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Are Japan–China relations sweetening or souring?



Author: Akio Takahara, The University of Tokyo

Are Japan–China relations on a collision course? The two thorny issues between Japan and China are history and security. But despite these problems, there is a case for cautious optimism for the time being.

Chinese President Xi Jinping prepares to review People's Liberation Army troops from a car during a military parade to mark the 70th anniversary of Japan's surrender during World War II. (Photo: AAP).

2015 marks the 70th anniversary of the end of WWII. Prime Minister Shinzo Abe’s remorseful anniversary statement was received with scepticism in China, while President Xi Jinping’s statement at the commemorative military parade did not touch on post-war efforts for cooperation and reconciliation at all. Chinese patrol boats continue to intrude into the territorial waters around the Senkaku/Diaoyu Islands three times a month.

Meanwhile, the Japanese Diet is discussing new security legislations that would allow Japan to implement its right of collective self-defence. The government hopes this will strengthen its alliance with the United States and its security ties with other friendly countries, but the move has been met with concern in China. Abe also did not visit China to commemorate the end of WWII on 3 September.

Despite all these events, it seems the two countries have not lost the momentum to improve their relations. But how long is it going to last?

Simply put, the momentum should continue while Xi stays firmly at the helm. The four factors that brought about the rapprochement between the two countries since 2014 have not been lost.

First, although strategic competition is intensifying due to China’s rapid military build-up and active maritime advancement, neither of the two countries wishes to go to war. In May and June 2014, there were two consecutive near-miss incidents between military aircraft over the East China Sea. One such incident would have been concerning enough, but to have two near-miss incidents was very alarming indeed. Both Japan and China realised that they must resume active dialogue to avoid any accidents that would escalate the situation.

Second, China’s economic slowdown is a reality and many localities are suffering from accumulated bad loans and fiscal deficit. Japan remains an important economic partner for China, especially in these times of need. But after Japan nationalised the Senkaku/Diaoyu Islands in 2012, violent anti-Japanese demonstrations led to Japanese businesses being destroyed, burned and looted. It was estimated that the damage to Japanese businesses in China amounted to 10 billion yen (US$80 million). The Chinese leadership realised that tension in the political relationship was one factor discouraging Japanese enterprises from investing in China.

Third, China is facing difficulties promoting its ‘new type of major country relations’ with the United States. The two countries agree to cooperate and expand their mutual interests in economic, environmental and other areas, but strategic competition is intensifying in the Western Pacific and extending into areas such as cyberspace and space. The tense relations with the US helped prompt China to refocus on neighbourhood diplomacy and ‘rebalance’ toward Japan.

Fourth, Xi Jinping has consolidated his domestic power base through his anti-corruption campaign and by heading newly established policy-making institutions. He has no reason to worry about domestic criticism if he adjusts his attitude towards Japan. While a ‘soft’ policy toward Japan has traditionally been an easy target for political rivals to criticise the Party leadership, Xi has already established his power and authority, and his image of a tough leader.

All the above factors still remain in place. The two governments continue to seek the next opportunity for their leaders to meet. But there are some signs that promoting relations further will not be an easy process.

For example, the Chinese media continues to bitterly criticise Abe. When Xinhua News reported Abe’s April 2015 visit to the United States, it headlined with ‘ridiculous performance’, even though the event taking place only a few days after Abe’s second, amicable meeting with Xi in Indonesia. In June, Abe sent a goodwill message to the Chinese people in an interview with Hong Kong-based Phoenix TV, but this was treated extremely lightly in the mainland media. This move was counterproductive diplomatically. Abe’s intention was to reciprocate Xi’s unprecedented, friendly message to a delegation of over 3000 Japanese at a convention in Beijing in May.

At the World Peace Forum in Beijing in late June, Foreign Minister Wang Yi ignored questions on what measures his ministry was preparing to consolidate the new, cooperative phase in Japan–China relations. Instead, he stressed that the fundamental problem in the bilateral relationship was that many Japanese could not psychologically accept China’s rise as a power. It sounded like China’s Japan expert did not want to say anything that could invite internal critique.

Do these events signify that criticism of Xi’s Japan policy is increasing? Possibly. A Xinhua article on 25 August demanded that the Japanese Emperor apologise for the war, adding suspicion to this claim. But the provocation had an impact, inviting Japanese Cabinet Secretary Yoshihide Suga to comment that the article was utterly undesirable and could throw cold water on otherwise improving Japan–China relations.

