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Japan-China tensions escalate as Yen weakens

Thursday saw Japan scrambling jet fighters after a Chinese governmental plane flew into what it considers its airspace over the disputed islets in the East China Sea, increasing tensions between the regions two biggest economies.

Relations between the two have deteriorated since September after Japan bought the disputed Senkaku/Diaoyu islands from their private Japanese owner. Since then patrol ships from both sides have been shadowing one another raising the possibility of an armed clash if a collision occurs. Thursday’s incident is the first time that either power has brought airpower into the dispute.

The Japanese defence forces scrambled eight F-15 fighter jets after the Chinese aircraft was detected on radar, before they arrived on the scene the Chinese plane had already departed. Meanwhile the Chinese responded by ordering Japanese ships out of the area.

“Despite our repeated warnings, Chinese government ships have entered our territorial waters for three days in a row,” Japanese Chief Cabinet Secretary Osama Fujimura told reporters.”It is extremely regrettable that, on top of that, an intrusion into our airspace has been committed in this way,” he said, adding that Japan had formally protested through diplomatic channels.

The Japanese economy has suffered in recent months because of the argument. A wave of protests in China forced the closure of several Japanese factories and stores, disrupted trade and prompted China to strengthen its own claim to the disputed territory. Japanese carmakers saw their sales in China slump in the weeks after the islands were sold.

“This is serious … intrusion into Japan’s airspace is a very important step to erode Japan’s effective control over the area,” said Kazuya Sakamoto, a professor at Osaka University. “If China sends a military plane as a next step that would really make Japan’s control precarious.”

Chinese Foreign Ministry spokesman Hong Lei told a briefing in Beijing.”The Diaoyu islands and affiliated islands are part of China’s inherent territory. China’s flight over the islands is completely normal.”

Due to the tensions and the upcoming Japanese elections the Yen has slumped to its lowest level in nine months against the US Dollar. Analysts are predicting that opposition leader Shinzo Abe will regain power and implement a new round of monetary easing in an attempt to devalue the currency and boost exports. He has also vowed to increase defence spending and face down any Chinese aggression.

The situation is growing ever tenser with other Asian nation’s growing increasingly uneasy with China’s new found military muscle. The world’s second largest economy is in the midst of several territorial disputes with its neighbours, including Vietnam and the Philippines.

The Pound to Euro exchange rate is currently trading at 1.2349

The Pound to US Dollar exchange rate is currently trading at 1.6119

The Pound to Australian Dollar exchange rate is currently trading at 1.5286

The Euro to US Dollar exchange rate is currently trading at 1.3050

The Euro to Pound exchange rate is currently trading at 0.8094

The Pound to Japanese Yen exchange rate is currently trading at 134.4910

The Euro to Japanese Yen exchange rate is currently trading at 109.3030

The US Dollar to Japanese Yen exchange rate is currently trading at 83.5200

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