Following the 2019 Osaka G20 summit, Japan–China relations appear to have entered a new period. While improved Japan–China ties are in the national interests of both countries, the ongoing US trade war with China is beginning to have significant effects on the relationship. Can Japan and China continue to improve relations? What benefits does this rapprochement offer the two countries?
Both Prime Minister Shinzo Abe and Premier Li Keqiang argue that the Japan–China relationship has returned to a normal track. The G20 summit last June marked President Xi Jinping’s first visit to Japan as General Secretary. Following Abe’s invitation, Xi’s state visit to Japan was confirmed for spring 2020. In October 2018, Abe visited China for the China–Japan summit.
Amid trade negotiations with the United States, Japan–China rapprochement could benefit the economic policy of both governments.
Although Japan originally wanted the United States to return to the Trans-Pacific Partnership (TPP), the Trump administration is known for insisting on bilateral rather than multilateral agreements. Japan resisted signing a new trade accord with the United States because Washington is demanding market opening greater than what was expected under the TPP but is now expected to sign a bilateral agreement in late September 2019.
Abe and Xi’s promotion of ‘free and fair trade’ during the G20 summit was a statement of opposition to US protectionism. The United States has threatened additional tariffs on automobiles imported from Japan. In 2017, 75 per cent of Japan’s trade surplus with the United States came from car exports. Any further US tariffs pose serious risks to Japan’s economy. Japan aims to offset the risk of one-sided trade deals with the United States by increasing its economic cooperation with China.
Economic cooperation with Japan serves three of China’s major interests. First, China hopes that Japan will join the Belt and Road Initiative (BRI). China has driven the BRI since 2014 but notably, Japan has not joined. The BRI would provide Japan with an opportunity to access new markets. Japan–China rapprochement is an opportunity for China to expand and develop the BRI, as well as to harness additional international support for the initiative.
Second, China hopes to use economic cooperation with Japan as a risk-hedging tool in the trade war against the United States. In May, the Trump administration increased the tariff rates from 10 per cent to 25 per cent on roughly US$200 billion worth of goods imported from China. The United States then applied additional tariffs on another US$300 billion worth of Chinese goods imported to the United States. Higher tariff rates are set to take effect over the coming months. Economic cooperation with Japan is one option open to China to ease the economic impacts of the trade war.
Economic cooperation with Japan serves a third interest for China: fuelling the deterioration of Japan–US ties. In 2018, Japan’s trade surplus with China surpassed US$6.7 billion. Japan is currently experiencing a boom in Chinese tourism, accounting for approximately 27 per cent of foreign tourists to Japan. China can potentially use Japan’s dependency on China for coercive sanctions. This has been done before — China imposed economic sanctions on South Korea because of the deployment of the Terminal High Altitude Area Defense system in 2017.
Future Japan–China rapprochement still faces challenges. While both Japan and China agreed to deepen security cooperation during Abe’s visit to China, it is difficult to improve the security environment in the East and South China seas. In the East China Sea, the Senkaku Islands dispute has been a security flashpoint since early 2010. In the South China Sea, China has militarised several islands and attaches great significance to the region because of the role it may play under the BRI. The territorial dispute remains unresolved and the two governments are unlikely to solve it in the near future.
Japan is wary of China’s military capacity in the South China Sea. Japan has dispatched naval vessels to the South China Sea and the Indian Ocean since 2017 and has held joint exercises with other nations. In response to China’s increasing military expenditure in the region, Japan adopted the National Defense Program Guidelines in 2018, which aims to increase marine, air, cyber and space defence capabilities.
Another challenge for Japan–China rapprochement is the US exclusion of Chinese information system companies. When the United States requested its allies to exclude Huawei, Japan’s government also decided to exclude Huawei and ZTE from public procurement. Major telecom companies in Japan postponed the release of Huawei’s new smartphone announcing Huawei’s exclusion from 5G. If Japan continues to exclude Chinese companies in the future, China will retaliate accordingly.
Despite these challenges, the two governments are sending positive signals to each other. In May 2018, Japan and China launched a maritime-aerial communication mechanism designed to reduce accidental military clashes in the East and South China seas. At the Osaka G20, Xi claimed the China–Japan relationship is at a ‘new historical starting line’. Japan’s 2019 Diplomatic Bluebook argues that stable relations with China are crucial.
The trajectory of Japan–China rapprochement is positive, but it rests on shaky ground. The US–China trade war is forcing regional stakeholders to adjust and it now seems that the future of Japan–China relations may be decided by the progress of US–China relations.
Tsuyoshi Minami is Postdoctoral Fellow at the College of Humanities and Communications, Shanghai Normal University. This first appeared in East Asia Forum.