The sharp deterioration in Sino-Japanese relations, compounded by blanket media coverage of angry Chinese rioters hurling missiles at Japanese targets, is damaging business sentiment towards China, according to Japan's External Trade Organisation.

Head offices of Japanese companies with manufacturing plants or subsidiaries in China had become cautious about the safety of their Japanese personnel and about possible damage to their sales, Tomoharu Washio, director-general of Jetro's overseas research department, said.