East China Sea

RUSI Commentary, August 11, 2016
China’s determination to gain control or assert its possession over various remote islands in its adjacent seas may seem inexplicable. But there is a perfect logic to what China is doing – much of this relates to the way the country’s communists seek to bolster their domestic legitimacy

The situation in East Asia has become increasingly troubling; for those watching the global economy, the fact that China and Japan, the world’s second and third powers, are engaging in a showdown over a few tiny islands not only seems ludicrous but also reckless, since any potential conflict could do serious damage to precarious recovery from the global financial crisis.

Last week, Japan claimed that a flotilla of more than 230 Chinese fishing vessels and eighteen coastguard ships entered Japanese waters around the disputed islands, called Senkaku in Japan and Diaoyu in China. Given their lack of running water and economic activity, it is not even certain that the islets would be afforded island status, especially after the recent finding by the Permanent Court of Arbitration rejected China’s claims in the South China Sea. So why do both states want the islands so much and why is China risking the global economy and conflict with Japan for patches of land not much larger than a football pitch? The explanation lies in recent Chinese history and how the Communist Party perceives it.

In 1989, the Communist Party barely survived the Tiananmen Square unrest. Following the crackdown, it developed a three-way strategy, which it has since boldly followed.

First, it enacted a massive ‘patriotic’ education programme, which sought to identify China with the Communist Party. It played up the narrative of victim, pointing to the ‘century of humiliation’ by foreign powers, including European and Japanese imperial interlopers. And while these approaches are based in fact, they miss the point that China the victim has also been China the perpetrator in such cases: it has in its long history attempted to invade and conquer its neighbours, particularly Korea and Vietnam, many times. As Bill Hayton, an expert on Chinese maritime claims, has asserted, disputes about the South China Sea or the Chinese-claimed Diaoyu Islands are really about recovering from the perceived loss of face that China endured in the past. Thus, the public is strongly supportive of the claims, and the insertions of large flotillas into contested waters – such as last week – buttress this Communist Party’s desire to be the sole defender of Chinese claims, and the sole avenger of previous wrongs.

Second, China’s Communist Party decided after crushing the Tiananmen protests that communist ideology was no longer enough to provide legitimacy, and set about a daring innovation in the 1990s – mixing the nationalist agenda with Deng Xiaoping’s economic reform, while restraining political reform. In other words, it concluded that if it provided enough refrigerators, televisions and opportunities to travel to exotic destinations, the public would submit to the total rule of the Communist Party. As well as the carrot, it also used the stick of repressing internet freedoms, censoring the media, and curtailing anything that might infringe on the absolutism of the party within the Chinese state. Kerry Brown, a China scholar, notes that President Xi Jinping’s rise has not been at the expense of the party, and although he has attacked its corrupt elements, his purpose is to strengthen the arty.

One only has to note the recent wave of trials of Chinese lawyers, such as Wang Yu and Zhou Shifeng, affiliated with political rights’ groups, to conclude that the party is serious about holding power and crushing dissent. However, if the Chinese public is to accept such repression, the party reasons that it must continue to deliver something in the realm of public wealth. The push to reform the economy falls into this category, but it also has a security strategy for harnessing nearby wealth and resources by claiming the valuable South and East China Seas fishing grounds, some of the richest in the world. Attempts to ban Vietnamese and Philippine fishing fleets are part of this strategy. So is the possibility of rich undersea gas fields in the East China Sea, an additional lure. For the party, securing these resources is directly linked to regime security.

Third, the Communist party has developed a strategy to push China into a position of East Asian superiority, and to do this, it has to prise the US from the region. Aware of the ‘Thucydidean Trap’, by which rising powers provoke a conflict with already-dominant powers, China’s strategy would seem to be to go about achieving its objective through indirect means. Looking purely at Beijing’s actions over the past decade, it would seem that Chinese military thinkers have decided the best way to expel the US as a regional power is by incrementally taking de facto control of the trade route that feeds the US’s allies.

Beginning with European ports and Middle Eastern oil terminals, the most strategically sensitive route moves goods and energy products worth $5 trillion annually through the Indian Ocean, past the Malacca Straits and through the South and East China Seas. China’s effort to dominate this vital route is achieved by slicing into the territory of smaller South China Sea states, with each initiative based on the calculation that Washington would not dare risk a war over territories non-essential to the US national interest. And Beijing’s calculations are likely correct. Projecting military power from those islands gives China de facto control of the region’s largest trade route. Enough – Beijing reasons – to compel regional powers to bandwagon with China.

