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The business community greeted Prime Minister Shinzo Abe’s Sunday summit in Beijing with Chinese President Hu Jintao, billed as a fence-mending effort by the two countries, with a sigh of relief.

Japan-China relations have been called politically chilly and economically warm, with the political side suffering in part from the annual pilgrimages to Yasukuni Shrine made by Abe’s predecessor, Junichiro Koizumi. Those visits provoked fury in China and South Korea, both of which accuse leaders in Tokyo of distorting Japan’s wartime past.

Japanese companies were reluctant to comment on Koizumi’s visits to the Shinto shrine, which honors Japan’s war dead as well as Class-A war criminals, saying it is not appropriate to speak on political matters. But their worries about how the bad blood between Tokyo and Beijing might affect their business are plain enough.

“Japanese companies welcome the new developments in Japan-China relations . . . because psychologically, doing business in China will become easier,” said Minoru Arahata of the Japan External Trade Organization.

More and more Japanese firms are getting active in the Chinese market, seeking to capitalize on the country’s rapid economic growth and size.

Between 1993 and 2005, Japanese private investment in China rose nearly fivefold to $6.53 billion, a record.

“Improving Japan-China relations is indeed a good development,” Toyota Motor Corp. President Katsuaki Watanabe told reporters Tuesday in Tokyo.

“But we (businesspeople) have established good relations with Chinese companies and we will try to maintain them.”

Japanese airlines, which saw passenger traffic between the two countries decline following anti-Japan demonstrations in China in April 2005, also welcome the thaw.

“We welcome the move, but at the same time, we remain calm,” waiting to see how relations will develop practically in the business world, All Nippon Airways Co. spokesman Yoshifumi Fukumori said.

Aeon Co., Japan’s largest retailer, which operates 19 outlets in China, including in Hong Kong, is also doing its best to take bilateral diplomatic developments in stride.

“We are aware that there are risks everywhere in the world,” said Aeon spokesman Satoshi Otsuka, adding that the company will continue to carefully assess those risks, not only in China but elsewhere.

Last year’s demonstrations forced Aeon to close its two Jusco stores in Shinzhen and Guangzhou for one day, after demonstrators surrounded the shopping malls where they are located. The stores reopened the next day.

JETRO’s Arahata pointed out that Japanese companies remain cautious in their Chinese investments for both political and business reasons.

“The Chinese government’s policy toward foreign companies, including the tax system, is expected to change as early as next year,” he said, adding that Japanese companies are reassessing their investments in China.

Since the outbreak of the SARS epidemic in 2003 and the anti-Japanese demonstrations last year, Japanese companies have diversified their investments to different countries, Arahata said.

“(Japanese companies) are aware that investing too much in China is risky,” and that belief is unlikely to change, he said.

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