Japan needs to navigate a pathway between the United States and China

Author: Editorial Board, ANU

Japan’s Fast Retailing CEO Tadashi Yanai, who runs the Uniqlo clothing chain, declared that his company wouldn’t be choosing between the United States and China in an interview with financial daily Nikkei Asia last week. ‘Japan can’t survive without being an open country’, Yanai said. Japanese companies caught between the United States and China ‘need to acknowledge that Japan has nothing. Japan has no choice but to make money in markets across the world’.

Yanai’s decision to make no comment on whether the company uses cotton from Xinjiang is emblematic of his approach to geopolitical affairs. ‘I want to be neutral between the United States and China’, he said. ‘The US approach is to force companies to show their allegiance. I wanted to show that I won’t play that game’.

When it comes to the economic crunch point, what’s good for Uniqlo is probably also good for Japan. But the Japanese government is yet to define a pathway through US–China rivalry and political assertiveness that might make Yanai’s posture a viable national strategy.

The Japanese prosperity that has come with globalisation and technological advancement has fundamentally changed the regional and global balance of power. The rise of China as the world’s second largest and soon to be largest economy poses a major challenge to the established global order.

The whole region is navigating these tricky changes, but Japan is in the cockpit.

The pressures on global markets and political and multilateral institutions and systems are unprecedented. China’s political system amplifies the uncertainty the region faces about how tensions with Beijing can be dealt with. Political and military power has followed China’s economic power, and the country is no longer hiding its strength and biding its time.

China is Japan’s and Asia’s largest trading and economic partner; Japan is the largest source of foreign direct investment for China. It is reasonable for China to have its power reflected in international efforts to shape global rules and for it to want to secure its interests in its immediate neighbourhood.

But the tip towards political coercion is a tip too far. China’s assertiveness in international dealings and its use of coercion, particularly in its immediate regional neighbourhood — earlier against Japan and recently more blatantly against Australia — have aggravated uncertainties about the nature of its rise. There is a growing attenuation of trust between China and other powers.

The United States’ responses to the rise of China have varied, grappling for a balance between engagement, competition and containment. In recent years, fears of the consequences of China’s challenge to US economic power have led to a trade war, technological decoupling and strategic competition and pressure on US allies and partners to make choices that favour the United States whatever the cost.

Although the rise of Japan in the 1980s was also met with a similarly confrontational American response, Japan was under the American security umbrella and had a political system that was a little less unfamiliar. The rise of protectionism in the United States, driven by an uneven recovery from the global financial crisis in 2008 and politically exploitable domestic socioeconomic disparities, has added to these pressures.

The pressure on US allies to decouple their trade and technology from China has grown. The multilateralism that helps to restrain and shape great power settlements and is essential to Japan’s prosperity and security, is harder to sustain.

At a time when strategic innovation is much needed to define a pathway through, Japanese political leadership is entangled in established ways of thinking from the past.

In our lead article this week, Ben Ascione observes that ‘unless [Japanese Prime Minister Fumio] Kishida can assert his control over the LDP after the July 2022 upper house election and build more than lukewarm public support he will find it difficult to exercise the levers of the prime minister’s office to strike a new policy course’.

‘Japanese democracy is at its weakest point in the post-war era’, Ascione laments, and there is no cut-through, hard-edged political debate about domestic or pressing foreign policy issues. Though he hails from a fine liberal tradition in Japanese conservative politics (the Kochikai faction which boasts former prime ministers Hayato Ikeda, Masayoshi Ohira, Zenko Suzuki and Kiichi Miyazawa) Kishida appears bound to the nationalist conservative…

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