The Bleak Future of Sino-Japanese Relations

The past year has rocked relations between Tokyo and Beijing. Why both sides—and Washington—desperately need to find common ground.

For all the attention paid to America’s complex relationship with China, stability and economic growth in Asia depends just as much, if not more, on the fraught relationship between China and Japan. Not only are these countries the world’s second- and third- largest economies, they also are major military powers that represent two very different political and social systems. Although increasingly interdependent economically, they oscillate between political engagement and outright competition over influence in Asia, territorial issues and military capabilities. The inability of these two countries to find a balance in their ties shapes Asian politics and economics and also complicates Washington’s efforts to find a stable Asian policy. Japan’s new government—its sixth in five years—has indicated that it now wants to improve relations with Beijing.

The past year, in particular, has rocked Sino-Japanese ties. In September 2010, the Japanese Coast Guard seized a Chinese fishing vessel and arrested its crew after a confrontation in the disputed Senkaku/Diaoyu Islands, just north of Taiwan. Great stores of natural gas and oil are contained on the seabed around these islets, and they have been the source of an ongoing dispute over which country owns them, despite being administered by Tokyo since the 1972 reversion of Okinawa to Japan from the United States. The 2010 crisis led to a freeze in relations, retaliatory arrests of Japanese citizens by Chinese authorities and a near-complete cutoff of crucial rare-earth materials to Japan from the mainland.

While such confrontations are rare, Sino-Japanese political relations have been more negative than positive in recent years. Tokyo has watched warily as Beijing has dramatically increased its military capability as well as its presence in East Asia. Of particular concern is the growth in numbers of Chinese submarines, fighter jets, and medium-range ballistic missiles. Well-publicized transits of Chinese naval ships between Japanese islands in the East China Sea have raised Japanese fears about a possible threat to its trade routes. Beijing, for its part, fears the U.S.-Japan alliance could seek to to hinder China’s ability to move freely through international waterways. Further sparring centers on issues including consumer product safety, Chinese pollution harming Japan and continued jockeying for influence in regional and global multilateral institutions.

Japanese leaders, in particular, see this as a zero-sum game in which they lose relative to China’s seemingly unstoppable growth. Tokyo’s attempts to negotiate free-trade agreements, create tri- or quadrilateral groupings and make bold diplomatic initiatives are often interpreted as playing catch-up to Beijing’s smile diplomacy. Yet in recent years, Beijing has alienated many of its Asian neighbors, primarily over its more assertive stance on territorial disputes and claims over the South China Sea. As China’s military capability has grown, it seems more willing to bully its neighbors, reversing years of diplomatic success. While this may provide fodder for Japanese worries about Beijing’s ultimate intentions in the region, it has not resulted in Japan’s successfully improving its own standing in Asia.

In truth, both countries are 800-pound gorillas in comparison to other Asian nations. The two are the most advanced military powers in Asia, with Japan holding a diminishing qualitative edge while China’s quantitative lead steadily increases. With a combined GDP of nearly US$8 trillion, they dwarf the economies of all other regional states. Japan’s high-tech industrial sector is the world’s most advanced, and China’s production of consumer goods has transformed global markets. Each provides millions of dollars in direct or indirect aid to countries around the globe, competing for access to raw materials and markets. Just as importantly, however, China is Japan’s largest trade partner, and Japanese firms employ nearly 10 million Chinese on the mainland. As important as each is individually, they are increasingly interdependent yet remain locked in persistent competition and distrust related to each other’s intentions and the Chinese assertion that Japan has yet to fully atone for its atrocities during World War II.

Just a few years ago, many observers expected this dynamic to change. Once the Democratic Party of Japan gained power in August 2009 after a half-century of Liberal Democratic Party rule, its leaders sought to reduce tensions with Beijing. One of the party’s founders, the now-disgraced Ichiro Ozawa, while in the opposition had led delegations numbering in the hundreds to China. After taking office, then prime minister Yukio Hatoyama went so far as to propose a new East Asia community in which Japan and China, along with South Korea, would take the lead. Yet, within a year these overtures had come to naught and relations had sunk to a new low. Things only got worse this month with the selection of Yoshihiko Noda as Japan’s new prime minister, given prior controversial statements that denied the war-criminal status of some of Japan’s World War II leaders.