A Critical Window Period in China-Japan Relations

By Yan Shenchun 

I. The Premier of China and Prime Minister of Japan exchanged visits within the year at an important time.

From October 25 to 27, 2018, Japanese Prime Minister Shinzo Abe paid an official visit to China at the invitation of his Chinese counterpart, Premier Li Keqiang. This is the first official visit to China by a Japanese Prime Minister in the past seven years and also a return visit to Premier Li Keqiang's official visit to Japan in May this year.

This year marks the 40th anniversary of the"China-Japan Treaty of Peace and Friendship". Confucius once saidthat “a person at his forty shall have no doubts about life”. Similarly, Sino-Japanese relations have also entered a period of maturity. At this important juncture, the leaders of the two countries have once again exchanged visits within the same year after 11 years (the last such ones were between Premier Wen Jiabao and Prime Minister Fukuda Yasuo in 2007), bringing China-Japan relations back to the right track. This is indeed significant.

During Prime Minister Abe’s visit to China, he received high-standard reception from the Chinese side. President Xi Jinping and Chairman of the Standing Committee of the National People's Congress Li Zhanshu met with him respectively. President Xi Jinping and his wife had dinner with the Abe couple. Premier Li Keqiang held talks with Abe. The leaders of the two countries exchanged views in an in-depth, extensive and candid manner on improving China-Japan relations and international and regional issues of shared interest. Much consensus was reached.One of the most important is that the two countries will turn competition into coordination and take China-Japan relations into a new era of coordination and cooperation.

The two prime ministers witnessed the signing of more than 10 agreements between the two governments, including a bilateral currency swap agreement and a search and rescue agreement. They attended a reception held at the Great Hall of the People to commemorate the 40th anniversary of the China-Japan Treaty of Peace and Friendship. They also attended the first ministerial forum on China-Japan third-party market cooperation together with nearly a thousand business leaders from both sides, during which 52 commercial agreements were inked.
II. The Next Three Years will be a Key "Window Period" for further Development of Sino-Japanese Relations.

Undoubtedly, the exchange of visits between the two prime ministers this year will help enhance political mutual trust, deepen exchanges and cooperation in various fields, and help further promote bilateral relations after its return to the right track.

In the next three years, there will be some key moments in China-Japan relations. In 2019, China will host the 8th China-Japan-ROK Trilateral Leaders' Meeting, which Prime Minister Abe is scheduled to attend and he might visit China again. In the same year, Japan will host the G20 Summit, and President Xi Jinping will participate and may visit Japan for the first time. In 2020, China will realize its first centenary goal of building a moderately prosperous society in all respects, and Japan will hold the summer Olympic Games for a second time. In 2021, the Chinese Communist Party will celebrate its centenary, and Japan will hold a general election in the House of Representatives.

Given their domestic political agendas of China and Japan, the potential in bilateral relations and cooperation and the changing international environment, a strong momentum in China-Japan relations is to be sustained. In other words, Sino-Japanese relations are expected to enter a period of stable development.

(I) Abe Administration’s Policy to Improve Relations with China is Expected to Continue.

Now it has become the consensus of both the Japanese government and the society to improve relations with China. Since last year, Prime Minister Abe has expressed his willingness to improve Japan-China relations on many different occasions and wants to "lift Japan-China relations to a new height." In his interview with the Japanese media at the end of last year, Chief Cabinet Secretary Suga Yoshihidesaid that "Japan is sincerely trying to improve relations with China."

On January 22nd this year, speaking of his China policyin a speech to the Diet session, Abe stressed that “we will fulfill the expectations of the international community by deepening our friendly relationship in a stable manner from a broad perspective”. The Japanese media noted that this was the first time since Abe took office that he explicitly proposed to develop "China-Japan friendship.”

In May, during Premier Li Keqiang's official visit to Japan, Prime Minister Abe gave him a high-profile reception by accompanying Premier Li throughout the visit and personally bid him farewell by the plane, which to some extent, showed Abe’s enthusiasm to improve the bilateral relations. During that visit, Abe stated more than once to Premier Li Keqiang that Japan-China relations would be shifted from "competition to coordination."

According to Japanese media, people close to Abe indicated that Abe does intend to make the improvement of relations with China one of his biggest diplomatic highlights and political legacies.

