Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Lending clarity to the China-Japan dispute

Sep 19 2012, 03:36 IST
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SummaryChina is in the news once again, for rowdy anti-Japanese protests raging in as many as 50 Chinese cities.

Both countries claim that, historically, the disputed islands are rightfully theirs. The kicker in all this is that the winner of the proceeds will get access to an estimated 100 billion barrels of oil and rich fishing grounds

China is in the news once again, for rowdy anti-Japanese protests raging in as many as 50 Chinese cities. Japanese goods, factories and nationals are practically under siege, so much so that the Japanese Prime Minister Yoshihiko Noda has requested China to protect its “nationals, companies and diplomats from attack”. The protests have emanated from contending territorial claims in the East China Sea. In the past, China has staked a claim from Tibet to Taiwan to the entire South China Sea, which naturally makes one wonder if there is any merit to these claims—or whether they are just a grab for everything available. Is China crying wolf, or do its claims have a basis?

In what has been an eventful week, the Japanese government bought three (of the five) Senkaku Islands. Senkaku to the Japanese/Diaoyu to the Chinese—these islands lie north-east of Taiwan and west of Okinawa, with a total land area of not more than 3 square miles. The islands are hotly disputed with China (PRC) and Taiwan (ROC) staking a claim, but Japan sealed the deal paying a whopping 2.05 billion yen, ($30 million) to the private Japanese owner. China’s Communist Party mouthpiece, China Daily, took an open pot-shot at Japan saying, “A thief is never a legitimate owner of stolen property,” which was cacophony to the Dalai Lama’s and, seemingly, Japan’s ears.

In what closely mirrors China’s aggressive foray in the South China Sea, Japan is stirring up a storm in the East China waters. China claims that the islands were “stolen” in the first place from China. Japan steamed ahead despite the threat of China’s marine surveillance ships hovering in the waters, and despite a call for prudence, hand-delivered at the Asia Pacific Economic Cooperation meeting in Vladivostok by China’s outgoing President Hu Jintao to Japanese Prime Minister Yoshihiko Noda. In effect, Japan delivered a neat penny to China’s thoughts and actions.

It is believed (and the Japanese government said as much to China) that Japan’s decision was motivated by the right-wing Tokyo governor Shintaro Ishihara’s “proactive steps to jump start purchase negotiations with the owners” and state control was seen as the best way to “end current instability connected with

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