Neighbors, But not Opponents

A stable, healthy and long-term relationship will benefit China, Japan and the region By Ding Ying

Despite rickety past relationships, it’s never too late for two neighbors to make amends. Today, China and Japan seem willing to follow this adage, although there is still much to be done to resolve the myriad disputes between them.

Japanese Prime Minister Yoshihiko Noda’s visit to Beijing on December 25-26, 2011, his first official visit to China since taking offce in early September, is defnitely a step in the right direction for improved ties.

During the visit, China and Japan reached a consensus on advancing their relationship based on mutual trust and cooperation.

More mutual trust

“Noda’s visit was a fruitful one. It relayed the message of the desire to strengthen the bilateral relationship,” said Hu Jiping, Director of the Institute of Japanese Studies at the China Institutes of Contemporary International Relations (CICIR).

Considering the complex international and regional situation in 2011–like the devastating earthquake in Japan on March 11, lingering world fnancial crisis and leadership transition on the Korean Peninsula– deepening mutual trust and cooperation are signifcant for China and Japan, as well as the rest of the region.

During Noda’s two-day visit, China and Japan both stressed the significance of developing bilateral ties. At a meeting with Chinese President Hu Jintao, Noda highlighted the political mutual trust as the major foundation for the development of these ties. He said China’s development is an opportunity not only for Japan, but for the international community. Promoting a strategic and mutually beneficial relationship between the two countries is necessary for solving regional and international issues. President Hu said Noda’s visit would further deepen this relationship.

Talking with the visiting Japanese prime minister, Chinese Premier Wen Jiabao said China and Japan should be good neighbors and partners rather than opponents. Wen said peaceful coexistence, long-term friendship, mutually beneficial cooperation and common development between the two nations serve the fundamental interests of both sides and their peoples and are benefcial to the peace, stability and prosperity of Asia and the whole world.

“Considering the euro and U.S. dollar’s unsteady exchange rates, buying China’s government bonds is a wise and strategic choice for Japan to diversify its foreign exchange reserves.”

—Zhu Chenghu, a professor with the National Defense University of the People’s Liberation Army

Zhou Yongsheng, a professor with the China Foreign Affairs University (CFAU), said Noda’s visit created a good atmosphere for 2012, a year that marks the 40th anniversary of the normalization of Sino-Japanese diplomatic relations. Deepening political trust, promoting economic cooperation and enhancing friendship are important for the two East Asian nations to realize reciprocal benefit, jointly deal with aftermath of the fnancial crisis and maintain peace and stability in the region, he said.

In 2011, the Sino-Japanese relationship was on the track of reconciliation. China provided immediate assistance after the March 11 earthquake. President Hu offered his condolences at the Japanese Embassy in China. Premier Wen visited earthquake-hit areas during a trip to Japan in May.

Japanese Foreign Minister Koichiro Gemba said in a speech at the Japan National Press Club on December 14, 2011 that Japan has no plans to “encircle or exclude” China in constructing an “open, multilayered network”of cooperation in the Asia-Pacifc region.

Gemba said it is vital to deepen the Japan-U.S. alliance to establish a new regional order, but at the same time “China’s full participation is indispensable.”

“It’s obvious that peace and prosperity in this region cannot be achieved if the three major countries do not join hands and cooperate,” said Gemba, suggesting that setting up a strategic dialogue and partnership between Japan, the United States and China is now more important than ever before.

Hu from the CICIR said deepening its relationship with China is a thoughtful choice of Japan. As an ally of the UnitedStates, Japan mainly is coordinating Washington’s strategy of boosting its presence in Asia Pacific, which has triggered concerns in China.

HEADING TO A BETTER FUTURE: Chinese Premier Wen Jiabao welcomes Japanese Prime Minister Yoshihiko Noda in Beijing on December 25, 2011

“We must not forget, Japan has interests of its own,” Hu Jiping stressed. Being a close neighbor of China, Japan is aware that a troublesome Sino-Japanese relationship will hurt itself. “To Japan, it hopes to establish a dependable, at least a stable, relationship with China.”

A stable Sino-Japanese relationship will stabilize the situation in Northeast Asia, which is also in Washington’s interests.

“Washington will be glad to encourage such a relationship on some level, as long as it is confdent the relationship is not too close to threaten U.S. interests in the region,” said Hu Jiping.

Since former North Korean leader Kim Jong Il passed away several days before Noda’s visit, the regional situation has remained sensitive. China and Japan also exchanged views on the regional situation and agreed to settle the nuclear issue on the Korean Peninsula through peaceful negotiations under the framework of the six-party talks.

Like Premier Wen said, the deep influence of the global financial crisis has been continuously expanding while the complexity and seriousness of the global and regional situation are beyond prediction. So it is necessary for China and Japan to closely work together to deepen their strategic and mutually benefcial relations.

Practical cooperation

During Noda’s visit, China and Japan agreed to establish a vice-minister level consulting mechanism to manage marine crises. “Such a mechanism will help to improve political mutual trust and ease up situation in the East China Sea,” said Hu of the CICIR to Beijing Review.

