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Japanese firms suspend operations in China

Escalating anti-Tokyo protests in China have prompted some Japanese firms to suspend factory operations there. Anti-Japanese sentiment exploded last week over a territorial dispute between the two countries.

The Japanese companies Panosonic and Canon shut down some of their plants in China on Monday in order to protect their workers' safety. The decision follows a weekend of massive protests in several cities, the worst anti-Japanese sentiment China has seen in decades.

The conflict revolves around a disputed ownernship of an island chain known as Diaoyu in China and Senkaku in Japan.

Panasonic reportedly suspended operations in Qingdao "for the time being" because of fire damage to one of its factories, according to the news agency AFP.

Canon also closed three of its factories in China on Monday. Japan could face economic sanctions by China if the dispute continues, warned a commentary by the online newspaper The People's Daily on Monday.

"Amidst a struggle that touches on territorial sovereignty, if Japan continues its provocations, China will inevitably take on the fight," the commentary read.

A halt in business with China would have a serious effect on Japan's economy. The two Asian countries' trading amounted to nearly $345 billion (263 euros) last year.

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Japanese firms hit by China row

Initial new agency reports hinted that factories are to remain closed through at least Tuesday, which is the anniversary of the 1931 occupation of areas of China.

Panetta calls for diplomacy

Meanwhile, US Defense Secretary Leon Panetta called on both China and Japan to make diplomatic efforts before they lose control of the situation. Panetta spoke to reporters traveling with him after his weekend meetings with Japanese leaders in Tokyo.

"It raises the possibility that a misjudgment on one side or the other could result in violence, and could result in conflict," said Panetta. "And that conflict would then have the potential of expanding."

Massive protests took place across several Chinese cities on Saturday and Sunday, drawing police to disperse thousands of demonstrators with tear gas, water cannons and pepper spray. Some demonstrators threw objects at Japanese buildings, including its embassy in Beijing. China's Xinhua new agency reported demonstrations in fives cities.

The row escalated last week after Japan announced that it had completed the purchase of the islands from a private landowner. In response, Chinese ships began surveying the nearby waters on Friday. The disputed maritime area is thought to contain valuable natural gas reserves.

kms/mkg (AFP, Reuters, dpa, AP)

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