China should attack the Japanese bond markets and cause a full-scale funding crisis, unless the latter nation reverses a decision to nationalise the Senkaku/Diaoyu islands, a senior advisor to the Chinese government said.
The Bank of Japan has followed the Federal Reserve and European Central Bank by extending its QE programme by 10trn yen.
The Japanese government is being forced to consider suspending state spending as it emerged it could run out of cash within a month.
Fidelity's Anthony Bolton has moved to reassure investors now is the perfect time to be in the Chinese markets, as hedge funds withdraw from the region and short-sellers move in.
The chief executive of Japan's Nomura Holdings has resigned following a damaging insider trading scandal.