China and Japan’s Sweet and Sour Relationship
By Kent E. Calder

Japan and China are the economic, and potentially the political, giants of Asia, locked in a complex scorpions’ dance. The two countries account for around two-thirds of the economic product of the region and more than half its military spending. Their trade is among the most vigorous and dynamic on earth, more than doubling over the past five years. Japan, an established economic superpower, also provides well over half Asia’s overseas development assistance (ODA). That includes over half of all ODA that China receives, although Japanese aid has declined almost 40 percent since 1999, and total suspension by the end of fiscal 2008 is being seriously discussed. China, for its part, has been Japan’s largest source of imports since 2002 and its largest overall trading partner since 2004, surpassing even the United States.

Despite their deep and growing economic ties and a successful October visit by new Japanese Prime Minister Shinzo Abe to Beijing, China and Japan stand in an increasingly wary geopolitical relationship—one that is dangerous, globally important and remarkably misunderstood in a world myopically focused on Iraq. Throughout history, hierarchy has heretofore helped structure the bilateral relations of these giants: One always was clearly more prosperous or powerful than the other. In classical days it was China; for over a century following the Meiji Restoration, Japan was generally preeminent.

Only in the past half-decade has the unprecedented prospect of simultaneous Chinese and Japanese power and affluence begun to materialize. A less-developed China has been growing rapidly, while a more affluent and mature Japan has remained relatively stagnant, with a population that in 2005 began an unusual peacetime decline. The classic conditions for a chronic security dilemma and balance of power struggle between mature and rising powers have come into view, with some likening the rivalry to the Anglo-German relationship on the eve of World War I.

As in the case of Anglo-German naval competition a century ago, technology, regional transition and domestic politics all deepen the prospect of serious conflict between Japan and China today, in ways that economic interdependence alone cannot resolve. Business does not dominate politics in either country. Transnational policy networks with stakes in interdependence are also weak.

To make matters worse, domestic political interests are also driving both nations’ governments to grow ever more confrontational, propelled by geopolitical rivalries, populist pressures and specters of the past. In China, the domestic legitimacy of the ruling Chinese Communist Party (CCP) itself is bound up with its role as the defender of national interests in the anti-Japanese struggles of the 1930s. And the deference derived therefrom grows ever more important amid the social inequities born of rapid growth.

In Japan, electoral support for the Socialists and Communists has fallen from 14 to 3 percent over the past decade. This collapse of the left, coupled with the recent ascendancy in opposition circles of defense hawks, is aiding consolidation of U.S.-Japan defense relations, even as it generates fears on the Asian continent of renewed Japanese militarism.

China, with clear aspirations to become once again a regional leader, now has nuclear weapons, ICBM capacity and a military budget that has grown in double digits for 17 consecutive years, with remarkably little transparency. Japan, the established power, has a relatively low military profile, with its “no-war” constitution, “nuclear allergy” and strong alliance relationship with the United States. Yet its defense-relevant technology is sophisticated, its political system is in transition and constitutional revision is clearly on the horizon.

History’s Shadows
World War II is now more than a half-century in the past. Yet it is well to remember that the anti-Japanese “United Front,” as the Chinese call it, lasted twice as long as the Pacific conflict. Starting with the Marco Polo Bridge incident of July 1937, it had been running for more than four years by the time of Pearl Harbor and provoked, by most accounts, far more casualties and atrocities than did even the bitter Pacific War. The story of Japanese expansion in Asia dates back a half-century further still.

Domestic politics in China, Japan and Korea all refract memories of common conflict in different ways, rendering the issue volatile and corrosive in efforts at cooperation. Sadly, the situation is growing more conflictual, even as generational change should open greater prospects for reconciliation. In China, patriotic education and intensive broadcasting of accounts of wartime conflict have been hardening attitudes toward Japan, while the Internet has been facilitating their expression. Forty-four million Chinese, for example, signed an electronic petition in spring 2005 opposing Japanese permanent membership in the United Nations. In South Korea, the politically vulnerable Roh Moo Hyun administration likewise gains enhanced domestic credibility from an anti-Japanese stance and has intensified nationalist appeals on both territorial and historical questions.

Japan itself is more complex and polarized, although positive sentiment toward China has been declining dramatically over the past four years. According to Cabinet Secretariat research polls, only 32 percent of respondents in October 2005 felt affinity for China, down from 38 percent in 2004 and 48 percent in October 2001, just after then-Prime Minister Junichiro Koizumi’s one and only prime ministerial visit to China. This compares to positive sentiments above 75 percent during the 1980s, before the Tiananmen massacre.

