Abe visits Beijing: a new Sino-Japanese route to globalization

29/10/2018

After seven years of absence, Japanese Prime Minister Shinzo Abe landed in Beijing to meet the Chinese President. This meeting will put an end to the 40 years of Japanese economic support in China but gives the go-ahead to a better commercial partnership

 

With the goal of improving bilateral relations, on Thursday the 25th, Japanese Prime Minister Shinzo Abe landed in Beijing for a three-day visit to China. This is the 16th visit of a Japanese premier in the Middle Kingdom and it took place seven years after Yoshihiko Noda’s last visit in 2011.

The occasion is the 40th anniversary of the Treaty of Peace and Friendship between the two countries, which took place on October 23rd in 1978 and will expire in June 2019. The entire three-day program aimed at giving the go-ahead to a greater communication on economic cooperation between the two countries.

However, the isolationist policies of the United States and the consequent impact on international relations were another point to discuss for the two leaders. “We want to use this opportunity to create momentum for us to map out and promote mutual cooperation and communication in various areas and to elevate Japan-China relations to a new level,” Chief Cabinet Secretary Yoshihide Suga said while announcing Abe’s visit to Beijing.

 

With this in mind, Tokyo and Beijing promised to end the conflicts and signed over 500 agreements, including the currency swap agreement. Abe said that China and Japan are close and partners – China is Tokyo’s first trading partner with $300 billion – and not a threat to each other.

 

The summit, in fact, comes at a delicate moment for Beijing’s commercial relations, marked by the trade war with the United States whose new protectionist policies find an answer in this new Tokyo-Beijing axis.

However, despite the rapprochement of the two powers after many tensions, the Japanese Premier announced before his visit, that the meeting in Beijing would also mark the end of the China Official Development Assistance program (ODA). As the Chinese economic assets changed, Tokyo is not going to send direct investments to China, but they will address joint projects, in third countries too such as Africa and south-East Asia.

In 1978, when the Japanese financial aid was decided, China already represented a great market potential for Japanese trade. Therefore, the ODA was an incentive for the “Open Door” policy announced by Deng Xiaoping the same year.

At that time, the Middle Kingdom had to rely on foreign funds to develop its infrastructures and to reach other countries’ economies. Japan, whose economy was growing, thus started to allocate funds for the construction of various infrastructures in China such as the Beijing subway line 1 and the Beijing Capital Airport with a first major series of investments worth 330 billion yen.

 

©Cifnews雨果网, Isetan store, Shanghai, one of the first Japanese luxury mall that opened a branch in China

 

This aid program, divided into low-interest loans, technical cooperation, and free assistance, has today reached 3.6 trillion yen with a contract worth $32 billion. In all these years, Japanese investments have significantly contributed to Chinese growth and this ongoing contribution has always been the basis of Japan’s engagement policy towards China.

In the early 1990s, however, with the advent of the economic recession, Tokyo began to rethink its foreign investments, including those aimed at China. On the other hand, Beijing is now Tokyo’s first trading partner with $300 billion of trade. Therefore, despite the historical contradictions, Chinese scholars believe that the suspension of Japanese assistance in the country will not affect Sino-Japanese relations.

 

The end of the ODA program does not come from political reasons; it comes from economic reasons. Beijing now is the second largest economy in the world and is a strategic player for everybody.

 

On the table of the China-Japan meeting, there were also the two big Chinese economic projects. For what concerns trade, the Regional Comprehensive Economic Partnership (RCEP) aims to create the largest free trade area in the world among the ten member states of the Association of Southeast Asian Nations (ASEAN) and the six Asia-Pacific states with which ASEAN already has existing free trade agreements.

As for investments, the Chinese initiative to rebuild a modern Silk Road with the Belt and Road initiative (BRI) caught the attention of the Japanese leader. Last year, Shinzo Abe announced his willingness to participate in the initiative by glimpsing a lucrative opportunity for Japanese companies that aim to expand abroad and considering it an essential prerogative for the collaboration between the two Asian neighbors. Tokyo will also contribute with a high level of expertise to joint projects on countries along the BRI routes.

 

©Cifnews雨果网, Qingdao harbour, Shandong, one of the PRC’s most important port

 

This approach is a clear response to Washington’s policy whose protectionism has often upset the Japanese prime minister. The US policy “America first” has in fact risen perplexities in the Asian allies. The United States is engaged in a trade war with China and have withdrawn from the Trans-Pacific commercial agreement promoted by Japan. Beijing, therefore, sees Tokyo as an important partner to counter the White House, using the agreements between the two countries as an excuse to alienate Tokyo from its main ally.

 

“Amid the escalating trade war with the US, it has become a very urgent priority for China to strengthen economic ties with Japan,” said Noriyuki Kawamura, a professor of Sino-Japanese relations at Nagoya University of Foreign Studies.

 

On several occasions, Washington accused Tokyo of unfair trading practices. Japan was also the only US ally not exempted from duties on steel. The tariffs also risk causing disruption in the export of cars to the States, the main bilateral trade between the two countries.

“The US is still the most important ally for Japan, especially security-wise. [But] betting on one country is risky,” said Kotaro Tamura, a former senator and parliamentary secretary in charge of economic and fiscal policy at Japan’s Cabinet Office.

Although China plays a major role in the international arena, in front of a growing American protectionism, the rapprochement with the Land of the Rising Sun is necessary to counter adverse international policies. Leaders’ official visits have always been the signal of relations between the two countries and the visit of Shinzo Abe to Beijing establishes the renewed relationship between the two powers after many years of tensions due to the East China Sea dispute.

 

By the way, the newfound American protectionism is just one of the reasons that led the two countries to bury the hatchet. The importance of Chinese customers for Japanese companies and the increasing tourism and cultural exchange between the two neighbors are what brought them closer.

 

Nowadays, Beijing and Chinese customers are extremely important for Japanese companies. Chinese love “made in Japan” products: Japanese cosmetics and Tokyo fashion are a real trend in China. As a result, Chinese tourism in the Land of the Risen Sun is growing so that many shops in Tokyo started to use Alipay and WeChat Pay to please Chinese customers.

Meanwhile, the National Diet has just issued a law that simplifies tourist visa practices for those with a Chinese passport. Moreover, thanks to the thousands of tourists and workers who choose Japan as their destination, Mandarin has become the second language in Tokyo (excluding the Chinese community).

 

©Cifnews雨果网, Bic Camera mall a Tokyo, Shinjuku, the first mall in Japan that allowed Alipay and WeChat payment

 

On the other hand, Chinese Universities attract so many Japanese students every year so that the Beijing Yuyan University, 北京语言大学, decided to open a branch in Tokyo. However, what Japanese people love the most of China is its food and lifestyle. They consider the Middle Kingdom’s way of life more relaxed and equal and, according to a Tokyo University’s survey, they appreciate the “less masculine than the Japanese society”.

The rising appreciation between the two countries and the common fear of new US policies served as a leverage to build a partnership that will bring East Asia at the center of world trade talks and that will also bring China to reach a new important role within international dynamics.

With a population that increasingly enjoys mutual respect, overcoming the legacy of the past conflicts, Tokyo and Beijing have demonstrated their will to do business together, now more than ever.

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