Abe was re-elected as the President of the ruling Liberal Democratic Party in September this year, and his term of office will end in 2021. If everything goes smoothly, his Prime Minister's term will also last until 2021, and Abe will become the longest-serving prime minister in Japan's constitutional history. Without political campaign pressure, Abe can concentrate on promoting his own internal and external policy agenda. In terms of foreign policy, Abe’s China policy will remain consistent and stable.

(II) China Needs a Stable Sino-Japanese Relationship in Building a Moderately Prosperous Society in All Respects.

The Chinese government's policy toward Japan is consistent. China is committed to peace, friendship and cooperation with Japan, which will not change withtemporary events. 

China is now at a decisive stagein achieving its first centenary goal of building a moderately prosperous society by 2020. It needs a more favorable neighboring and international environment to further deepen reform and opening-up. Therefore, it has strong will and patience to steadily grow relations with Japan.

This year marks both the 40th anniversary of China reform and opening-up and the 40th anniversary of the "China-Japan Treaty of Peace and Friendship". In October 1978, Deng Xiaoping, the chief architect of China's reform and opening-up endeavor, visited Japan to exchange the ratification instruments of the Treaty. The visit is hence regarded as the starting point for China's opening-up. During the visit, Deng Xiaoping said, "I am coming to Japan to ask for advice from Japan" and "I want to bring back the advanced experience of developing science and technology in Japan". Among all the factors that have influenced the external environment of China's reform and opening up over the past 40 years, the Japanese factor certainly has occupied a prominent position.

At present, China's reform and opening up process has entered a new stage. To achieve high quality and sustainable development is a central task for China and in this regard, Japan's experience and lessons are especially important to China.

(III) Sino-Japanese Relations will Enjoy Strong Internal Driving Force.

The increasingly close economic ties and cultural exchanges between China and Japan have always been the internal driving force for this relationship and are expected to be further strengthened in the next three years.

According to Japanese statistics, Japan’s investment in China in 2017 was 3.27 billion U.S. dollars, a year-on-year increase of 5.1% and reversing the downward trend in the preceding four years. In the first half of this year, it also maintained rapid growth. With the upgrading of the manufacturing sector and consumption in China, more and more Japanese companies will lay greater emphasis on the Chinese market. Recently, Toyota, Honda and Nissan, Japan's top three automakers all announced plans to expand production capacity in China. In terms of trade, in the first half of this year, according to Chinese statistics, bilateral trade in goods reached US$214.1 billion, a year-on-year increase of 11.2%.

It can be expected that in the next three years, with the deepening of China-Japan cooperation in fields such as high-end manufacturing, finance, innovation and old-age care, and in the third-party market under the framework of the Belt and Road Initiative, China-Japan economic and trade relations will reach a new level. 

There were frequent people-to-people and cultural exchanges. In 2017, more than 10 million people traveled between the two countries. The number of sister cities reached 345 pairs. There are more than 1,000 flights per week flying between more than 60 cities of the two countries.

According to Japanese statistics, the first half of this year has seen Chinese mainland tourists made record 4.056 million journeys to Japan, an increase of 23.6% year-on-year and a much higher figure than tourists from other countries. As a result, the Chinese people’s opinion of Japan has improved markedly. On October 11, the results of “the Japan-China Joint Opinion Survey 2018” jointly conducted by the China International Publishing Group and the Japanese think tank Genro NPO show that Chinese respondents are getting more optimistic about the future development of China-Japan relations. An increasing number of Chinese respondents recognize the importance of Sino-Japanese relations and look forward to stronger bilateral and multilateral cooperation.

At the same time, Japanese people's opinion of China is also improving, albeit at a small margin. Japan is essentially a relatively closed elite society, and public opinion is greatly influenced by political elites, academics and the media. With the resumption and strengthening of exchanges between leaders of the two countries, the atmosphere of Sino-Japanese political relations is warming up, which will gradually spread to the Japanese society.So we can expect that in the next three years Japanese people's sentiment toward China will be greatly improved.

III. Sino-Japanese Relationship Needs to be More Stable against the Backdrop of Profound and Complex Changes in the International Landscape.

Recently, many media analyses of China and Japan including those in the Westoften cite the US factor when interpreting the improvement of Sino-Japanese relations. A common view is that the Trump administration's pursuit of unilateralism and trade protectionism hasdriven Beijing and Tokyo closer. It argues that the friction between China and the United States has exceeded the economic and trade field, and Japan has begun to question whether the US is dependable as an ally. In order to compensate for the losses caused by the decline of their respective relations with the United States, and to exert some pressure on Washington, both China and Japan need to speed up the improvement of relations with each other. 

