Strains on China-Japan marriage of convenience could trigger a big row

The diplomatic dance that Japan and China perform to do business with each other while remaining stand-offish in public could become difficult to maintain before long if things go on as they are

Anthony Rowley

Published: 4:45pm, 4 Jul 2021

Why you can trust SCMP

When it comes to “love-hate” relationships, Japan’s with China must be unique. Even as a limping Japanese economy embraces China as its biggest export market, Japan is reportedly indulging in China-containing “war games” with the US in the Taiwan Strait and around islands in the East China Sea.

How long can this extraordinary situation persist before some incident forces one or other of the “odd couple” to question or even renounce their love-hate relationship? The China-Japan relationship is more a marriage of convenience than affection, and some fear that strains on the relationship could trigger a big row.

It is of course also a triangular affair with Japan’s dominant partner, the United States, bent on a policy of competing with or even confronting China, and Japan seemingly willing not only to go along with but also actively support such a strategy of competitive coexistence.

One manifestation of this has been the recent holding of maritime war games close to Taiwan and to the Senkaku Islands, known as Diaoyu in China, which Japan claims ownership of but which China and Taiwan also claim.

01:56

Diaoyu-Senkaku islands spat deepens as Japan warns China over coastguard ships in East China Sea

There is a good deal of posturing on the part of the US and Japan in these manoeuvres, as there is on the part of China in its sea and air incursions close to Taiwan and the Senkakus. So maybe they are not alarming enough to destabilise the Japan-China economic relationship of mutual need.

But this assumption is looking increasingly like wishful thinking as the Biden administration in the US ups the ante against China on everything from military presence in East Asia to infrastructure competition and supply chain logistics, with Japan going along as a not obviously reluctant partner.

China-Japan fish fight could make UK’s Cod War look like small fry

The diplomatic dance that Japan and China perform to do business with each other on an ever-increasing scale, under the table as it were, while remaining stand-offish in public to the point of appearing estranged, could become difficult to maintain before long if things go on as they are.

One retired Japanese senior diplomat who spoke recently at a briefing on condition of anonymity suggested that Tokyo needs to practise ever more active diplomacy with Beijing to keep the bilateral relationship on track, and yet “diplomacy might not be fast enough” to avoid a “confrontation”.

01:29

Japan approves record US$52 billion defence budget

That the two need each other in terms of their economic relationship is undeniable. Japan relies heavily on China as an export market for the capital goods that Japan excels at making. And China relies on Japan as a key market for mineral fuels, machinery and food exports.

Japan is China’s third-largest source of foreign investment, and, until the pandemic intervened, Japan’s service sector depended heavily on China as its chief source of (free-spending) foreign visitors. Japanese companies meanwhile continue to establish a business presence in China at a rapid rate.

China ‘regrets’ Japan’s decision to complain to WTO over stainless steel duties

One thing that could serve to undermine this relationship is the Biden administration’s determination to reduce US economic dependence upon China in the areas of manufacturing supply chains, with Japan replacing China in the capital goods sector.

This idea was advanced by veteran Japan analyst Jesper Koll at a panel discussion which I moderated recently at the Foreign Correspondents’ Club of Japan in Tokyo. This could be one area in which a technologically advanced Japan boosts its own economy, Koll suggested.

02:47

Tourists in China feed international travel bug at Japan-themed street in Guangdong province

But any overt move by Japan to take advantage of the wedge that Biden is seen to be driving between US manufacturing and Chinese suppliers would certainly not endear Beijing to Tokyo and Japan would need to tread very carefully in this regard.

It is possible also to envisage Biden’s supply chain diversification strategy as being designed to reduce the dependence of others such as South Korea and the more advanced members of the Association of Southeast Asian Nations on China, although the sheer size of the Chinese market argues against diversification on a massive scale.

A critical juncture in the China-US contest in Southeast Asia

But before any of this happens – and hopefully before the war-game posturing deteriorates into an incident that could trigger a hardening of attitudes (or worse) in Japan or China – a shifting political scene in Japan could alter the balance in the bilateral relationship.

The autumn of this year will see not only a general election to the Lower House of Japan’s parliament but for the presidency of the dominant Liberal Democratic Party (LDP) which is currently occupied by prime minister Yoshihide Suga. The parliamentary election must be held by October at the latest while the LDP contest is due by September 23.

Yoshihide Suga stands up after being elected as Japan’s new prime minister at parliament’s lower house in Tokyo on September 16, 2020. Suga faces not only a general election to the lower house but also the LDP’s presidential election. Photo: AP

Toshihiro Nikai, a powerful faction member within the LDP who is considered to be Japan’s most pro-China lawmaker, appears to be manoeuvring his faction to provide an alternative leader to the LDP, possibly himself. In that case, Japan’s relations with China could undergo significant improvement, according to political analysts.

Given the sheer weight of Japanese trade and investment with China, it is obvious that both sides have a vested interest in preserving at least the status quo in their mutual economic relations. However, brinkmanship of the kind they are both engaging in, egged on by the US, can easily lead to “accidents”.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs