The red sun of the Japanese flag flutters alongside the Chinese emblem's five stars at a business zone in Dalian -- a rare sight in a country still embittered by Tokyo's imperial dominance decades ago.

The northeastern city was the only one in China with a Japanese consulate to avoid demonstrations when anti-Japan protests raged across the country over disputed islands four months ago.

Japan's 40-year occupation of Dalian -- which only ended with Tokyo's defeat in World War II -- lasted longer than anywhere else in mainland China.

But despite its oppressiveness the colonial presence helped lay the groundwork for thriving trade ties to develop in recent decades, enabling economics to trump emotion and pragmatism to outweigh the past.

"You can't just say that we won't work for Japanese companies or earn Japanese money" because of history, said Gem Wang, the planning director of Dalian Software Park, another business facility, where half of the 200 or so foreign firms are Japanese.

Elsewhere in China Japanese factories halted work, restaurants locked their doors and drivers of Japanese cars covered their logos during September's huge demonstrations that came in the wake of Tokyo's move to nationalise part of the disputed island chain.

But businesses at the software park calmly stayed open.

"Dalian residents for a variety of reasons -- the historical relationship, their contact with Japanese people, easier communication -- are perhaps more reasonable in this regard," said Wang.

"Many people speak Japanese and have Japanese friends."

The Dalian University of Foreign Languages opened in 1964 as a school devoted to Japanese -- a few words of which have crept into the local dialect.

In the 1980s and 90s Japan played a key role in revitalising China's northeastern rustbelt as Dalian reinvented itself as a technology and foreign investment hub.

China and Japan are now the world's second- and third-largest economies, while Dalian ranks among the top spots in Asia for outsourcing and has made a name in tourism and shipbuilding.

It is also the home port of Beijing's new aircraft carrier, the most tangible symbol of its growing military heft -- which comes as it grows more confrontational with its maritime neighbours, including Japan as the islands row continues.

But the list of companies in one business zone bustling with corporate campuses reads like a roll call of the Nikkei 225 -- Canon, Toshiba, Mitsubishi, Panasonic and more.

According to Ting Yang, a senior research manager in China for the market intelligence firm IDC, 60 percent of Dalian's foreign software business comes from Japan.

When the protests over the islands broke out, seemingly sanctioned by Chinese authorities, Dalian's Japanese ties could have made it a focal point.

But the city of six million people, set by the sea and interlaced with green hills and public squares, remained calm.

Local authorities may have opted not to alienate their Japanese partners, said Rana Mitter, an expert on Sino-Japanese ties at Oxford University.

"Trade with Japan has been crucial in terms of building what Dalian is today from the 1980s onward and I suspect there'd be a lot of local, political as well as general interest in not upsetting that too much," he said.

Japan's role in Dalian began bloodily with a 1894 incident during the First Sino-Japanese War known as the Port Arthur Massacre that Mitter described as an atrocity.

Russia and Japan tussled for control of the strategic city, the only port in the region not to freeze over in winter, and 11 years later Moscow ceded it in the peace treaty to end the Russo-Japanese War.

Tokyo built it up as a trade hub and blueprint for colonialism in northeast China, where it set up the puppet state of Manchukuo in 1931.

But despite the brutality that came with occupation, older generations were "by no means all entirely hostile to the Japanese", said Mitter.

"There's a certain amount of respect, whether grudging or otherwise, for the Japanese modernisation of the region."

Zhou Qi, a 30-year-old Dalian native running a Japanese restaurant, said his grandparents who lived through colonialism taught him: "There are good Japanese and bad Japanese."

Nowadays the mixed legacy of the period still shows -- a touristy "Japan Street" of colonial-style homes and shops contrasting with a former Russian-Japanese prison kept as a museum to demonstrate, its website says, the "barbarous and cruel" nature of imperialism.

Japanese architecture still dots the city, as do sushi and teppanyaki restaurants.

Li Zhengzai, a 39-year-old manager of a Japanese steakhouse, said that after living in Tokyo for six years he came to respect its culture and adopt its style -- so much so that many Chinese now mistake him as Japanese.

But Dalian residents did not lack patriotism, he stressed. They would go to war if needed, he said, and Japan should admit its past aggression, a sore point among many Chinese.

Still, he advised against fighting, as armed conflict would cost money that neither side could afford.

"'National humiliation' must be remembered," Li said -- using a term that refers to the Japanese invasion of China -- "but should not impact future generations".