If on the way, it must risk conflict with the US and Japan, China will do so, although it will attempt to avoid direct confrontation. Many of the issues that continue to bedevil the region arose in 1989, as a result of the route the Communist Party took in trying to ensure its survival. Its three-fold strategy of promoting nationalism and economic growth at the expense of political reform, and the development of a greater Chinese strategy for the region, has landed the nation in its current situation.

The inner corridors of power in Beijing see nothing wrong with this grand strategy. After all, it has been highly successful: the party remains dominant in China, and is still closely identified with the health and prosperity of the nation. China’s economic and military growth has allowed it to begin to reorder the region to suit its own preferences. The question is how far will it go, and at what point will it cause an unpredictable reaction from the US, Japan, or neighbouring states. And although no-one outside China can predict this, neither can any Chinese official.


China and America: A Superpower Showdown in Asia?

The National Interest, 14 June, 2014


Over the past several months, tensions between Washington and Beijing have steadily grown worse. Relying again on the incremental approach that has thus far served it well, China dragged a deep sea-drilling platform into Vietnamese-claimed waters, shouldering aside protesting Vietnamese vessels. Then on the 21st of May, President Xi Jinping proposed a new Asian security pact with nations such as Russia and Iran, a pact that pointedly excluded the US and seemed to be a club for authoritarian states. Then in June, Beijing refused arequest by a UN court of arbitration at The Hague to provide evidence of its claims in a case brought by the Philippines. Days later, a video released by Vietnam showed a heavy Chinese fishing vessel slowly crushing a Vietnamese counterpart; the moment seemed to perfectly symbolize China’s new diplomatic strategy towards the region and one could almost see the phrase “Chinese soft power” slipping under the waves with it. If one thought it couldn’t get worse, it did. As the West has continued to look for ways to exert pressure on Russia over its actions in Crimea, China finally revealed where its cards lay: Beijing inked a $400 billion natural gas deal with Moscow and now looks set to sign another. None of it good news for those who think China ought to be a status quo power, upholding the rules of the global system.

All of this must have been uppermost in President Obama’s mind in late May as he toured the region on what allies called a “reassurance tour” and Beijing called a “containment tour.” The tour failed to make any headway on the White House’s touted trade group, the Trans Pacific Partnership (TTP), but was overall a success by showing US allies and regional partners that the rebalance has the support of the White House. However, despite this brief show of US soft power diplomacy in the region, China’s rise has gradually shifted from being a welcome to an unwelcome event. One can almost see the exam question at some future university:

Were American leaders right to believe that economic liberalization and heavy investment in China would eventually lead to political liberalization, and make China into a responsible stakeholder?

Until recently, the preferred answer in Washington was yes.

It seemed certain to say that the economic liberalization of China was inherently a “good” thing, that raising millions out of poverty demonstrated once and for all the benefits of free market capitalism. The 1991 collapse of the USSR may have proven the failure of the communist economic model, but a successful China had demonstrated to the world capitalism’s strengths. And as every liberal knew, economic success brings with it a rising middle class, the vanguard of a pluralistic system.

Success, partly…

No one disputes that the first part of the story has been a triumphant success: China’s rampant growth as a state capitalist regime has dominated Western headlines for nearly two decades. An unprecedented influx of US, Japanese, Taiwanese and EU investment turned the Chinese economy red hot in less than a decade after Deng’s Southern Tour, with many becoming blasé about China’s double digit growth figures. Surely, Mao turned in his grave during the 2008 financial crisis, when many were calling China the savior of the global (capitalist) economy. Who could have predicted in his time that Chinese leaders would one day lecture their North Korean counterparts on the benefits of the free market? If anyone fretted that the second part of the story had not yet happened – China had not added political reforms to the mix – optimists would always add ‘yet’sotto voce. It was only a matter of time before China’s growing middle classes began clamoring for political as well as economic rights, they said, and saw signs of this in China’s growing online forums, which became miniature town meetings on corrupt officials and abuses of power.

And as Washington has watched with dismay, this Western notion that China would gradually liberalize politically has been dissipated more and more. Not only does President Xi show no signs of loosening Party control at home or of adopting liberal values abroad, his security proposal in Shanghai reveals an inclination to defend and augment authoritarianism. That brief spring felt before the 2008 Beijing Olympics quickly froze over as the regime reasserted control over television stations, bloggers and netizens, threatening three-year sentences to those who spread “internet rumors.” In early May, prominent journalist Gao Yu was detained as part of targeted campaign against activists in the run up tothe 25th anniversary of the Tiananmen Square incident, an anniversary that was eerily silent in Beijing. Contrary to expectations, Xi has also consolidated and centralized power with the party and the military quickly, with the Economistcalling him the most powerful Chinese leader since Deng.

