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Security guards try to remove a group of Chinese protesters who ransacked Japan's JUSCO departmental store, in Qingdao on September 15, 2012.

  • Panasonic halted operations at three factories in China after violent protests
  • Protesters ransacked Japanese businesses and damaged Japanese vehicles
  • Panasonic reported two plants were damaged by weekend anti-Japan protesters
  • Chinese economist: "The Sino-Japanese economic war has officially begun"

Hong Kong -- Panasonic halted operations at three factories in China after angry protesters ransacked Japanese businesses over the weekend amid rising tensions over disputed islands in the East China Sea.

Violence against Japanese companies was seen in Xi'an, Dongguan, Changsha and Guangzho, according to local media reports. A Panasonic factory and Toyota dealership in Qingdao were damaged on Saturday, and a Jusco department store was ransacked. In Guangzhou, demonstrators broke into the Garden Hotel and attacked a Japanese restaurant on the second floor, according to the South China Morning Press.

Panasonic has suspended work three plants in China until Tuesday, after factories in Qingdao and Suzhou were damaged by protesters, company officials told CNN. Panasonic also halted operations at a factory in Guangdong province until Tuesday as some local employees staged a strike as protest against Japan's claim to the island chain, called Diaoyu by China and Senkaku by Japan.

A Heiwado Co. department store in Changsha was ransacked, as were Japanese supermarkets in several cities, Japan's Kyodo News Service reported.

People take pictures of a Japanese car damaged in Xi'an on Saturday.

"The Sino-Japanese economic war has officially begun," Chinese economist Wang Fuzhong wrote on Weibo, a Chinese microblogging site. "I hope it won't end in a situation where everyone loses."

Chinese state media, reporting on the protests, decried the violence. Even hawkish publications, such as Global Times -- which ran an editorial "Discard illusion of friendly ties with Japan" last week -- published an editorial Monday headlined "Violence is never appropriate solution."

On Thursday last week a Chinese official warned that Tokyo's move to "buy" a disputed island chain in the East China Sea would hurt trade between Asia's two largest economies. The battle over ownership of the island chain will "inevitably" have a negative impact on Sino-Japan economic ties, Vice Minister of Commerce Jiang Zengwei said Thursday, state-run Xinhua reported.

The islands sit among popular fishing waters and are also believed to be rich in oil resources. Ownership of the chain would allow exclusive commercial rights to the seas surrounding the islands.

Despite booming auto sales in China, sales of Japanese car brands are down 2% in China compared to a year ago, according to the China Association of Automobile Manufacturers. Meanwhile, sales of car brands from other foreign countries, including Germany, the U.S., South Korea and France, are up 25%, 19%, 12% and 4% respectively.

Luo Lei, deputy secretary-general of China Automobile Dealers Association, said earlier this week that Toyota purchases have fallen 15% while Mazda sales are down 6% year over year.

Tensions rise over Asian islands

Why is Japan feuding over islands?

U.S. and China: It's complicated

Tensions between China and Japan -- the world's second and third largest economies, respectively -- escalated on Friday as Chinese surveillance vessels entered the disputed area to begin patrols and "law enforcement," according to Chinese state-run media.

China dispatched the ships after the Japanese government bought several of the islands from a private Japanese owner last week.

The Chinese vessels entered Japan's territorial waters despite warnings from the Japanese Coast Guard, said Shinichi Gega, a spokesman for Japan's 11th Regional Coast Guard Headquarters.

Japanese Prime Minister Yoshihiko Noda said Tokyo would "take all possible measures to ensure security" of the islands, located between Okinawa and Taiwan.

China is Japan's largest trading partner. Nearly 20% of Japanese exports last year were sold to mainland China, compared to 15.3% exported to the U.S., according to figures from the Japan External Trade Organization.

Last week, the Japanese government approved the purchase for 2.05 billion yen ($ 26.2 million) the group of small islands from the Kurihara family, a private Japanese owner, according to Chief Cabinet Secretary Osamu Fujimura.

China says its claim to the islands goes back hundreds of years. Japan formally recognized them as Japanese sovereign territory in 1895.

The islands were administered by the U.S. occupation force after World War II. But in 1972, Washington returned them to Japan as part of its withdrawal from Okinawa.

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