China And Japan Warm Commercial Ties As A Matter Of Convenience

CHINA-JAPAN RELATIONS have blown hot and cold since the two resumed diplomatic ties in 1972, and there is self-evidently history as to why that is the case.

Japanese Prime Minister Shinzo Abe’s current three-day visit to Beijing is the first by a Japanese prime minister for seven years, an indication in itself that the bilateral relationship is coming out of a chilly phase. The ‘historic turning point’ lauded by the official statements is over-egging the pudding at this point.

There is a geographical logic to the trade deals agreed during the trip ($18 billion worth). This has been given additional fillip by the US administration’s imposition of tariffs on both Chinese and Japanese exports. Both neighbours need to diversify their sources of supplies and their markets as a result. They are both already among the biggest trading partners of the other and the $30 billion currency swap agreed during Abe’s visit will underpin that.

However, Japanese carmakers have not yet got the all of the better access to the Chinese market they want, and Tokyo has not provided as ringing an endorsement of the Belt and Road Initiative as China would wish.

Abe also needs to secure a better seat at the table in the discussions over North Korea, which are becoming increasingly a quadrilateral affair between Pyongyang, Seoul, Beijing and Washington, sidelining Tokyo, which has a particular issue over Japanese citizens kidnapped by North Korea that is not shared by the other four.

The key point of conflict between Beijing and Tokyo remains their territorial dispute over islands in the East China Sea known as the Diaoyu to China and the Senkaku to Japan. Anti-Japanese riots broke out in China just six years ago following moves by Japan to extend its sovereignty over the islands. Cars made by Japanese manufacturers and other Japanese products were vandalised in China. Tourism, trade and investment between the two countries fell off a cliff. Beijing froze high-level contacts.

Anti-Japanese nationalist sentiment remains a switch that Beijing can flip on or off at its convenience.

Asia’s two largest economies making common commercial cause in the face of the challenges posed by the Trump administration is one thing; resolving long-standing political differences will be another. The challenge will be greater for Japan than China, as it now has two ‘frenemies’ to deal with not one.

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