Supporters and opponents of Koizumi’s Yasukuni Shrine visits are almost evenly matched, although a slight plurality (as well as six former prime ministers) opposes them. At the political level, however, the dominant Mori faction, the ruling Liberal Democratic Party (LDP) to which the new prime minister, Shinzo Abe, belongs, has deep transwar connections. These make the Abe government prone to conservative conceptions of national interests while rendering it more suspect in the eyes of continental Asia than its predecessors. Abe himself is the grandson of Nobusuke Kishi, prime minister during the Security Treaty crisis of 1960 and a member of Prime Minister Hideki Tojo’s World War II-era cabinet, although also the initiator of large-scale reparations to Southeast Asia during his term as Japanese leader.

Between 2001 and 2006, Koizumi six times visited Yasukuni Shrine, where the fallen of Japan’s wars, plus 14 Class A convicted war criminals, are enshrined. Only two other sitting prime ministers in the past 20 years visited, each on a single occasion. Koizumi did, to be sure, stress the personal and nonofficial nature of his visits.

In the emotional debate over the morality and political significance of Yasukuni visits, it is important not to lose sight of their larger Northeast Asian political-economic context. Three epic changes are occurring almost simultaneously: Popular involvement in politics is clearly broadening, often accompanied by a nationalist bias; the shadows of reunification across Cold War boundaries in China and Korea are steadily lengthening; and technology—especially missile technology—is rapidly growing more precise and potentially destructive.

These three developments compound both Japan’s perception of the rising power of continental adversaries and also the apprehension that Japan, mainland China, Taiwan and the Koreas all feel toward one another. Fluid perceptions of power and fear, as Thucydides observed more than two thousand years ago, are the classic causes of war. And they are increasingly pervasive in Northeast Asia today.

Currents of Reunification
The shadows of reunification—across both the DMZ and the Taiwan Strait—are steadily deepening. Since the June 2000 Pyongyang summit, intra-Korean trade has grown by 150 percent, tourism has boomed and railway lines across the DMZ have been reconnected. A Republic of Korea-backed Special Economic Zone in the peninsula’s ancient capital of Kaesong, now in North Korea, has begun to flourish, the North’s nuclear program notwithstanding.

Investment across the strait is estimated to total more than $100 billion, with more than 70 percent of Taiwan’s 2004 global foreign investment now flowing to China and 10 percent of its entire labor force working on the mainland. Since 2003, the mainland has been a larger trading partner of Taiwan than the United States, and the gap is widening. Four Taiwanese firms are now among the People’s Republic of China’s 10 largest exporters. Lien Chan, leader of the Kuomintang (KMT) Party that -Chiang Kai-shek led in disarray to Taiwan at the end of 1949, last April visited his ancestral graves and the former Nationalist capital of Nanking while also meeting CCP General Secretary and Chinese President Hu Jintao. The KMT swept Taiwanese local elections in December 2005, and prospects that they will win the 2007 presidential election are strong.

Paradoxically, as Beijing and Taipei move closer economically, their level of military confrontation is escalating, due to complex factional politics on both sides of the strait. This contradiction creates a tense, ambiguous and exceedingly dangerous situation, with serious implications for Japan as well. There are now more than 800 Chinese short-range missiles, mostly CSS-6s and CSS-7s, and 1,200 fighters, 69 submarines, 42 frigates and two People’s Liberation Army groups deployed along the strait, with nearly 300 fighters, mostly F-16s, complemented by assorted tactical missiles, arrayed against them. One Japanese island at the end of the Ryukyu chain, -Yonaguni, is less than 40 miles from where Chinese missiles splashed down in the 1996 crisis. And those missiles have the range to easily reach mainland Japan.

North Korean military capacities are also substantial, with the challenge to Japan rising even as tensions relax along Korea’s DMZ. Totally apart from its growing nuclear capacity, the North has numerous chemical and biological weapons and a clear if limited nuclear capability, as well as operational Nodong mobile missiles capable of delivering them against Japan. The combined military forces of North and South Korea, whose rationale for intra-Korean conflict is declining, number close to 10 times the strength of the Japan Self-Defense Forces.

Other Looming Challenges
Beyond a classic security dilemma, intensified by growing Chinese economic power and the uncertainties of the Taiwan Strait competition, China and Japan confront other contentious questions that could interact with the Taiwan issue to catalyze conflict. Among the most pressing is their mutual thirst for energy. Japan is 99 percent dependent on imports for its oil and gas, while coastal China is similarly bereft. Offshore oil in the East China Sea is one of the few “domestic” development options available on either side.

