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Japan digs in, suspends services to China (+video)

The territorial dispute between China and Japan over tiny uninhabited islands in the East China Sea continues to escalate. Mass anti-Japan protests in China lead to the Japanese suspending businesses and embassy services in China. 

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Hundreds of Japanese businesses and the country's embassy suspended services in China on Tuesday, expecting further escalation in violent protests over a territorial dispute between Asia's two biggest economies.

China's worst outbreak of anti-Japan sentiment in decades led to protests and attacks on Japanese companies such as car makers Toyota Motor Corp and Honda Motor Co, forcing them to halt operations and prompting Chinese state media to warn that trade relations could deteriorate.

More protests continued across China on Tuesday, which marks the anniversary of Japan's 1931 occupation of parts of mainland China.

Hundreds of protesters had gathered outside Japan's embassy again on Tuesday, some throwing water bottles at the building, which was protected by a heavy police presence, Reuters witnesses said.

Japan was also bolstering its defences around the disputed East China Sea islands after state media reported a flotilla of around 1,000 Chinese fishing boats was sailing towards them.

The Japanese coast guard said it has so far been unable to confirm the arrival of the fishing boats, but it spotted one Chinese fisheries patrol ship in waters near the disputed islands shortly before 7 a.m. (2200 GMT)

The Japanese government has set up an information-gathering operation to monitor the movements of the Chinese fishing boats.

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China and Japan, which generated two-way trade of $345 billion last year, are arguing over the uninhabited islets in the East China Sea, a long-standing dispute that erupted last week when the Japanese government decided to nationalise some of them, buying them from a private Japanese owner.

The weekend protests mainly targeted Japanese diplomatic missions but also shops, restaurants and car dealerships in at least five cities.

Toyota and Honda said arsonists had badly damaged their stores in the eastern port city ofQingdao at the weekend.

On Tuesday, Toyota said it plans to halt operations at some of its factories in China, Kyodo news agency reported.

Other major Japanese brandname firms announced similar shutdowns on Monday and urged expatriates to stay indoors.

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