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Japan Economy May Be Hurt by China Spat, Kaieda Says

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Sept. 24 (Bloomberg) -- Japan’s economy may be hurt by its political dispute with China, Economy Minister Banri Kaieda said today, signaling widening concern at the consequences of tensions with the nation’s biggest trading partner.

“Given that our growth strategy has been to incorporate Asian demand into our own demand, the current rare-earth, rare-metal problem that has been reported in the press is becoming a very big obstacle,” Kaieda told reporters in Tokyo today. “I hope for the earliest possible resolution to this problem.”

Kaieda spoke after a spat erupted this month over Japan’s detention of a fishing-boat captain. The Chinese sailor was detained after his vessel collided with two Japanese Coast Guard vessels.

Chief Cabinet Secretary Yoshito Sengoku said separately that there’s no confirmation of a Chinese embargo on so-called rare-earth elements. The New York Times reported yesterday that it put an embargo on exports of the products, which are used in items including cars and weapons, to Japan. Chinese Ministry of Commerce spokesman Chen Rongkai said yesterday that “China does not have a trade embargo on rare earth exports to Japan.”

A deterioration in the relationship between China and Japan would be negative for the global economy as a whole, Japan’s finance minister, Yoshihiko Noda, told reporters in Tokyo today.

To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net