Territorial row impacting integration in Asia

MANILA, Philippines - The territorial disputes in the East and South China seas could potentially derail the economic integration in the region, an analyst from the Asian Development Bank said.

Iwan Aziz, head of the Office of Regional Economic Integaration (OREI) of the Asian Development Bank, said on Tuesday that recent data show that economic interaction between China and Japan, for instance, has been declining in recent years.

For example, tourists to China coming from Japan  declined to 2.878 million in 2013 from 3.722 million in 2010.

Meanwhile, tourists to Japan coming from China also declined from 1.413 million in 2010 to 1.314 million in 2013.

Also  trade between the two countries has been reduced.  For instance, China's exports to Japan represented 2.3 percent of its gross domestic product (GDP) in 2010, higher than 2.1 percent in 2012.

The same pattern is observed in Japan with its exports to China representing 3.0 percent of its GDP in 2010, which declined to 2.7 percent in 2012.

"We can't pinpoint with 100-percent certainty [that these declining tourism and trade were] because of geopolitical, but we believe there is some impact of geopolitical issues  on those," he said in a briefing following a seeminar on regional cooperation  in Asia and the Pacific at the Asian Institute of Management in Makati.

Beijing and Tokyo have  long been engaged in a territorial dispute over an island (called Senkaku in Japan and Diaoyu in China) in the East China Sea. Tensions, however, heightened in 2012 and have since worsened following China's assertiveness in the region.

China is also embroiled in a number of territorial rows with other countries in Asia, including South Korea, the Philippines, Malaysia, Vietnam, Taiwan and Brunei.

A Reuters report in 2012 said Japanese manufacturers were reconsidering their investment plans in China following the worsening tensions between them.

Owing to this development, Japanese firms were said to be looking at Southeast Asia as an investment alternative.

"Japanese FDIs (foreign direct investments) are going to ASEAN (Association of Southeast Asian Nations). The decision could have been influenced by a number of things such as business consideration and geopolitics," Aziz said.