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China's 'Line in the Air' Won't Stop Japanese Business

Stocks in this article: PCRFY CAJ TM HMC NSANY

TAIPEI (TheStreet) -- China's offshore air defense zone covering islets disputed by Japan hardly eases historic turbulence between the two economic giants that depend on each other for business. But the zone announced by China in late November won't bring down Japanese business as it did last year and in 2005 following other political disputes.

China says Japan, like anyone else, should notify it before flying through its air identification defense zone, or ADIZ, that covers the Diaoyu (Japan calls them Senkaku) islands claimed by both countries. Japan has flown anyway without a heads-up to Beijing, as has the United States. China didn't send as much as a mosquito to chase the planes off.

I suspect the air defense zone was sent up as a trial balloon, a common yet widely misunderstood tool of Beijing policy making. Consequences of violating its zone were never spelled out, nor were some of the basic rules -- for example, what happens to civilian aircraft that use the space. Keeping things vague lets China do anything from attack to sit quiet and say it has followed policy as it uses the experiment to gauge world opinion, which has gone against it.

China probably won't cancel its zone, but it's unlikely to kick others out or even bluster on as if it might. Worst-case scenario, Chinese planes will use the zone to track Japanese or American counterparts up close. Provocative, perhaps, but not a precursor to war.

As the trial balloon is losing altitude, the authoritarian government has few grounds to create an anti-Japan furor at home through the state-run mass media. Its official Xinhua News Agency quotes the foreign ministry on Nov. 27 as saying the air zone is for defensive only, causing no need for panic among other countries.

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