Turning the Tide

Is a new Cold War between China and the United States inevitable? Obama’s foreign policy for the region has sought to avoid definitively answering that question, as well, he might. The consequences of radically changing direction when it comes to China policy would be a dramatic shift in US grand strategy, the greatest perhaps since the fall of Soviet Union. Many in the West have claimed that China cannot be “contained,” pointing to Beijing’s role in servicing US debt as well as its place as a major trade partner to so many pivotal US allies. While there is some truth to this, it is not quiet as unthinkable as it once was. Michael Pettis, a renowned economist at the Peking University, along with many others predict a debt crisis for China in the next 4-5 years, in which Chinese growth rates will all but come to a halt. He argues that the Third Plenum reforms promoted by President Xi (raising savings rates for homeowners, raising the currency, dealing with land ownership and the internal passport system) are bound to come into stiff resistance from Chinese elites, happily profiting from the current system. The stakes are quite high: should Xi fail to push these reforms through, China could hit the growth wall suffered by Japan in the late 1980s. As with Japan in the 1980s, China is called the engine for the global economy, but as Japan stagnated in the early 1990s, the West experienced one of the biggest booms in recent memory. This doesn’t mean that China is a paper tiger, it does cast doubt on the idea that China will is destined to inherit the earth…

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Obama’s Pivot to Asia: 2014 and Beyond

4 June, 2014


Leaving on a Jet Plane

It was late at night as Air Force One taxied to a halt at Narita Airport in Tokyo to kick off an extended Presidential visit to the region. Emerging from the aircraft, President Obama seemed determined to impress upon the region and Japan his personal commitment to the Asia Pacific. Deemed a ‘reassurance tour’, the President’s trip to Japan, South Korea, Malaysia and the Philippines was meant to ‘underscore a continued focus on the Asia Pacific region and commitment to his vision of rebalancing to the world’s largest emerging region,’ in the somewhat wooden phrasing of the White House.

Despite the President’s many statements to the contrary, over the next few days, it was clear to many analysts and journalists that the trip was meant to reassure US allies over growing Chinese assertiveness. Chinese media like the Xinhua railed against the trip and the wider policy of ‘containment’. The US “rebalancing strategy”, the Xinhua wrote hours after Obama’s plane touched down at Narita, “smacks of a carefully calculated scheme to cage the rapidly developing Asian giant by rallying US allies”.  The Global Times quoted the Chinese Ambassador to Washington as saying the “rebalancing to Asia policy may need some ‘rebalancing’ so that the United States can maintain a good relationship to every nation in the region,” a not-so-subtle warning.

Missing the Point

Unfortunately, Chinese pundits missed the greater point in their haste to see rebalancing as simple containment and only a small number of analysts reported on the US rebalancing as a response to Chinese behavior. One such pundit, Yang Hengjun, a former diplomat and Senior Fellow at the Atlantic Council posed the question, ‘why are China’s neighbor’s so afraid of her’ in a regional forum, and though his efforts are laudable, he fails to connect Beijing’s problems with its policies, and instead blames the China’s media for hubristic statements that offend and scare neighbors. This neatly moves responsibility away from the military, CNOOC, and the Chinese leadership who have been promoting expansionism in the East and South China Sea maritime disputes. This attempt to forge a ‘CNN effect with Chinese characteristics’ rather reveals the constraints under which political analysts must be written in Beijing.

Japan and ROK

Despite the claims of the Global Times and others to the contrary, the trip was a success. And it was a success for one simple reason. It did what it said on the label. The president had gone to personify and symbolize US commitment to its allies in their various disputes with China and this was done. The United States’ reiterated its political and military support for the current status quo, and stated firmly that changes could only come peacefully and through diplomacy. Obama’s visit to Japan gave Prime Minister what he had long wanted, a presidential assurance that the Senkaku Islands (disputed with China) fell within the remit of the US-Japan security alliance. In return, Obama emphasized that Japan’s role as a regional force for stability would be enhanced by ‘collective self-defense’, a point that shows that the defence commitments of the alliance now cut both ways.

While some pundits have argued that Abe had done little more than take the President to a great sushi bar, giving little on the Trans Pacific Partnership (TPP) front, this overlooks the primary reason for the trip and overstates the need for the TPP to be negotiated within its present time-table. Others – such as Kent Calder, a noted scholar on Japan – have argued that behind the diplomatic niceties between Obama and Abe, the chasm between Washington and Tokyo has become incredibly wide, particularly on history and nationalism issues. Whatever the case, it is clear that Abe and Obama shared a single agenda for this trip: to consolidate the alliance in the face of regional insecurity, and avoid open bickering. This they managed to do, though it is a small victory.

