The trade war was caused by Japan's hard line on China in an effort to win support at the July election, said Li Guanghui, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation, a think-tank of the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).

But he said Japanese policies on China are expected to turn round after the election, and the government is expected to move to solve problems with China.

"The trade war is harmful for both Japan and China as the two economies are very dependent on each other,'' Li told China Daily.

Japan is China's largest trade partner and China ranks second in terms of Japan's trade volume with other countries.

He said the trade war is especially bad for Japan, which is seeing signs of its economic recovery stalling after a decade-old slack.

But Li said anything could happen before then if Japan continued to be harsh on China.

"The trade war could quickly spread to other products that involve large amounts of money if Japan takes a hard stance,'' he said.

Japan triggered the trade war in April when it decided to impose emergency tariffs on imports of onions, mushrooms and tatami rushes, mainly from China.

The move was widely seen as being politically motivated as the Japanese government is seeking farmers' support at the July election.

Although Japanese officials claimed that farmers' incomes dropped dramatically because of imports, their statistics do not indicate this.

Japanese statistics indicate that imported onions accounted for 8.2 percent of Japan's total onion sales last year, imported mushrooms made up 39 percent of Japan's sales and imported rushes accounted for 59 percent. Almost all of the imported products came from China.

Economists said Japanese companies have lost their competitive edge in the farming industry and shifted their production to neighboring countries. Protective measures harm their interests as well as Chinese farmers.

After negotiations with Japan failed to persuade it to call off the tariffs, MOFTEC declared last week it would levy 100 percent extra tariffs on imports of automobiles, mobile phones and air-conditioners from Japan.

China's imports of autos, mobile phones and air-conditioners from Japan was worth US$1 billion last year, compared with China's US$150 million in exports of onions, mushrooms and tatami rushes to Japan, according to official statistics.

Experts said China's extra tariffs are more symbolic than a warning.

The value of products involved is small compared with the total imports and exports between China and Japan, they said.

Sino-Japan trade increased 25.7 percent year-on-year to US$83.2 billion last year, according to Chinese customs statistics.

But Li Guanghui said the potential influence of the tariffs on Japanese industries is huge, as they could not stand to lose the huge, untapped and lucrative China market, he said.

MOFTEC officials, while showing a reluctance to harm long-term Sino-Japan trade ties, indicated that they would not cower if Japan wanted to spread the problem.

Long Yongtu, vice-minister of MOFTEC, recently told the media that whether and when the problem could be properly solved would depend entirely on Japan.

MOFTEC officials said Japan has asked to have further talks on the issue on the coming Thursday.

Japanese media reported that other domestic industries, such as bike, tie, shirt, eel and chopstick makers, are also seeking government protection from Chinese competition.

They said the Japanese government was likely to adopt similar measures against China in these industries

(Chinadaily.com.cn 06/25/2001)