The definitions of “domestic,” however, conflict, and demarcation lines are dangerously ambiguous. China claims that the entire East China Sea continental shelf is a “natural prolongation” of the Chinese mainland that extends eastward all the way to Okinawa. On the other hand, Japan has drawn a hypothetical median line roughly 100 miles west of the Okinawa Trough, where the richest petroleum deposits in the area are believed to be concentrated.

The energy conflict has escalated ominously in recent years. In May 2004, China began serious exploratory operations in the Chunxiao gas fields, only four kilometers from the median line, provoking rising Japanese concern. Then in November 2004 a Chinese nuclear attack submarine intruded for over two hours into Japanese waters near Okinawa, ostensibly by accident. Meanwhile, a territorial dispute over Okinotorishima, a small yet strategic outcropping on approach routes from Guam to the Taiwan Strait, has flared due to Chinese military marine mapping activities in the vicinity. In May 2005 the Ministry of Economy, Trade and Industry authorized Japanese firms to explore in contested areas. And in September 2005, Chinese warships appeared at the now-active Chunxiao gas fields, on the very edge of disputed waters, on the eve of Japan’s national elections. Overflights by Chinese military surveillance aircraft in disputed airspace have also risen since spring 2005 to -record levels.

Missile defense is another bone of contention. Given the ever more imposing array of missiles positioned in close proximity to Okinawa, where the indispensable Kadena U.S. Air Force base and 70 percent of American defense facilities in Japan are concentrated, defense specialists view neutralizing this potential threat as vital. Steps to establish the operational efficacy of ballistic missile defense simultaneously could enhance deterrent capabilities of the alliance and further alarm Beijing.

As Sino-Japanese tensions deepen over energy, territorial claims and missile defense, prospects for Japanese constitutional revision are also rising. In October 2005, the ruling LDP published its draft of a revised charter; Abe, the new prime minister, is firmly committed to revision. And in the wake of Koizumi’s September 2005 landslide, the LDP now has, together with its coalition partner New Komeito, the two-thirds majority needed for revision. Clear opponents in the Communist and Social Democratic parties have just 16 of 460 seats in the dominant Lower House.

The current LDP draft proposes only limited constitutional change on security matters, retaining the historic first clause of Article 9, asserting that “The Japanese people forever renounce war as a sovereign right of the nation.” Yet the new draft does finally legitimate the Japan Self-Defense Forces. It also clarifies the strategically important matter of collective self-defense, the linchpin of effective U.S.-Japan security cooperation. It likewise loosens amendment procedures, opening the way for easier future constitutional changes that could in turn further magnify emerging Sino-Japanese tensions.

Beyond specific flashpoints of conflict, Japan and China are drifting toward a more diffuse struggle for preeminence in East Asia, with both positive and negative dimensions. The two are competing in trade liberalization, with free trade agreement (FTA) proposals that should accelerate and vitalize the emergence of Pacific regional free trade across the region as a whole.

In a darker dimension, China appears intent on denying Japan a permanent U.N. Security Council seat that many observers feel it richly deserves. Tokyo, after all, contributes 20 percent of the United Nations’ entire budget, compared to China’s 3 percent and is increasingly active in global peacekeeping.

U.S. Diplomacy in the Region
Stabilizing Sino-Japanese relations is crucial for both the region and the broader world. In engineering a desperately needed resolution, the United States has a crucially important role. The United States should not get formally involved in prescribing for its ally partner Japan, even on the issue of Yasukuni Shrine. Such prescription could be manipulated by China and divide the alliance partners. Instead, the U.S. approach should be what it has been since the days of the Nye Initiative—reaffirming the alliance and then encouraging Japan and China to develop a dialogue of their own to supplement it.

U.S. diplomacy needs to transcend the “hub and spokes”—an exclusive focus on bilateral relationships between individual Asian countries and Washington that should not be discarded, but whose overall utility is clearly declining. The United States needs to consider the regional implications of specific bilateral policies and emerging regional issues, such as energy, which need a broader, more transnational formulation. It needs, in partnership with Japan and others, to reach out broadly to Asian nations of common interest, including India, Indonesia and Vietnam, with strategic dialogues and FTA proposals, as well as to traditional allies and partners.

In the end, the United States can indeed be the “essential power” in Asia, as American diplomatic rhetoric often has maintained. Yet America desperately needs a broader notion of alliance—one that recognizes political and cultural as well as military dimensions. And this nation needs a more subtle means of understanding the impact of alliance on third parties, to truly reach that distant yet vital destination.

Kent Calder is the Edwin O. Reischauer Professor, director of the Japan and Korea Studies Program and director of the Reischauer Center for East Asian Studies.