Obama’s pressure on Abe to deal with the ‘comfort women’ issue was rewarded in Seoul as President Park Guen-Hye presented a warm welcome to the President. Days before his visit, the reputable Asan Institute published a survey saying that 93% of South Koreans saw the alliance with the US in a positive light. High strung North Korean media attempts to brand the visit as one by a ‘pimp’ to his ‘crafty prostitute’,[6] only seemed to reaffirm Pyongyang’s isolation and inability to be taken seriously. Despite or perhaps because of warnings from Obama and Park, the awaited 4th nuclear test failed to materialize in the days up to and after the summit. Truly, the visit was marred by the Sewol ferry disaster, which was then boiling over into a cabinet reshuffle; events around the Russian annexation of the Crimea also took precedence. As expected, the latter event caused ripples of disquiet among US allies, concerned about Washington’s military commitments. If anything, however, Russian behavior only served to reinforce the need for the US alliance system.

Malaysia: Symbolically Substantive

Arguably, Obama’s trip to Malaysia was the smoothest as the US rebalance was openly welcomed by Malaysia’s leadership. In a press conference hosted by Prime Minister Najib, the two men agreed to elevate the bilateral relationship to a Comprehensive Partnership, agreeing on the interdiction principles of the PSI, and continuing to work on increased military interoperability. As with Japan, Malaysia has begun to edge closer to the US as Beijing’s claims have hardened in the maritime sphere. On the other hand, as with Japan, this has yet to bring home the TPP bacon and the President was again disappointed on the TPP front. However, his mood must have been lifted during the ‘town hall meeting’ with a number of Malaysia’s young people as he was greeted with screams of “We love you, Obama”, a reminder of his potent charisma and links to the region. In an East West paper, Elina Noor at the Institute of Strategic and International Studies (ISIS) argues that this was where the real power of Obama’s visit to Malaysia lay – his ability to connect with people. For those who remember the criticism endured by the Bush administration in the region, his ability to connect has been a welcome one.

Last but not least

The final visit of the reassurance tour was to the Philippines, perhaps the place most in need of reassuring. Long-suffering at the hands of Chinese encroachment in the South China Sea, Manila was relieved that Obama’s statement that “…nations and peoples have the right to live in security and peace, to have their sovereignty and territorial integrity respected”, was supported by a new Enhanced Defense Cooperation Agreement. The new defence pact gave US forces greater access to patrol Philippine waters, and though US forces have eschewed basing rights, it is likely that both Japan and the United States will work to increase coast guard and naval Philippine capabilities.

The real question of course, is how did Obama’s reassurance trip affect China? What has the balance does to deter China from seeking to forcefully change the status quo? The answer to that is unfortunately ‘not much’, as can be seen by Beijing’s establishment of an oil rig in Vietnamese waters in the days following Obama’s return to Washington. There is very little self-awareness amongst the Chinese leadership and that in itself is most worrying. Relying on ‘the century of humiliation’ narrative, China’s media continues to defend expansionism from US ‘bullying’. If rebalancing to Asia does not deter China, what policy should replace rebalancing? “How do we deal toughly with our banker”, as Hilary Clinton once asked. What policies should the US adapt after a future Sino-Vietnamese naval conflict. The US and other regional states have oft told themselves that China cannot be contained, and that is probably true, but it can be restrained. It is really a question of making Beijing pay an economic and political price for its aggressive actions towards US allies. What comes after ‘rebalancing’? What indeed.

China: America Hedges its Bets

 The National Interest, 6 December, 2013


The rise of China in economic, political, and military terms is a key challenge for the security policy of the United States, which has both helped affect that rise and now hedges against the possible risks of that rise.

China’s sudden declaration of an Air Defence Identification Zone (ADIZ) over Japanese-administered islands in the East China Sea is yet another vindication for US policy in the region. While there have been a number ofcriticisms of President Obama’s pivot to Asia; the policy was and remains the correct one. The decision to re-orient itself back to the Pacific was largely in reaction to a perception that a lack of diplomatic focus had not been good for the region. US allies in the region, such as Japan, Singapore and the Philippines, argued that a continued absence of focus by the United States in the region had become increasingly dangerous as China began to inexpertly exert its power in the region, particularly over maritime domain disputes. It has done this through a long-term incremental approach to de facto sovereignty over the East and South China Seas. In many ways, these claims have resurrected the logic of balance of power politics, and while Southeast Asian states have striven to avoid choosing between Washington and Beijing, the feeling was that China was taking advantage of the vacuum to assert a power-based hierarchical order. While Washington has also tried to avoid a zero-sum competition with China, the Bush administration and Obama administration began to carefully shift their view of China as it behaved with increased hubris in the region.

