Rising to the Chinese challenge
It is fascinating, even from a distance, to watch China and Japan jockey for the esteem and patronage of their Asian neighbours. We hear from them that this is just a friendly rivalry, a 'win-win' rather than a 'zero-sum' game, in the tiresome cliches of trade diplomacy.
But if history is any guide, it would be hard to believe that both are not keeping score and seeking an edge. Today, Tokyo hosts the Association of Southeast Asian Nations' first away-from-home summit. There will be the usual high-minded talk about everyone pulling together for the prosperity of all East Asia. But this glitzy celebration of Asean-Japanese partnership will also remind the visitors where the economic power still lies, where most of their foreign aid (60 per cent) and tourism revenue (2.5 million Japanese travellers in 2000), and a large chunk of their foreign investment (22 per cent) comes from.
Prime Minister Junichiro Koizumi will likely earn some points, too, for starting up negotiations on bilateral free trade with Thailand, Malaysia and the Philippines. That is the least Tokyo can do. It is only now trying to catch up with a remarkably successful charm offensive by that other Asian power. Through most of the 1990s, while the Japanese economy was too sickly to remain a model for other Asian countries, China transformed itself in their eyes from a scary, territory-coveting communist giant to a friendly growth machine willing to share its bounty.
First, then foreign minister Qian Qichen got himself invited to the Asean foreign ministers' 1991 meeting. China was accepted as an Asean 'consultative dialogue partner' in 1994, and two years later, as a 'full partner'.
In 2001, then premier Zhu Rongji countered fears that China was taking jobs from Asean by offering the region free trade in 10 years. That trumped a less-generous offer from Japan that would have continued to protect its own agriculture sector. Last year, China laid one last Asean bogey to rest by signing a code of conduct for territorial claimants in the South China Sea.
To put things in perspective, this is still a win-win proposition for most of the players, particularly Asean. Some Japanese interests may even be content, for now, with Chinese-led regional growth. Japan's trade surplus with the rest of Asia is surging, largely because of shipments to the mainland. But there is a 'new nationalism' sweeping through Japanese political circles, the latest issue of Foreign Affairs magazine tells us, and Mr Koizumi seems to be responding to it.
The Tokyo summit is a chance for him to show that Japan is not quite ready to yield pride of place. At stake, the Yomiuri Shimbun speculates, is financial leadership - whether the yen or the yuan will be the dominant currency in the region. How strong is Japan's sales pitch? Figures from the Japanese Foreign Ministry lay out Japan's economic advantages.
Asean is Japan's second-largest trading partner after the US, with 14.2 per cent of the trade, compared to mainland China's 13.5 per cent and Hong Kong's 3.6 per cent. At the same time, Japan is Asean's second-largest trading partner, absorbing 20 per cent of trade, compared to China's 6.9 per cent and Hong Kong's 5.3 per cent. But those figures alone are not persuasive enough. What is getting the region's attention is the fact that its trade with China is growing at 40 per cent a year, while its trade with Japan is generally flat. China, following the Japanese example, is starting to pour serious money into the region. Last year it handed Indonesia a US$8.4 billion contract to supply Fujian province with 2.5 million tonnes of liquefied natural gas over 20 years.
Mr Koizumi surely knows he cannot outsell the Chinese on economics alone. That could be the reason why his Japan-Asean partnership initiatives include expanded educational exchange programmes and co-operation in security matters. These are sensitive areas in which China either has less aid-giving capacity or may not be entirely welcomed as a partner.
Ultimately, the shape of the regional trading structure will determine whose vision prevails. Asean will have to decide whether it is better off with China's pan-Asianist model or the more inclusive arrangements Japan still favours. Japan would like Australia and New Zealand to be under the roof, as well as seeing that the US continues to have an active presence Eduardo Lachica is a veteran analyst of Asian affairs based in Washington
