China's economic woes may be behind Japan backlash -Suntory CEO

By Mayu Sakoda and Yukiko Toyoda

TOKYO China's economy is in a "extremely difficult" situation, which may be contributing to a rising backlash against Japan over the release of treated Fukushima water into the ocean, the head of Suntory Holdings said.

Even so, the global spirits giant is planning to stick to its investment plans in the world's second-largest economy, although that could change if the issue becomes prolonged, Chief Executive Takeshi Niinami told Reuters.

The comments from Niinami, head of a major business lobby, echo the concern of the country's fishing industry about the situation on the Chinese mainland and the government's desire to maintain deep ties with its neighbour.

Japan's engagement with China, already fraught from disputes over chip export controls and the Taiwan Strait, soured further this month after Tokyo's decision to release treated water from the stricken Fukushima nuclear plant.

Niinami backed Japan's decision to release the water, saying it was based on international standards. Outrage in China, manifested in bans on Japanese seafood and harassing phone calls, is out of step with the response from other countries and may have more to do with unrest at home, he said.

"This public sentiment could be affected by the stresses that China is under, such as the extremely difficult economic situation and the difficulty of young people finding jobs," Niinami said in an interview on Thursday.

"So it may be that this kind of stress is being vented externally, perhaps toward the current issues in Japan, since this stress itself can't be resolved in the short term."

China is grappling with a broad slowdown in growth, a worsening crisis in its property sector and insecurity among consumers as youth joblessness reaches record highs above 21%.

China has said Japan had not proved the water would be safe. It has also said its embassy and consulates in Japan have received "nuisance calls from Japan".

ATTRACTIVE MARKET

The Fukushima issue has had some impact on Suntory's business in China, where the company produces domestically as much as possible and complies with safety certification from any goods shipped from Japan, Niinami said.

He said China remains a "very attractive" market for Suntory and hopes Beijing will make tax cuts and other reforms to help revive the private sector and fend off the prolonged stagnation that Japan has lived through.

China remains a major market for many Japanese companies, with many manufacturers having extensive supply chains there.

A Reuters survey of major Japanese companies showed 82% expect China to remain at least as important to their business in future as it is now. That compares with views among many American firms, cited by U.S. Commerce Secretary Gina Raimondo in a trip to Beijing this week, that China is "uninvestible".

As for Japan, Niinami said the government wasn't doing enough to help small businesses thrive so that they can raise wages and reskill a shrinking pool of workers for sectors such as green technology and healthcare.

"I think the government's role is to open up such opportunities," he said. "Until now, companies have been rescued, but going forward, we need to focus on saving people instead."

(Reporting by Mayu Sakoda, Yukiko Toyoda and Rocky Swift; Editing by David Dolan and Edwina Gibbs)