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CommentInsight & Opinion

China and Japan must not let Diaoyu issue derail trade ties

PUBLISHED : Friday, 21 September, 2012, 12:00am
UPDATED : Friday, 21 September, 2012, 2:28am

China and the US have long maintained a high-level economic dialogue that keeps trade and finance apart from other issues between them. Despite other disagreements, business can continue as usual. That arrangement serves global as well as mutual interests. It would be good if relations between China and Japan, who launched a similar dialogue more recently, reflected such common sense. They are, after all, the world's second and third-biggest economies, respectively, and Asia's most important trade partners.

History between the two, however, can get in the way of such pragmatism. The latest flare-up over claims to the Diaoyu Islands is a case in point. Nationalist sentiment has boiled over on the mainland, resulting in the biggest protests since the normalisation of Sino-Japanese relations 40 years ago.

Global Japanese brand manufacturers closed factories in China amid vandalism against the country's business interests and calls for boycotts of its goods. This raises concerns over the impact on the economic relationship between the two countries. Indeed, a Commerce Ministry spokesman in Beijing said Japan's efforts to nationalise the islands would damage the development of economic and trade relations between the two countries.

As Beijing reins in the protests and factories resume production, it is time for moderation and negotiation in place of confrontation and patriotic fervour that has at times got out of hand. It is also time to reflect on the consequences of a trade war between the two Asian giants. Japan would be the big loser, because it is more reliant on bilateral trade - China being its biggest customer while Japan is the mainland's fourth biggest. But the trade balance is running China's way, so it stands to be a big loser in the long run from any serious trade disruption.

Tit-for-tat trade sanctions, or a trade war, are the last thing the world - and for that matter China - needs while Europe is in recession and US growth is weak. Moreover, economic growth on the mainland moderated in the second quarter to the slowest pace in three years and hopes for a third-quarter turnaround may be disappointed. This is no time to derail a bilateral trade relationship that has continued to grow while those with the US and Europe have stalled. It is to be hoped common sense prevails over populist sentiment and that mutually beneficial economic dialogue can serve as an anchor when the bilateral relationship hits troubled waters.

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chanwan
Nonsense. The author should see that China is dead serious this time, and rightly so. Of course, a broken international relationship hurts trade but national pride and what is right and what is wrong in the broadest sense of history trump petty benefits. China will, and should materialize their claim of the disputed islands.
caractacus
So tell us what we don't know. The Chinese government obviously orchestrated the racist demonstrations while manipulating events so they didn't get too out of hand. This shows the unscrupulous and unprincipled lengths to which it is willing to go to gain an underhand advantage. Nothing new there. Such is international politics.
The dispute over the Daoiyu islands is not about WWII, but economics, underlined by China's desperately felt need to secure natural resources beyond its legitimate borders on land and sea to feed its economic growth without regard for the environment or the lawful interests of its geographic neighbours, whom it attempts to treat as inferior.
China's earliest reactions to Western embassies and trade were often characterised by the same Imperial arrogance shown to nearby peoples; disdain and a determination to humiliate, insult and cheat the 'barbarian' foreigner at every turn. Such attitudes still exist in subliminal form from top to bottom of indigenous Chinese society. Reverting to type, China clearly has not learned the lessons of history. Unless it can learn that it is not the Middle Kingdom and does not have a divine right to rule all it sees, in the not too distant future it will again provoke the ire of the democratic nations of the earth. Free peoples will never be subjugated by tyrants.
mercedes2233
You are not prejudiced, I hope?

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