With the tense diplomatic standoff over the Senkaku Islands straining economic ties with China, business analysts warn the sovereignty row will soon start taking a toll on the economies of both Asian giants.

For Japan, which is already showing further signs of a slowdown, dampened exports to its largest trading partner and reduced earnings for the Chinese subsidiaries of Japanese firms would likely rub salt in the wound.

Given the intertwined nature of the world's second- and third-largest economies and their level of mutual dependence, some business analysts noted that China ultimately will also likely suffer a negative impact to its economy, such as declining stock prices, just as its breakneck growth is beginning to slow.