The above viewpoints and analyses do have merits, but they have ignored the internal driving force of Sino-Japanese relations. Cooperation between China and Japan is mutually beneficial, and confrontation hurts both sides. This is a commonunderstanding between the two governments and the strategic circles from both sides. The twists and turns in Sino-Japanese relations over the past years havealso made that point crystal clear. In fact, the two countries had this desire to improve relations long ago, something decided by the fundamentals of this relationship. The changes in the international environment only speed up the process.

Lately when the author talkedwith some Japanese scholars aboutChina-Japanese relations, they all argued that Prime Minister Abe is sincere aboutimproving relations with Chinain spite of the escalating trade frictions between China and the United States and the apparent rising negativity in Trump administration’s policy toward China, showing that Japan’s foreign policy is subtly shifting toward a new balance between China and the United States.

Some Japanese strategists pointed out that even with the existence of the Japan-US alliance,China-Japanese relationshipis still an “indispensable guarantee” for Japan to ensure some strategic independence and diplomatic balance. Ms. Kawaguchi Shunko, former Foreign Minister of Japan made it clear at a meeting in Beijing recentlythat “China-Japan relations and cooperation is a relatively independent system, just like Japan-US alliance. Even if the trade frictions calm down in the future, the US factors will not have a fundamental impact onChina-Japanese relations.”

The world today is undergoing profound and complex changesunseen in a century.The trend toward a multi-polar and globalized world is gaining momentum. The reform of global governance system and international order has gathered pace. At the same time, the world is seeing rising trend of de-globalization,protectionism and unilateralism,significant changes in world economic environment, and growing instabilities and uncertainties in the global situation.

In this context, the relations between China and Japan, the world's second-largest and third-largest economies, have moved far beyond bilateral scope andhad implications for the region and the world at large. China and Japan have more and more common language and interests in upholding the UN-based multilateral international order and WTO-centered multilateral trading regime.

In an interview with Chinese media before his visit to China, Prime Minister Abe said that Japan and China share major responsibilities  for peace and prosperity in the region and the world. The two countries should bear in mind the overall interests and pursue stability and friendly cooperation. When President Xi Jinping and Premier Li Keqiang met with Prime Minister Abe in Beijing this October, they both stressed the importance of the two sides to work together for the development of Asia and the world at large.

As the United States is pursuing unilateralism, isolationism and self-interests, China-Japan cooperation will play amore constructive role in shaping an open and inclusive economic order in the Asia-Pacific. In recent years, China and Japan have joined hands with ASEAN countries to promote the “Regional Comprehensive Economic Partnership” (RCEP) agreement. Countries in the region are counting onChina and Japan to improve bilateral relations as soon as possible, work together to address global challenges and provide more public goods to the Asia-Pacific and the world.

IV. Sustained and Sound Development of China-Japanese RelationshipRequires a Long-term Vision.

Needless to say, China-Japan relations still face many serious challenges ahead beforeachievingsustained and sound development. At present, China and Japan are still in a period of mutual adjustment, when they are still getting to know where each other stands. The structural issuesin China-Japan will prominent. The long-standing thorny issues related tohistory, Taiwan, territorial and maritime rights and interests cannot be solved in a short period of time.

In the long run, whether China-Japan relations could move ontothe track of sustained and sound development depends, to a large extent, on whether the two sides can strengthen political and security mutual trust, whether they can approach bilateral relations from a strategic and long-term perspective, and whether they truly regard each other’s development as opportunities and translate thepoliticalconsensusof being “cooperative partners and not threats to each other”into concrete policies and actions.

In the coming years, the two sides should follow the principles set out in the four political documents, support each other's peaceful development, and shape a new type of bilateral relationship that echoes the trend of the times and suits each other’s interests.

Both countries should proactively carry outengagement in political and securityfields, expand common interests, strengthen economic cooperation and cultural and people-to-people exchanges. At the same time, the two sides should properly handlehistorical issues and issues related to East China Sea, Taiwan, so as to usher in a new future for bilateral relations. 

To this end, the author would like to make the following three proposals for consideration.