Perhaps a power struggle is intensifying in China. Past experiences suggest that anonymous attacks against Japan are often signs of defiance against the Chinese leadership. But we should not be misled by them. Currently, the four factors underpinning Japan–China rapprochement are still in place. We should keep an eye on the fourth factor: Chinese domestic politics, especially as further economic downturn could have a destabilising effect. But, for now, it seems that Xi stands firmly at the helm and has decided to improve ties with Japan.

Akio Takahara is a professor in the Faculty of Law at The University of Tokyo.

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Are Japan–China relations sweetening or souring?


ASEAN weathering the COVID-19 typhoon



Vietnam's Prime Minister Nguyen Xuan Phuc addresses a special video conference with leaders of the Association of Southeast Asian Nations (ASEAN), on the coronavirus disease (COVID-19), in Hanoi 14 April, 2020 (Photo:Reuters/Manan Vatsyayana).

Author: Sandra Seno-Alday, Sydney University

The roughly 20 typhoons that hit Southeast Asia each year pale in comparison to the impact on the region of COVID-19 — a storm of a very different sort striking not just Southeast Asia but the world.


Just how badly is the COVID-19 typhoon thrashing the region? And what might the post-crisis recovery and reconstruction look like? To answer these questions, it is necessary to investigate the strengths and vulnerabilities of Southeast Asia’s pre-COVID-19 economic infrastructure.

Understanding the structure of the region’s economic house requires going back to 1967, when Southeast Asian countries decided to pledge friendship to one another under the ASEAN framework. While other integrated regions such as NAFTA and the European Union have aggressively broken down trade barriers and significantly boosted intra-regional trade, ASEAN regional economic integration has chugged along slower.

Southeast Asian countries have not viewed trade between each other as a top priority. The trade agreements in the region have been forged around suggestions for ASEAN countries to lower tariffs on intra-regional trade to within a certain range and across limited industries. This has lowered but not eliminated barriers to intra-regional trade. Consequently, a relatively significant share of Southeast Asian trade is with countries outside the region. This active extra-regional engagement has resulted in ASEAN countries’ successful integration into global value chain networks.

A historically outward-facing region, in 2010 around 75 per cent of Southeast Asian commodity imports and exports came from countries outside of ASEAN. This share of extra-regional trade nudged closer to 80 per cent in 2018. This indicates that ASEAN’s global value chain network embeddedness has deepened over time.

Around 40 per cent of ASEAN’s extra-regional trade is with the rest of Asia. From 2010 to 2018 Southeast Asian countries forged major trade relationships with four Asian countries: China, Japan, South Korea and India. Outside Asia, the United States is the region’s major trading partner. ASEAN’s trade focus on Asia’s largest markets is not surprising. Countries tend to establish trade relationships with large, geographically close, and culturally similar markets.

Fostering deep relationships with a few large markets, however, is a double-edged sword. While it has allowed ASEAN to benefit from integration in global value chains, it has also resulted in increased vulnerability to the shocks affecting its network connections.

ASEAN’s participation in global value chains has allowed it to transition from a net regional importer in 1990 to a net regional exporter in 2018. But the region’s deep embeddedness in a small and tightly-coupled network cluster of extra-regional global value chain partners has exposed it to disruption to any and all of its external partners. By contrast, ASEAN’s intra-regional trade network structure is much more loosely-coupled: a consequence of persistent intra-regional trade barriers and thus lower intra-regional trade intensity.

In the pre-COVID-19 period, ASEAN built for itself an economic house held up by just five extra-regional markets, while doing less to expand and diversify its intra-regional trade network. The data shows that ASEAN trade became increasingly concentrated in these few external markets between 2010 and 2018.

This dependence on a handful of markets does not bode well for risk and crisis management. All of the region’s major trading partners have been significantly affected by COVID-19 and this in turn is blowing the ASEAN economic house down.

What are the ways forward? The immediate task at hand is to get a better picture of the region’s position in global value chain networks and to get on top of managing its network risk exposure. Already there are red flags around the region’s food security arising from its position in food value chains. It is critical to look for ways to introduce flexibility into existing supply chains for greater agility in responding to crises.

It is also an opportune time for ASEAN to harness the technology transfer gains of global value chain participation and invest in innovation-driven diversification of products and markets. The region’s embeddedness in global value chain networks certainly places it in a strong position to readily access large export markets not just in Asia but also Europe and the Americas.

Over the longer term, ASEAN is faced with the question of whether it should seriously look…

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