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The thawing of the ice between China and Japan

Updated On: Apr 13, 2007

China is having another round of optimistic and fruitful diplomacy in Northeast Asia again.

Korean President Roh emphasized officially that South Korea welcomes and not fears China's economic development and hopes that the expansion of the Chinese market offer South Korea many more opportunities. Most importantly, South Korea is studying the possibility of establishing a free trade zone between the two nations – the crown jewel of the bilateral relationship. The two states are also planning education cooperation and exchanges between the youths of both countries for the Sino-South Korea Exchange Year held also on the year that marks the 15th anniversary of the China-South Korea diplomatic ties.

However, the trip that really took the international spotlight was his next stop – Japan. Chinese Premier Wen Jiabao referred to his visit to Japan as an "ice-melting trip". In his first address to the Japanese Diet, the first by a Chinese leader in 22 years, Mr Wen urged Japan not to forget the past, but put the responsibility for the war of aggression to a limited number of militarists and acknowledged that the majority of Japanese had also been the victims of war. 

While making a mention of this historical issue that continued to plague Sino-Japanese relations, perhaps as a reflection to be more forward looking, he also pushed for the wider promotion of  exchange between the young people of the two countries. A survey of approximately 1,000 Chinese and Japanese university students conducted by the Chinese periodical "Oriental Outlook" and the Japanese newspaper "Yomiuri Shimbun" in March 2007 released their results on 8 April 2007 and found that most of the participants do not think the current relationship between China and Japan is at the optimum.

Surprisingly, both Chinese and Japanese students agree that the other country is of great importance to their own country's economic development with more than half of Japanese respondents wrote "China" in answer to the question "Which country or region is, in your opinion, most important to your country's economic development" and Japan followed closely behind the US in the Chinese students’ responses. Youths in both countries also agree that China will become the most influential country in the international community. Approximately 85% of Japanese respondents wrote "China". Most Chinese students voted for their motherland. TheUnited States was the second most popular choice. The survey results also debunked a prevailing myth that Japanese-educated Chinese often went back to Chinamore anti-China because of the discrimination they felt when they were studying and living in Japan.

Japan also has its own wish list for the Sino-Japan rapprochement. Japan was China's largest trading partner for 11 consecutive years until 2003 when it overtaken by the US and European Union due to tensions between the two East Asian powers after anti-Japanese sentiment in the Chinese public burst out into the open over Tokyo's desire for a permanent United Nations Security Council seat. While Sino-Japanese trade is growing, it is not in proportion to overall Chinese expansion at double-digit rates. This ice thawing could also mean economic goodies for the Japanese side.  Both countries are now eager to start working together to develop energy resources and tackle climate change.  Broad business deals for the possible joint development of oil and gas projects were signed.

While China’s trade and economic relations with its closest neighbours, South Korea and Japan seem on the right track, US and China look set to face increasing trade disputes.  China expressed great regret and strong dissatisfaction at the decision of the United States to file WTO cases against China over intellectual property rights and access to the Chinese publication market. "The decision runs contrary to the consensus between the leaders of the two nations about strengthening bilateral trade ties and properly solving trade disputes", said Wang Xinpei, spokesman with the Ministry of Commerce. "It will seriously undermine the cooperative relations the two nations have established in the field and will adversely affect bilateral trade", he added.

Another Chinese official, the country's top intellectual property rights (IPR) regulator, also spoke out against the United States' WTO complaint. "It's not a sensible move for the U.S. government to file such complaint," said Tian Lipu, commissioner of the Intellectual Property Office, at a national meeting of IPR officials in Nanchang, capital of east China's Jiangxi Province. By doing so, the United States had ignored the Chinese government's immense efforts and great achievements in strengthening IPR protection and tightening enforcement of its copyright laws, Tian said.

