Guard spotted the boat some 43 kilometers north-northwest of the largest island, Uotsuri, early Tuesday morning. The Coast Guard confirmed the boat had left the area before 10:30 AM. It said at around 11:10 AM, the vessel again approached Japan's territorial waters off another island and left soon afterward. In response to warnings from Japan's Coast Guard, the Chinese vessel replied the islands are inherent Chinese territory and that its mission is legitimate." Watch this space carefully, especially once the Chinese armada of 1000 fishing boats, which is already en route to Senkaku, engages in a stand off with Japanese battleships: "China's state-run radio has reported 1,000 fishing boats have left the provinces of Zhejiang and Fujian for waters near the Senkaku Islands. But Japan's Coast Guard says it has not yet spotted a large fleet in the area." It will quite soon. Elsewhere, sentiment across mainland China is getting the opposite of better, fast.
Anti-Japan protests reignited across China on Tuesday, the sensitive anniversary marking Tokyo's occupation of its giant neighbour, escalating a maritime dispute which has forced major Japanese brandname firms to suspend business there.
Relations between Asia's two biggest economies have faltered badly, with emotions running high on the streets and also out at sea where two Japanese activists landed on an island at the centre of the dispute.
China reacted swiftly to the news of the landing, which risked inflaming a crisis that already ranks as China's worst outbreak of anti-Japan sentiment in decades. Beijing described the landing as provocative, lodged a complaint with Tokyo and said it reserved the right to "take further action".
The dispute over the uninhabited group of islands in the East China Sea - known as the Senkaku in Japan and Diaoyu in China - led to another day of protests that were smothered by a heavy blanket of security.
Japanese businesses shut hundreds of stores and factories across China and Japan's embassy in Beijing again came under siege by protesters hurling water bottles, waving Chinese flags, and chanting anti-Japan slogans evoking war-time enmity.
Japanese Prime Minister Yoshihiko Noda urged Beijing again to protect Japanese citizens in China.
"Today is our day of shame," said a Beijing protester, Wei Libing, a waiter in his 40s. "Japan invaded China on this date."
"Wipe out all Japanese dogs," read one banner held aloft by one of thousands of protesters marching on the embassy, which was ringed by riot police standing six rows deep. Japan's foreign ministry said some embassy windows had been smashed.
Sino-Japanese ties have long been plagued by China's bitter memories of Japan's military aggression in the 1930s and 1940s and present rivalry over resources - the islands are believed to be surrounded by energy-rich waters.
For China, Tuesday marks the day Japan began its occupation of parts of mainland China in 1931.
Rowdy protests sprang up in other major cities including Shanghai, raising the risk they could get out of hand and backfire on Beijing, which has given tacit approval to them through state media. One Hong Kong newspaper said some protesters in southern Shenzhen had been detained for calling for democracy and human rights.
In the meantime, as we posted yesterday, up to $350 billion in bilateral annual trade is now at risk. And trillions in downstream consequences.
Other Japanese companies -- from Mazda and Mitsubishi Motors to Panasonic and Fast Retailing -- also shut plants and stores in China, sending Japanese share prices falling and prompting a warning from credit rating agency Fitch that the situation could hurt some auto and tech firms' creditworthiness.
Japan's top general retailer, Seven & I Holdings said it will resume business at all its 13 Ito Yokado supermarkets and 198 "7-11" convenience stores in the cities of Beijing and Chengdu on Wednesday.
Some firms recalled workers back to Japan due to the unrest.
"The situation on the ground in China is not so good and I was advised by the locals not to go out. I couldn't get any work done," Japanese expatriate worker Hisato Takase said on arrival at Tokyo's Haneda airport.
Japanese restaurants, a common target of protesters, barred their doors while many Japanese expatriates stayed home.
Expect the situation to deteriorate before it gets better.