Growing thaw between Japan and China

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Muhammad Rafique looks at the groundbreaking visit of Japanese PM to Beijing

PM Abe and President Xi

Japan’s Prime Minister Shinzo Abe has visited Beijing indicating the betterment of relations between both countries. This is the first bilateral visit of a Japanese head of government to China since 2011 after the spat over Senkaku Islands in the East China Sea. The group of uninhabited islets, called Diaoyu in China, are controlled by Japan but claimed by Beijing.

The dispute particularly intensified after the Japanese government of former Prime Minister Yoshihiko Noda, Abe’s predecessor, decided to bring the Senkaku islands under state control in September 2012. The incident prompted anti-Japanese riots in China and kicked off a frosty spell that has only recently begun to thaw.

Japan and China relations are a bitter-sweet tale of fluctuations as Chinese still have not forgotten the Japanese invasion of their country in the last century and the atrocities committed during the subjugation of China for years. The sensitivity of the relations could be gauged from the fact that they soured when former Japanese Prime Minister Junichiro Koizumi persistently visited the Yasukuni Shrine, where 14 Japanese class-A war criminals of the World War II are honoured among the country’s war dead. But equally steadfast is the Chinese reaction about the high-handedness of Japanese that still revokes revulsion in Chinese folk-lore though both countries signed a Treaty of Peace and Friendship forty years ago.

The prospects of widening trade restrictions are clearly visible as America is bent upon unleashing aggressive and protectionist trade measures

China never fails to denounce the Japanese atrocities during Second World War but has recently softened its rhetoric and appears to have been more cordial. Both countries have slowly come out of the hiatus of bad relations and though the meeting on sidelines between PM Abe and President Xi in 2014 at Eastern Economic Forum in Vladivostok in Russia appeared awkward to many, but the exchange on ministerial levels gradually became more frequent. Japanese business is eager for increased access to China’s massive market, while Beijing is interested in Japanese technology and corporate know-how.

The times have seen Japan and China emerge as the second and third largest economies of the world and are credible powers in their own right. The main reason for erstwhile enemies to come together is the rising spectre of US onslaught on trade resulting in unnerving both China and Japan. The need to improve economic cooperation between Japan and China is badly felt as they both are conscious of their specific vulnerabilities. China has started to suffer from the stringent measures taken by Trump administration and it is experiencing mounting economic difficulties.

Warm welcome

The prospects of widening trade restrictions are clearly visible as America is bent upon unleashing aggressive and protectionist trade measures. The growing volume of trade restrictions has already created fear in the burgeoning economies of China and Japan. Both countries are conscious of their trade superiority and feel it imperative to jointly face the consequences. Japan is quite conscious that the mood in Washington is to go for applying widespread restrictions on trade and that it may be next in line.

Abe’s three-day trip to Beijing has set-up the possibility that the Chinese leader will visit Japan next year. The two leaders are likely to focus on a range of potential deals including joint investments in infrastructure in regional nations including Indonesia and the Philippines. They will also discuss the territorial issue that put their relationship into a deep freeze. However, just days before Abe’s trip, Tokyo lodged an official complaint after Chinese ships cruised around the disputed islands.

It is expected that the most consequential agreements signed by both governments during the visit of Japanese PM may well be the infrastructure deals. The indications are that in asking Japan to undertake joint projects, China is signalling a change in approach to its Belt and Road Initiative (BRI).

It is getting quite apparent that President Xi’s signature project has hit resistance both at home and abroad and some of the predictions of the critics have hit the mark as failed projects are bringing with them economic and political costs. The setback suffered by BRI in Malaysia has triggered a chain reaction and the take-over of Hambantota Port in Sri Lanka has also raised fears.

From the current state of BRI it may look prudent for China to engage with Japan as such partnership may prove a pragmatic step. As Chinese policymakers search for ways to better deploy the country’s vast sums of capital abroad, they can draw on Japan’s experience in funding foreign ventures, which dates back to the 1970s. Japan too, suffered a geopolitical pushback.

Japan can convey an understanding that BRI is a sustainable idea by preferring to engage with it and can help shape the initiative’s massive investments and get more business for its companies. By doing so, Japan will also obtain a broader hedge against an increasingly uncertain US relationship. It is obvious to many that Asia needs significantly larger infrastructure investment in order to produce growth rates that may be able to exceed global average and keep ahead of competition.

Muhammad Rafiq is associated with trade and industry

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