From the US perspective, the lame-duck Bush administration has yielded to Congressional pressure to be tough on China. However, filing two cases against China at the World Trade Organization over China’s failure to crack down on pirated goods like movies and books and Chinese restrictions on the distribution of foreign films and music less than two weeks after the US Commerce Department said it would impose duties on two Chinese paper makers (with the potential of expansion of such duties to steel, plastic) worry some that it may start a trade war and push China to retaliate.

But a trade war now may harm US interests as well as China. Boeing jets may become more expensive if Chinese steel used in its jets became more expensive and jets are a hell of a good way to reduce record trade deficit (US$232 billion) with China. In addition, a trade war may be misdirected because, in many cases, it is not China’s cheap labor but President Bush’s tax cuts for the wealthy and the war in Iraq that are hurting the livelihoods of the Americans more than cheap Chinese products.  

Despite the saber-rattling, China is hoping that it will receive a request for consultations from the United States so that it can deliberate on and actively respond to a formal request to avert a trade war. Despite economic tensions, however, officials on both sides seem to think that it would have little negative impact on the upcoming Strategic Economic Dialogue. There are still hopes that the Paulson-instigated “strategic economic dialogue” with top Beijing leaders would have a stronger hand in calming the anti-China mood in Congress. The next round of fence-mending is like to follow on the heels of a delegation of Chinese officials, led by Vice Premier Wu Yi, that come to Washington for another session of the strategic dialogue started by Mr. Paulson in late May 2007.

From big power diplomacy to small ones. In a tiny little corner of Southeast Asia, for too long backwaters of ASEAN even after joining the organization, Cambodia is receiving attention from a bigger boy with far greater resources. Cambodia’s energy potential does not go unnoticed by Chinese companies which launched two power projects in Cambodia, the Stung Atay hydropower plant and a set of electricity transmission network. The hydropower plant costs 190 million U.S. dollars and can generate 465 million kilowatt-hour of electricity per year.

Cambodia is naturally grateful to its northern neighbour for such projects as it currently does not have the infrastructure to generate enough electricity to fuel the increasing demand, which has been rising 15 to 20 percent per year, according to Cambodian Ministry of Mines and Energy. The Yunnan provincial government will also donate US$1 million worth of fax machines, computers, printers and generators to the Cambodian government in the coming months.

In return for Chinese largesse, Cambodia has allowed Chinese companies from Yunnan province to co-develop two real estate projects in Phnom Penh and Sihanoukville. Under the agreements, the two sides will develop the Boeng Kak Lake area in Phnom Penh into a multi-purpose living and recreation center called the New City of East, and establish an eco-garden in Sihanoukville for tourism and other commercial uses. Currently, bilateral trade between Yunnan and Cambodia stood at 3.51 million U.S. dollars in 2006 and, by the end of 2006, the two sides have signed over 20 economic and trade agreements worth of 40.39 million U.S. dollars.

Whether big or small, countries in East Asia are now responding to China’s rise in different ways.  (13 April 2007)

Sources:

China, Japan move closer to energy cooperation (Straits Times, 13 April 2007)

China’s Wen aims to melt the ice (Today, 13 April 2007)

Chinese Premier arrives in Seoul for official visit (People’s Daily, 10 April 2007)

Top IP official lashes out at U.S. WTO action against China (People’s Daily, 10 April 2007)

China expresses regret, dissatisfaction over U.S. complaints at WTO (People’s Daily, 10 April 2007)

Chinese premier begins talks with S.Korean president (People’s Daily, 10 April 2007)

President: S. Korea welcomes China's development, expects more cooperation: (People’s Daily, 10 April 2007)

Chinese premier unveils five proposals to enhance Sino-S.Korean ties (People’s Daily, 10 April 2007)

Challenging China (NY Times, 10 April 2007)

U.S. Toughens Its Position on China Trade (NY Times, 10 April 2007)

How far and how close are China and Japan? (People’s Daily, 10 April 2007)

S. Korea to boost cooperation with China: PM (People’s Daily, 8 April 2007)

Economic ties at stake as Wen goes to Japan (Channelnewsasia, 8 April 2007)