Island grudge boils over

As major brand names became the target of protesters across China, Beijing said it would use its economic clout to punish the Japanese for buying three contested islands from a private owner last week.

China's ruling Communist Party warned that Japan's economy would suffer for up to 20 years, if Beijing imposed sanctions over the territorial row. "If Japan continues its provocations, then China will take up the battle," a front-page editorial declared.

However, such fighting talk represents something of a departure, at least where the islands, known as Diaoyu in China and Senkaku in Japan, are concerned.

While Tokyo - which effectively controls the islands - and Beijing have always held contrary positions over the sovereignty of the archipelago, the ruling elites have been keen to keep a lid on the nationalistic feeling they bring up.

"These provocations are a new trend that we have not seen before," Bernt Berger, senior researcher for China with the Stockholm International Peace Research Institute, explains. "We have to observe to see if they deepen."

"It is surprising because so far both sides were able to interact on different levels and in terms of maintaining good investment and trade relations on one level, having political differences on another level and having conflict of interests on a maritime point of view on even another level."

Japanese protesters reach island

On Sunday, two Japanese activists landed on one island, stoking Chinese ire on the 81st anniversary of an incident that led to Japan's invasion of China. The timing is provocative, with atrocities committed by Japan still remembered with bitterness.

"This image of Japan as a fundamental enemy is really present even among the younger generation. The images of Japanese war crimes are kept very present in the Chinese society."

"I think it went out of hand for the Chinese security institutions but, to some extent, they facilitate it. It serves their interest to show they let it happen and they are on the side of the population. On the other hand, it reaches a level at the grass roots where it is difficult for them to control it."

However Berger adds that the Chinese protests also have their roots closer to home. "There is also a venting by China's population against the situation inside the country, worsening economic situation, rising prices and discontent with the party. There are absolutely no channels to vent this anger."

The protests do indeed serve a purpose for the Chinese government, agrees Janet Hunter, professor of economic history with the London School of Economics.

"Chinese 'sanctioning' of protests against Japanese business and so on has in the past had two advantages for the Chinese authorities," said Hunter.

"It strengthens their threats they are able to make against Japan, increasing the pressure on Japan, and it also has been used to divert internal tensions away from the domestic towards foreign issues."

'Bloodbath in Tokyo'

The group of islands was effectively nationalized by Japan to avert a more provocative plan by the nationalist governor of Tokyo to buy and build facilities on them. However, the consequences of even taking the islands out of private hands have proved incendiary, with attacks on Japanese businesses and diplomatic missions and calls for a "bloodbath in Tokyo."

For now, Japanese businesses are taking matters into their own hands, suspending production amid the unrest. With Western countries counting on both powerhouses to help the global economy out of its current slumber, there was concern, as Japanese firms with large stakes in China saw their share prices fall. However, Hunter thinks this is unlikely to be a long term issue.

"If they allow serious economic consequences, it could be highly problematic for the regional and world economies," she explained. "After all, these are the two largest economies in Asia and the second and third largest economies in the world. It would at the very least create enormous instability and have a global impact."

The sentiment is something that Berger agrees with. "Asia generally has a general trend of keeping conflicts that cannot be resolved under the surface and maintaining trade relations," he said. "I think they will try to get back to that stage. China will try to restrain grass roots activists."

Calling for Beijing to adopt a "cool-headed manner" Tokyo said on Tuesday it would press Beijing to assure the safety of its nationals. China has said it hopes for "a peaceful and negotiated solution."