(I) Exploring the Possibility of Signing the Fifth Political Document to Elevate China-Japanese Relations to a New Level

High-level exchanges provides important strategic guidance forimproving bilateral relations. This year has seen mutual visits at prime-minister level. Prime Minister Abe is scheduled to attend the 8thChina-Japan-ROKLeaders’ Meeting hosted by China early next year, while President Xi Jinping will attend the G20 Summit hosted by Japan in June 2019. The two sides should seize these major opportunities to strengthen top-level design and strategic guidance of bilateral relations and enhance political mutual trust.

At the same time, exchanges between governments, political parties, and legislatures should be maintained. In particular, the two countries should step up political and security dialogue and exchanges, to have in-depth discussions on the major issues of bilateral relations as well as how to shape domestic and foreign policy, in order to deepen trust, dispel misgivings and prevent strategic misjudgment.

Recently, former Japanese Prime Minister Fukuda Yasuo and Liberal Democratic Party Secretary-General Nikai Toshihiropublicly stated that in order to enhance political mutual trust, it is necessary for Japan and China to sign a fifth political document. Ten years have passed since thefourth political document the China-Japanese Joint Statement on Comprehensively Promoting Strategic and Reciprocal Relationswas signed in 2008. Since the Japanese side has such political will, China shouldtake this opportunity to shape a more rational perception on China by Japan and jointly explore a new type of relations that is in line with the call of the times and respective interests of the two countries. 

The author believes that the China-Japanese relationship, which has entered the forth decade, isstandingat a new starting point. The bilateral relations should be upgraded from the “Strategic Relationship of Mutual Benefit” established ten years ago toward a more positive directionat a higher level, namelyto shape a future-oriented "Strategic Cooperation Partnership” based on the notion of a community with a shared future. 

(II) Promoting Economic and Trade Cooperation and Encouraging Japan to Join the Asia Infrastructure Investment Bank (AIIB).

Economic and trade cooperation has always been the “ballast stone”of China-Japanese relations. Under the new circumstances, it should play its role as a "booster". The two sides should actively implement the agreements signed during the two prime ministers’ visits, focusing on cooperation in the fields of energy conservation, environmental protection, and advanced manufacturing, and expand the pragmatic cooperation between emerging service industries such as finance, medical care, artificial intelligence and digital economy. The Belt and Road Initiative provides a new platform for the two countries to promote third-party market cooperation and boost regional economic integration in Asia.

Financial cooperation is the top priority of China-Japanese economic cooperation and can play a role as a lubricant for consolidating the economic foundation of bilateral relations. The two countries has just renewed their currency swap agreement, and a direct transaction settlement mechanism for the Chinese RMB and JapaneseYen hasbeen set up. Furthermore, the Chinese sideis preparing to set up a clearing bank for RMB in Tokyo.

As the third-party market cooperation between China and Japan gradually takes a substantive step, Japan’s participation in the AIIB should also be put on the agenda at early date. In fact, the call for the Abe administration to join the AIIB in Japan has been high since last year.

According to Japanese media reports, the latest assessment of the AIIB by the Japanese government shows that AIIB has made proper institutional arrangements in terms of operational transparency, financing conditions, and risk management, and has carried out sound cooperationwith existing international financial institutions such as the World Bank and ADB. AIIB enjoys a good prospect.

According to the rule of AIIB Charter, Japan is bound to become the second largest shareholder once it joined the AIIB. Currently, what Japan lacks on the issue of joining the AIIB is just the political resolve and a suitable timing. The Chinese side should encourage Japan to takethat key step.

(III) China Should Join the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)in Due Course.

China and Japan are part of the RCEP negotiations and are workingwith ASEAN partners to conclude substantive negotiations by the end of this year. While advancing RCEP, China should seriously consider  joining CPTPP as part ofthe joint efforts to promote economic integration in the region by China and Japan.

The Japan-led CPTPP has been signed and supported by many Asia-Pacific countries. In the long run, the new economic and trade rules advocated by CPTPP echo the prevailing trend of future global economic and trade development. Generally speaking, they are in line with China's economic restructuring and reform, and can play a certain role in pushing China’s reform and opening up. In the face of the new situation of economic globalization, China should take a future-oriented approach and turn external pressure into motivation for further reform and opening up by preparing for joining CPTPP.

In this process, Japan is well-positioned to play an important role as a “matchmaker”, as this will not only enhance China-Japanese mutual trust and promote integrated economic development, but also enhance theirsubstantive cooperation in leading the efforts toward Asia-Pacific economic integration.

Yan Shenchun is an observer of international affairs.