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Japan hopes hot economic ties will warm chilly political relations.

Economic ties between Japan and China remain robust despite chilly political relations, a senior Japanese business expert has claimed.

However Hiroshi Okuda, chairman of the Japan Business Federation lobby group, said any long-term chill could lead to a "very serious situation".

Sino-Japanese relations sank to their worst level in decades last year due partly to Prime Minister Junichiro Koizumi's visits to a Japanese shrine for war dead that China regards as a symbol of Japan's past militarism.

There have been concerns that such thorny bilateral ties may dampen growing economic links between Japan and China, which replaced the United States as Japan's biggest trading partner in 2004, according to Japanese data.

Mr Okuda said: "There are often media reports saying Japan-China ties are changing from chilly political and hot economic (relations) to chilly political and cool economic. But I think there is still no change to the situation of chilly political but hot economic (ties)."

Mr Okuda, speaking a day after Koizumi rejected criticism by China and South Korea of his visits to Tokyo's Yasukuni shrine, said he hoped whoever succeeded Koizumi as prime minister would bring about a change in Japan's diplomacy towards Asia.

"If possible I would like it to be changed," Mr Okuda said, adding that he was worried about the possible impact that a long-term chill in political ties could have.

In addition to trade, Japanese investment in China has also been on the rise, and nearly all Japanese firms surveyed in a poll released last week said they planned to either maintain or bolster investment in China in 2006.

The Reuters Tankan poll found that 53 per cent of about 180 companies expect to maintain current levels of business activity in China and nearly 47 per cent plan to boost their presence.

Fewer than one per cent said they plan to scale back activity.

Japanese direct investment in China totalled 490.9 billion yen (pounds 2.4 billion) in the year that ended last March, up 38 per cent from the previous year.

Prime Minister Koizumi has defended his visits to Yasukuni shrine, where war criminals are honoured along with Japan's 2.5 million war dead, saying they were intended to pray for peace.

He last visited the shrine in October. Mr Koizumi has said he will step down in September, when his term as ruling Liberal Democratic Party president expires.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jan 9, 2006
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