China Holds Working Level Discussions With Japan on Islands Spat

Nov. 5 (Bloomberg) -- Chinese and Japanese officials met yesterday and today to discuss a territorial dispute that has damaged relations between Asia’s two biggest economies.

Shinsuke Sugiyama, head of the Japanese Foreign Ministry’s Asia-Pacific bureau, met with Chinese counterpart Luo Zhaohui in Wuhan, Hubei province, the ministry said in a statement today. It was at least the third diplomatic meeting between the two sides in the past month. Chinese Foreign Ministry spokesman Hong Lei confirmed the talks without saying where they occurred.

Japan’s purchase in September of uninhabited East China Sea islands called Senkaku in Japanese and Diaoyu in Chinese incited violent protests in China, damaging Japanese companies like Tokyo Motor Corp. and endangering a $340 billion trade partnership. Control of the area gives the holder sovereignty over an area rich in oil, fish and natural gas.

Japanese Prime Minister Yoshihiko Noda called for talks in an Oct. 10 interview, saying “both countries lose out” if relations deteriorate. While Vice Foreign Minister Chikao Kawai met last month with Chinese officials in Shanghai, neither government has indicated any softening in their position.

China in latest talks reiterated that it “won’t cede even half a step on its sovereignty” over the chain, Hong said at a briefing today in Beijing.

The dispute has the potential to spin out of control and escalate into a military face-off, according to a confidential report submitted last week to Secretary of State Hillary Clinton by a delegation of former U.S. officials. The Obama administration has urged both sides to resolve the matter, saying that while the U.S. takes no position on sovereignty, the islands fall under its mutual defense treaty with Japan.

The talks in Wuhan coincided with a U.S.-Japan military exercise that began today and runs until Nov. 16.

“The exercises are not being held with any particular country or region in mind,” Japanese Chief Cabinet Secretary Osamu Fujimura told reporters today in Tokyo.

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To contact the editor responsible for this story: Peter Hirschberg at