The Compass

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China's Self-Containment Strategy

More evidence that China's assertiveness over its territorial disputes is backfiring:

Anti-Japan riots in Beijing, Shanghai and elsewhere in China in September triggered by Japan's nationalization of the disputed Senkaku Islands brought vandalism and violence to Japanese restaurants, stores and car dealers and a boycott of Japanese products.

The disturbances prompted Japanese companies to worry that they have been too dependent on China for their sales and production and thus should consider diversifying their global exposure.

The "China-plus-one" concept, in which firms look to establish footholds elsewhere in Asia, was fostered several years ago but since September has gained greater traction.

Many Japanese firms are now looking to other emerging Asian markets to spread their risks.

James Clad and Robert Manning dubbed this "China's self-containment" and it appears to be unfolding before our very eyes. It does not appear that Asian states will meekly drop into Beijing's orbit as compliant satellites. Instead, it looks like they will push back against pressure from China, heightening the risks of a conflict -- one that would almost certainly implicate the U.S.