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CWA # 66, 24 November 2018
East Asia
China and Japan: Renewing relations at the right time

  Harini Madhusudan

 

 

 

 

 

Abe’s visit to China can be seen as a part of an ongoing effort from both sides to try and renormalise Japan-China relations through resuming high-level dialogue

 

 

 

 

 

 

 

 

 

 

 

China and Japan seem to have chosen to put aside the security concerns in favour of economic benefits. Also, China might be looking at Japan as a means to rekindle links with the US. Better US-China relations is also in the interest of Japan.

Harini Madhusudhan is a Research Associate at the ISSSP, NIAS


Japanese Prime Minister Shinzo Abe made a three-day official visit to China, starting 25 October 2018, which also happens to be 40 years since the signing of the ‘Japan–China Treaty of Peace and Friendship.’ The meeting included high-level discussions on trade and infrastructure cooperation between Shinzo Abe and Chinese President Xi Jinping, and Premier Li Keqiang.  They emphasized on the importance of realigning the bilateral relationship in accordance with three key principles: ‘shifting from competition to cooperation,’ ‘forging a relationship as partners, not as threats,’ and developing a free and fair trade regime.’ 

This event was being closely watched by the international community. While meeting with Abe, Xi Jinping stressed the value of "sound and stable development of China-Japan relations” that can create “fundamental benefits for people of the two nations, which is widely hoped by this region and the international community." Has Trump managed to push China and Japan closer? What lies ahead for larger China-Japan relations?

Abe’s visit to China can be seen as a part of an ongoing effort from both sides to try and renormalise Japan-China relations through resuming high-level dialogue under two aspects. First, is to restore China-Japan relations from the series of incidents that catalysed its initial deterioration. (Senkaku Islands) Second, realigning Japan-China relations to reflect China’s economic strength. Japan stopped extending loans to China back in 2008, but now it has also officially announced that it will cease official development assistance payments. China expressed its gratitude to Japan for its support on both fronts, and the two countries exchanged — as equals — a memorandum on over 50 projects for business cooperation in third countries.
 

Trade War and China- Japan

This dialogue seems to be the direct outcome of the stand-off between China and the US. The Chinese premier, Li Keqiang visited Tokyo in May 2018, a first in eight years. Similarly, in late August 2018, high-level Japanese delegations travelled to Beijing, where Toshihiro Nikai, secretary general of Japan’s ruling Liberal Democratic Party, met Chinese Vice-President Wang Qishan. 

While covertly criticising the United States for its anti-globalisation turn, Xi Jinping and Li Keqiang expressed the possibility of a combined Japan and China forces that could take the United States head-on, which in all likeness may never happen. Both sides, however, highlighted the importance of a diversified trade regime during the summit talks. The trade war with the US may have made this possible, the Chinese side seems more active and eager to discuss larger cooperation, in a move to diversify its market; a hedge against its Trade War with the US. 

With the trade war expected to get worse in the coming months, China is seen moving closer to the EU, Japan and soon ASEAN to reduce its dependence on the US markets.  China, during the meeting, hinted at reducing the import restrictions on Japanese food products after necessary scientific evaluations.  However, statements related to the Trade- War were not made. 

Finance, Infrastructure and BRI

On the sidelines of the meeting, Abe and Xi participated in an inaugural, bilateral event devoted to third-party market cooperation, where companies signed off on several dozen accords, whose overall commercial value is estimated at over US$18 billion. They encompass a broad range of areas, from currency swaps to rescue operations, along with various energy projects.

The two countries have agreed to create a “new framework” to facilitate cooperation between them when looking to back infrastructure projects abroad. Furthermore, various infrastructure deals announced last week are expected to further facilitate the China-led Belt and Road Initiative (BRI). Chinese officials welcomed Japanese participation in the BRI, should it choose. “Japan has also expressed its readiness to actively participate in the BRI. We are now actively conducting third-market cooperation. We are looking for more proactive cooperation in this regard,” Chinese Foreign Ministry spokesperson Hua Chunying had told the Financial Express.

For many years now, Japan has been ahead of China in terms of investments in Thailand. The Thai government has been seeking international investors in support of its development project. This flagship project aims to turn Thailand’s eastern seaboard into a bustling economic zone by expanding the ports, airports and railway tracks. In this concern, Beijing had raised the idea of working with Tokyo on Thailand’s Eastern Economic Corridor. 

Both the leaders confirmed that they would aim towards a swift conclusion of the Regional Comprehensive Economic Agreement and accelerate a Japan-China-ROK Free Trade Agreement. The leaders also seemed to have shared similar views about promoting reforms to the World Trade Organisation. Chinese officials seem to have become more open than in the past, about discussing transparency, openness, economic viability and fiscal sustainability. One could relate it to President Xi Jinping’s interest in furthering the “Belt and Road Initiative”. 

For Japan, the shift in attitude towards China’s belt and road projects would add momentum to its rapprochement with Beijing at a time of uncertainty caused by US President Donald Trump. Japan also is keen towards furthering its involvement in the Indo-Pacific, and it will further fall into an awkward situation with Taiwan’s expectation to find Japan’s support for its interest in joining the TPP. This may well be Japan’s attempt to balance out the situation. What was interesting to note was the discussion of the issue of a peaceful East China Sea. The two parties reaffirmed their determination towards making it a “Sea of Peace, Cooperation and Friendship.” The meeting in all seem to have gone smooth but it does not look warm enough, yet. 

China and Japan seem to have chosen to put aside the security concerns in favour of economic benefits. Also, China might be looking at Japan as a means to rekindle links with the US. For Japan, better US-China relations is in its interest of Japan. While the issues pertaining to sovereignty, territory, Taiwan and historical perceptions remain, it looks like the high-level interactions between the two Asian Economies will continue.

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