Tensions between China and Japan escalated once again, this time over a grudge dating back to WWII.

The Financial Times reports Japanese Ship Seized in WWII Claims Dispute.

A Chinese court has seized a Japanese cargo ship over legal claims related to the second world war as escalating tensions between the two countries spill into the realm of commerce.

Japan was quick to denounce the confiscation of the vessel, warning it could have a “chilling effect on all Japanese companies doing business in China”. It is the first time a Chinese court has ordered the seizure of Japanese assets in relation to second world war.

The incident underlines strained relations between China and Japan, who have recently sparred over a string of disputed islands that some analysts say is the most dangerous faultline in Asia. Extensive economic ties between the two countries have so far served to stabilise the relationship.

The Shanghai Maritime Court seized the Baosteel Emotion at a port near Shanghai at the weekend, it said on its website. The ship belongs to Japanese conglomerate Mitsui OSK Lines and had been ferrying Australian iron ore to China’s flagship steel mill Baosteel.

Japan has consistently argued that the peace treaties it signed after the war exempt it from having to pay compensation to individuals or companies in former enemy countries. But China and South Korea, which nurse the strongest resentment over Japan’s often brutal imperial expansion, counter that the agreements only cover government-to-government reparations, leaving private groups free to sue for damages.

Still, for many years China discouraged any claims by its citizens against Japan, whether for forced labour, sexual slavery or asset seizures. Former premier Zhou Enlai explicitly rejected the prospect of any Chinese wartime claims, in return for assurances of Japanese development aid and investment. As a result, Chinese activists have had to pursue claims in Japanese courts.

“Overall China is dissatisfied with Japan, so a lot of matters have re-emerged,” said Shen Dingli, an expert in Northeast Asian geopolitics at Fudan University in Shanghai. “In the past they might have discouraged suits like this but now they don’t stand in the way.”

Last year, South Korean courts ruled against Japanese corporations in two landmark cases involving Koreans forced into labour for the Japanese war effort.

Trade wars, currency wars, and beggar-thy-neighbor tactics are hallmarks of deflationary times. When the global economy is good and jobs plentiful, age-old disputes like these seldom surface.

Mike “Mish” Shedlock