Japanese Prime Minister Shinzo Abe's visit to a shrine honoring war criminals has aggravated tensions between Japan and China, prompting one expert to say Beijing is taking a 'smarter approach' to the strained relations between Asia's two biggest economies.
Tensions between the world's second and third largest economies have flared up in recent years following a territorial dispute over the East China Sea islands, which disrupted trade between the two nations. More recently, Beijing's introduction of an air defense zone has raised tensions further.
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Abe's controversial visit to the Yasukuni shrine in Tokyo on Boxing Day provoked criticism from China, while the U.S. Embassy said it was "disappointed" with Japan's leadership.
"The leadership in China seems smarter on this one and more astute on this and recognizing what is going on more than Abe. Abe seems a little bit more wound up on this," said David Zweig, director of the center on China's Transnational Relations at the Hong Kong University of Science and Technology.
Zweig said the U.S. government's decision to criticize Abe gave China a chance to "calm down and step back."(Watch This: China-Japan island dispute: Is it worrying?)
"So it seems the Chinese are being a bit smarter on this, Abe is out on a limb a little bit here and I think the Chinese see that. They are thinking if the Americans are going to criticize him, let him dangle in the wind, that'd be a good thing," he added.
A resurgence of political tensions could threaten a recovery in trade relations between the two countries at a time when export numbers are all the more important for Japan amidst its ambitious plan to drag the economy out of over a decade of deflation.
Japanese exports to China recovered strongly in the first half of the year, recording an annual decline of only 0.6 percent, up from a 10.8 percent decline last year. From July to November, exports have surged to 18 percent.
The strong recovery in exports has given Abenomics a boost, but the prime minister faces a number of hurdles in 2014, including the planned consumption tax hike in April and the expected reduction in household spending as consumer prices tick upwards, which could derail his good work.