Island row dulls China land grab fears in Japan

A spat over disputed islands has put a damper on Chinese sales of Japanese products from cars to cosmetics, but there is relief in one market at a fall-off of foreign buyers -- real estate. The chance to own land in Japan's beautiful mountain wilderness of Hokkaido has proved a real draw for moneyed Chinese, but there are local fears over what some see as a land grab targeting forests and water sources. The backlash started in 2010, when a Chinese woman was quoted by local media as saying: "What's arresting about Japanese land is that it has water." Broadcasters jumped on the issue, running stories that talked of how Chinese money was "targeting Japanese water" and buyers were "trying to conquer Hokkaido." The reports left locals nervous amid much talk of land being appropriated by potentially hostile foreigners. Mineral water producers say they are often contacted by brokers for Chinese buyers. Morihiro Oguma, president of Japan Mineral in Makari, said he has received dozens of calls. "I think the water industry is targeted," he said. Foresters fret that woodland could be exploited for timber. "Anonymous ownership is a problem as we want owners to preserve forests, making it a rule to plant trees after cutting down," said Takafumi Norota, an official at the Hokkaido Association of Forestry Cooperatives. "We also fear that Chinese investors may buy up Japanese larch trees in Hokkaido and take them all back to China" on the back of rising global timber prices, Norota said. In April, Hokkaido enacted a "water resource conservation" ordinance that stipulates mandatory in-advance reporting of land transactions near water resources "to hand over precious water to the next generation." Local politicians denied the ordinance was aimed at Chinese buyers. Despite their huge trade relationship, ties between Japan and China are often uneasy. Mutual mistrust is rife, with many in China believing Japan has not done enough to atone for its wartime behaviour, while many Japanese think Beijing's leaders exploit history to make their country a scapegoat for their own shortcomings. A recent government survey found only 18 percent of those polled had a positive view of China, down more than eight percent in a year. Japan and China have been at loggerheads for decades over the sovereignty of a group of islands in the East China Sea, controlled by Tokyo under the name Senkakus, but claimed by Beijing as the Diaoyus. The row flared badly in September when Japan nationalised them, sparking sometimes violent protests in China. Hideyuki Ishii, 39, president of investment advisory firm Hokkaido Style, has brokered a handful of real estate deals between Chinese buyers and Japanese sellers in Japan's northernmost prefecture. Ishii said he was harangued by a group of conservative journalists and assemblymen for doing business with the Chinese. "But I'm confident about what I do, which is to introduce people who want to buy and people who want to get rid of nonperforming assets," he said. He had 50,000 flyers printed that say in thick Gothic "I won't let you call me a traitor! -- Would you like me to evaluate your land in the booming Chinese market?" He says the scare stories are overdone and most of his Chinese customers are "purely interested in private ownership" because owning land is not permitted in China. "Others do it as an investment" in places where there are established resorts, he said. But in any case, they are buying what Japanese people are willingly selling. "Chinese people buy land in Hokkaido where no Japanese show interest, while there are many, many Japanese owners of mountain forests who are elderly, often sick, and want to sell their assets as soon as possible to obtain cash to finance their post-retirement life or to pay medical fees," he said. And in any case, the amount of land in foreign hands is small. As of April 1 this year, of Hokkaido's total land area of 83,457 square kilometres (33,383 square miles), just over 10 square kilometres of land classified as "mountains and forests" was owned by foreign individuals or firms, a local government survey found. A majority of foreign owners were Chinese firms and individuals, and others were based in Hong Kong, the British Virgin Islands or Cayman islands, well-known tax havens. One of Ishii's past clients, a Chinese woman who runs her own company in Beijing, told AFP by phone on condition of anonymity that she bought a second-hand house in the port city of Otaru two years ago as the price "was cheap, and the environment in Hokkaido was beautiful." She bought 333 square metres (3,583 square feet) of land for a holiday cottage at a price tag of 200,000 Chinese yuan ($31,000). "Hokkaido is closer to Beijing than Hainan island," a popular southern resort island in China, she said. Potential buyers from Hong Kong and Taiwan are still interested in land around Kutchan town and neighbouring Niseko, popular destinations for skiers and snowboarders. But Ishii's business has fallen victim to souring Sino-Japanese ties as the two sides do diplomatic battle over a different bit of real estate -- the group of islands in the East China Sea. "Since the territorial issue emerged, individual Chinese have been reluctant to visit Hokkaido, which has had a negative impact on my business," he said. "We can't make a pitch if we can't show them the land and the attractive surroundings here," Ishii said.