- NEW: Chinese language search giant Baidu wades into the Japan-China territorial clash
- More Japanese factories and businesses in China shuttered Tuesday over island dispute
- Fitch: credit ratings of Japanese firms could come under pressure if dispute escalates
- Nearly 200 7-11 stores, owned by a Japanese company, were closed in Beijing and Chengdu
More Japanese factories and businesses in China shuttered Tuesday as an East China Sea island dispute threatens to drag relations between Asia's two largest economies to their lowest point since World War II.
Meanwhile, Baidu -- China's most popular search engine -- waded into the dispute by showing a cartoon image of the Chinese flag over the disputed island on its homepage.
Clicking on the image revealed a page headlined "Diaoyu Island is China's!" The page had an interactive feature asking web users to place a virtual flag on a map of the islands. By 2:30 p.m. China time, nearly 2.7 million people had planted virtual flags, according to the site.
Baidu is a public Chinese company traded on Nasdaq, and also operates a Japanese language search engine. However, the image was not posted to its Japanese website.
"The real intent of this is to exhort people toward a more rational form of patriotism and show fact, and not fan flames of patriotic ardor," said Kaiser Kuo, director of international communication for Baidu. "We want people to be more rational in their patriotic outpouring ... planting a digital flag is a whole lot better than throwing rocks and smashing cars."
In a note Tuesday, ratings agency Fitch warned that the credit ratings of Japanese auto and technology manufacturers could come under pressure "if the clash between China and Japan over the Senkaku/Diaoyu islands escalates and is prolonged.
"A number of Japanese companies, including Panasonic, have temporarily suspended production at some of their Chinese facilities as anti-Japanese demonstrations demanding a boycott of their products flared across 85 cities in China at the weekend."
Nissan, Mazda, Honda and Toyota suspended operations at some of their Chinese automotive plants, as have electronics makers Canon and Panasonic.
Nearly 200 7-11 stores in Beijing and Chengdu, owned by Japanese company Seven & I Holdings, as well as 13 Ito Yokado supermarkets will be closed through Wednesday "to maintain the safety of employees," company spokesperson Katsuhiko Shimizu said.
Fears are high that demonstrations Tuesday -- the anniversary of Japan's 1931 invasion of China -- may repeat scenes of violence which saw a Panasonic factory lit on fire, Japanese restaurants and department stores ransacked and Japanese cars smashed and overturned. Meanwhile, a Japanese Coast Guard official told CNN Tuesday that a Chinese fisheries patrol boat has entered the disputed waters and a Japanese vessel will attempt to warn the ship away.
Tensions in the dispute, a perennial source of nationalistic anger on both sides of the East China Sea, rose on September 10 after Japanese government agreed to buy the uninhabited islands from its private Japanese owners. China claims historical ownership of the island chain, while Tokyo maintains it has been in Japanese hands since 1895. The islands — known as the Senkakus in Japan and Diaoyu in China -- were administered by the U.S. occupation force after World War II. But in 1972, Washington returned them to Japan as part of its withdrawal from Okinawa.
The islands sit among popular fishing waters and are also believed to be rich in oil resources. Ownership of the chain would allow exclusive commercial rights in the seas surrounding the islands.
China's fishing moratorium in the East China Sea ended on Sunday, raising concern that as more Chinese trawlers enter the area, so raises the likelihood of conflict. China's Ministry of Agriculture issued a statement saying the "surrounding waters of Diaoyu Island and its affiliated islets are traditional fishing grounds for generations of Chinese fishermen," Beijing's CNTV reported Monday.
Last Friday, China's state-run agency reported that six Chinese maritime surveillance ships entered the island chain and began patrols and "law enforcement," China's state-run news agency Xinhua reported.
Sales of Japanese car brands in China were down 2% compared to a year ago, China Association of Automobile Manufacturers said last week. Meanwhile, sales of foreign brands from Germany, the U.S., South Korea and France were up 25%, 19%, 12% and 4% respectively.