(2012-10-12) Denny Roy, a senior fellow at the East-West Center, said that the growing importance of China within the regional economy is multiplying Beijing's economic leverage over its trade partners.
"One argument has been that the Chinese cannot or will not employ economic coercion because economic activity is so globalized," he said. "So the apparent willingness of Beijing to use economics as a political weapon has huge implications." < In 2010, China "squeezed Japan on rare earth elements," he said, in a prominent instance of Beijing using its economic clout to achieve a political outcome.
... According to Roy, the widely reported dispute between China and Japan over the Senkaku/Diaoyu Islands has impacted the bilateral economic relationship in two ways.
"First, popular anger in China has made the atmosphere less friendly toward doing business with Japan," he said, explaining, for example, that Japanese businesses in China have reported being targeted by crowds of Chinese protesters. "Second, the Chinese government has used other levers, including economic levers, to pressure Japan over the islands dispute."