China and Japan also vowed to improve cooperation in the financial market, energy conservation, environmental protection, green economy and hi-tech sectors, while pushing for a free trade zone between China, Japanand the Republic of Korea. China promised it will continue supporting and participating in Japan’s post-disaster reconstruction.

Common economic interests favor improved cooperation, said Hu Jiping. As both Europe and the United States suffer from the fnancial crisis, China is one of Japan’s only hopes for future economic development, he said.

China has remained Japan’s top trade partner. Bilateral trade reached $312 billion from January to November 2011, up 16.5 percent year on year, making Japan China’s fourth largest trade partner, according to China’s Ministry of Commerce.

According to statistics from the Japan External Trade Organization, a governmentrelated organization that promotes foreign trade and investment, there are more than 20,000 Japanese enterprises in China. Japan is the third biggest overseas investor on the Chinese mainland only after Hong Kong and Taiwan. About 60 percent of trade between the two sides, however, currently is conducted in U.S. dollars.

During Noda’s visit, China and Japan decided to encourage direct currency exchange between them to boost bilateral trade. Japan declared its plan of buying yuan-denominated Chinese government bonds worth $10 billion.

“Buying each other’s government bonds can improve their mutual trust and diversify their foreign exchange reserves,” said Zhu Chenghu, a professor with the National Defense University of the People’s Liberation Army.

China and Japan are the two nations that hold the largest foreign exchange reserves. China started purchasing Japan’s government bonds in 2005. In April 2011, it set a new record by buying 1.33-trillion-yen ($17.1 billion) in mid- and long-term government bonds of Japan. Japan worried that this might make Japan passive when making diplomatic decisions.

Japan’s foreign exchange reserves are about $1.3 trillion, over 70 percent of which are in U.S. dollars. In early August 2011, the Standard & Poor’s rating agency downgraded the credit rating of the United States for the frst time.

“Considering the euro and U.S. dollar’s unsteady exchange rates, buying China’s government bonds is a wise and strategic choice for Japan to diversify its foreign exchange reserves,” Zhu said.

TIGHTENING LINKS: Chinese President Hu Jintao shakes hands with visiting Japanese Prime Minister Yoshihiko Noda in Beijing on December 26, 2011

He also said although the amount is small, it represents a big change in Japan’s foreign exchange reserve policy. Japan’s choice is a beneficial one to China, too. Japan will be the first developed economy to hold yuan reserves, marking a signifcant step forward for the yuan to become a global currency, Zhu said.

More to be done

Differences between China and Japan, of course, cannot be solved through one visit. Improving mutual trust is always the crucial element for the Sino-Japanese relationship. This calls for efforts both to strengthen governmental exchanges and communication and to promote friendly feelings between the two peoples.

All existing problems between China and Japan are rooted in insufficient trust. Zhou from the CFAU pointed out the Noda administration has a growing sense of insecurity with China’s rising power and position. As a result, it is trying to deter China’s rise by joining forces with the United States.

The Noda administration’s recent activities proved his conclusion. A day after Noda wrapped up his Beijing trip, the Japanese Government announced a controversial decision to relax a decades-old, self-imposed ban on weapon exports. The policy shift will allow Japan to participate in arms development and production with other countries.

SINGING FOR FRIENDSHIP: A Japanese singer sings with students from a primary school in Yinchuan, capital of northwest China’s Ningxia Hui Autonomous Region, on October 18, 2011

“Japan and the United States have jointly conducted weapons research and development to step up their security alliance,” said Japanese Chief Cabinet Secretary Osamu Fujimura. Japan is the world’s sixth largest military spender, but up until now has paid disproportionately high premiums on military hardware as the previous restrictions meant that wholesale orders couldn’t be made and Japan had to settle for high levies on small contracts.

By lifting the ban, Japan can deepen its military ties with the United States while making big money to save its economy, Zhou said.

The CICIR’s Hu cautioned that potential conflicts in the East China Sea related to sovereignty over the Diaoyu Islands and energy exploitation and exploration is a hidden danger to the bilateral relationship. Once a conflict breaks out, it will bring up disastrous consequences to Sino-Japanese ties. Establishing a joint security management system will help, but it still is not the fnal solution, he said.

Moreover, he pointed out, Japan’s frequent leadership changes are negatively infuencing bilateral ties. “Being a neighbor and trade partner, we prefer a stable government in Japan rather than dealing with different parties and administrations,” he said.

Observers noticed that in recent years, people in the two nations’ likeability to each other have been decreasing. In a recent poll in Japan, about 85 percent Japanese respondents said they didn’t trust Chinese. Hu believes some Japanese media outlets are partly responsible for the result because of their biased reporting.

“But the Japanese Government has the responsibility of clarifying false and inaccurate reports and guide the bilateral relationship on the right track,” he said.

The two governments should also provide more opportunities for communication and exchanges between Chinese and Japanese peoples, so as to improve their feelings toward each other, he said.

dingying@bjreview.com