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Macroscope | Thawing China-Japan relations may have hit a cold front with latest World Trade Organisation move
- As the two countries prepare for the Chinese president’s first state visit to Japan, their slowing economies should motivate greater cooperation
- However, Japan teaming up with the US and EU to push for WTO rules that strike at the heart of China’s economic model presents a challenge to closer ties
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Sino-Japanese relations have hardly been a focus of global attention lately with other events – US-China trade, Middle East crises and even Brexit – dominating headlines, but the issue of how the world’s second- and third-largest economies manage their relations will loom large this year.
Chinese President Xi Jinping will make his first state visit to Japan around April; both he and Japanese Prime Minister Shinzo Abe see the visit as being of more than ceremonial importance. They will be looking for results, not least in the critical area of economic cooperation.
The trouble is that, as their own economies slow down, both are seeking ways to reduce dependence upon a fickle and volatile Trump administration in the US. Yet a convergence of interest between two neighbours whose economic systems are so different is very difficult to visualise.
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Critical in this regard could be how China reacts to Japan’s decision to join the United States and now the European Union also in pressing for tighter global trade rules to prevent Chinese enterprises using state subsidies to boost exports. This strikes at the heart of China’s economic system.
The US is intent upon leaving its tariffs against China in place pending a “phase two” trade agreement and this limits China’s ability to step up imports from Japan of capital goods needed to produce manufactured exports. At the same time, Japan’s ability to buy more from China is restricted by slowing demand.
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