Beijing and Tokyo are Making Asia “Great Again”?

01/02/2019

2018 was the year of “grassroots reconnection” between Japan and China. Experts in Tokyo recently underlined that this tendency will continue in 2019 too

 

Tokyo and Beijing are getting closer. But how can Japan and PRC collaborate together? Many economist have stated that the 21st century will be the “Asian Century”. Countries such as Malaysia, Indonesia or Thailand will boost worldwide economy. Beijing and Tokyo became the second and third largest economies in terms of GDP, but the two countries are getting closer year by year, improving bilateral relations and driving “Asian Century” growth.

 

©Unsplash. Akihabara, Tokyo. If order to achieve outcomes, Washington needs allies, such as Japan. But Tokyo already shown reticency about US trade policy.

 

China and Japan should pursue greater cooperation on a number of fronts, from economic development to international trade and currency internationalization. But while political relations need time, bilateral trade and investment have nevertheless kept China and Japan closely integrated in recent decades.

 

Japan has been China’s second biggest trading partner for most years from 2006 to 2016, while China replaced the US to become Japan’s biggest trading partner in 2007.

 

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, Osaka or Kyoto started to use Alipay and WeChat Pay to please Chinese customers.

 

Source: CNBData

 

Made in Japan is now big in China. For example, PRC’s e-commerce platform Kaola.com in 2018 spent $5bn on more ‘Made in Japan’ items, while on Tmall, Japanese products, from make-up to daily use items, are the most popular. Moreover, Alibaba plans to significantly boost sales of Japanese products at its online and physical retail outlets in China. 

Alibaba will set up a new division, the “great import center,” which will be tasked with finding quality Japanese products not yet widely known among Chinese consumers. The new project marks a shift that will have Alibaba directly operating its own online outlets and supplying its physical outlets, including the Hema Supermarket chain and affiliated department stores.

Now is an opportune moment for Japan and China to accelerate economic integration, especially as the wave of anti-globalization washes over the industrialized world.

 

Source: Ministry of Finance, Japan

 

The isolationist policies of the United States and the consequent impact on international relations is just one of the reasons that led the Japan and China to get closer. “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 last year in October.

 

Japanese and Chinese economists also appointed that bilateral cooperation and integration does not have to begin at the level of nations either, but on a localized scale.

 

It means that China and Japan could identify regions and cities as special zones to kickstart and experiment with the integration process, scaling up at a later stage.

One key opportunity of cooperation is infrastructure development. 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.

 

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

 

Plus the ever-increasing demand for infrastructure investment in the region is attractive for both China and Japan. 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.

 

Tokyo would like to use Chinese diplomatic influence to join these projects too and share its technological know-how, due to shake its economic stagnation.

 

To realize the potential of infrastructure investment in the region, China is going to have to get a grip on its bloated SOEs, which risk inefficient resource use in infrastructure provision. Japanese companies, meanwhile, need to become more competitive globally.

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.

Nevertheless severals  “historic contradictions”, walking around Japanese main cities such as Tokyo, Kyoto or Okinawa, the new friendship between those two  giants is visible and touchable. In every shop or restaurant is possible found someone who could speak Chinese.

 

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

 

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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