Japanese companies are concerned about Prime Minister Shinzo Abe's forceful diplomacy with neighbors like China, at a time when demand from Asia's giant appears to be ebbing, a Reuters survey showed.
More than half the executives in the Reuters Corporate Survey said demand from China is peaking or declining.
The survey showed a quarter are concerned about the impact of Abe's approach to foreign policy, which has inflamed tensions with China and South Korea. Forty-six percent said it has not affected them, and 29 percent said they were unsure.
Japan's ties with China and Korea have worsened over bilateral territorial disputes and a feeling in Seoul and Beijing that Tokyo has not atoned for its wartime aggression, especially with Abe's December visit to the Yasukuni shrine, which Japan's neighbors consider a symbol of its wartime and colonial brutality.
"On territorial issues, it's natural to protect Japan's interests and positions," said an executive at an electrical equipment company.
"But I would like to see more humility regarding issues that are sensitive not only for China and Korea, but globally, like the understanding of history, the Yasukuni Shrine visit and the place of Tokyo war crimes tribunals," the executive said.
"Obstinately insisting on these issues could erode trust in Japan and damage national interests - not only economically but also from the perspective of the international standing of Japanese people."
Executives offered their comments anonymously in the Reuters Corporate Survey of 400 firms, conducted March 3-14, which is split evenly between manufacturers and non-manufacturers.
Even among the majority who reported they were not concerned, many of the 195 respondents expressed reservations about the prime minister's diplomacy.
"I would like more attention paid to avoiding friction over Yasukuni and other diplomatic issues of low importance," said an executive at a steelmaker whose business has not been affected.
The rise of China has been an engine of global growth, drawing huge numbers of Japanese manufacturers to build or use its factories and offering many millions of new consumers for Japanese goods.
But after 30 years of growth averaging 10 percent or more, the world's third-biggest economy is shifting gears. The government targets 7.5 percent growth this year, shifting toward domestic demand and relying less on exports and investment. A growing number of analysts say Beijing may need to take steps to prop up growth.
Of the 176 executives who responded to a question about Chinese demand, 45 percent said it is peaking and 13 percent it is declining, while only 31 percent said it is rising and 11 percent said it is bottoming.
With Europe recovering only sluggishly, the survey showed, companies are seeing strong demand in North America and Southeast Asia.
(Writing by William Mallard; Editing by Simon Cameron-Moore)