Global business leaders are voicing increasing concern over heightened political tensions between China and Japan, sparked by a maritime dispute in the East China Sea. They fear an escalation may have a spill-over effect on their regional operations and damage trade ties between the world’s second and third-largest economies.

Company executives, diplomats and analysts told CNBC that supply chains across China and Japan and regional trade flows are at risk if the territorial dispute between the north Asian neighbors – believed to be the worst in decades – deepens.

“This could really be something that causes a huge economic dislocation,” Mike Splinter, chief executive officer at Applied Materials told CNBC. “If import barriers go up, it could affect our business.”

John Rice, president and CEO at GE Global Growth and Operations said he was worried about the potential “repercussions” to the flow of free trade that may arise because of escalating “geo-political” risk in the region. “That’s what we worry about…because we’re free traders to our core.” Rice said he was monitoring developments “very closely.”

While the precise scale of any disruption to manufacturing supply chains is hard to assess, many observers are starting to draw a parallel with the disruption in the wake of the 2011 Fukushima disaster in Japan.

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