In the year following the announcement of the pivot policy, Chinese pundits accused the US ofcontainment, asserting a US plan to stem China’s rise as a great power. This is wrong for a number of reasons. First, this accusation ignores the US prominent role in developing China’s economy. All through the 1990’s, the US granted China most favored nation trade status, making this permanent in 2001. In addition, the US sponsored China’s entry into the World Trade Organization (WTO) in2001. While there are no statistics on this topic, US investments into China since the 1970s could be over the trillion dollar mark. Robert Manning from the Atlantic Council has argued if the US wanted to enact a policy of containment of China, it would look quite different from the complex policy package that we see today. It would, for example, involve far more balancing behaviors including the attempted the diplomatic sidelining of China, a military build-up aimed specifically at Chinese platforms, and the creation of further alliances in and around China’s periphery. The US is not attempting such policies, nor does it think such policies are possible. Instead, as Evan Medeiros has argued convincingly, Washington is carrying out a policy of strategic hedging, a dual-track policy in which it carries out two policy bundles; one of engagement and one of balancing simultaneously. This article seeks to show how the United States came to follow such a complex policy, while also seeking to understand the strengths and weaknesses inherent in such a policy.

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Shinzo Abe: Foreign Policy 2.0 

Harvard Asia Quarterly,  15 April, 2013 Co-Authored with Maiko Kuroki, Doctoral Candidate, LSE

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668886-3x2-940x627To outside observers of Japanese politics, Shinzo Abe’s return to power in Japan was unexpected and slightly unlikely. The unanticipated and sudden end of his first premiership seemed to be a final closure on the grand ambitions of a leader molded in the style of Prime Minister Yoshida. For despite his conservative nature, foreign policy of the first Abe cabinet was noted for its groundbreaking approach to Japan’s security and foreign policy. Noting that his flamboyant predecessor Junichiro Koizumi had begun to move Japan out of its careful and pacifist foreign policy positioning – at the request of the US in the post-9/11 period – Abe dreamt of turning Japan into a ‘normal power’, one with allies, interests, and hard and soft power. This meant developing a more balanced and equal relationship with Washington, while also developing strong ties abroad with other Asia-Pacific powers like India and Australia. It also meant developing a strong relationship with China, while simultaneously hedging against the growth of Chinese power in the region. Such a nuanced and complex policy towards Beijing would require squaring within the right-wing factions of Abe’s party, the Liberal Democratic Party (LDP), but this could be ameliorated by Abe’s revisionist approach to Japan’s constitution as well as his hard-line policy vis a vis North Korea. Whatever the case, Shinzo Abe is likely to try and leave his mark on Japan’s place in the world and his second premiership is similarly likely to herald a stronger more dynamic policy vis a vis China, as well as a refocusing of Japanese foreign policy to other regional security partners besides the US. In the forty years since Tokyo and Beijing restored diplomatic relations, the bilateral relationship has seen its ups and downs. Leadership visits between Tokyo and Beijing have been characterized as ‘thawing’ at times, but unfortunately, these patches of political warmth have been interspersed with a series of mini-crises, freezing winters which seem to throw relations into hibernation. Thus far, this off-and-on-again cycle has not prevented the two countries from strengthening economic ties. At the same time, China’s economic rise has encouraged an enlarged naval force and a more assertive foreign policy on its periphery. Shinzo Abe has assumed the premiership in Japan on the back of a renewal of tensions between the two powers, centered on the maritime territorial conflict of the Senkaku Islands.

Current Sino-Japanese Ties

Much has changed in the economic and military balance between China and Japan since 2007. Trade has continued to grow in importance, while political tensions have worsened. The development of the Senkaku / Diaoyu island dispute as the predominant issue of contention between the two is far removed from previous issues, a shift from the previous cycle of on-and-off ties. Unlike past sources of tension, like Koizumi’s Yasukuni Shrine visits[1] or historical textbooks, the objects of dissent are a real group of islands, visible, accessible, and perfectly situated between the two nations. Furthermore, both capitals have backed themselves into diplomatic corners, with little room for negotiation without losing face domestically. The porous and ungoverned nature of the maritime space[2] increases the number of civilian actors who can interact around the islands, turning them into a political amphitheater with nationalist audiences on both sides of the East China Sea. These crucial differences, combined with a number of intertwined factors – undersea gas fields, current People’s Liberation Army (PLA) naval doctrine and bureaucratic overlapping – mean that this maritime territorial dispute is easy to inflame, difficult to extinguish. The resulting increase in nationalism among the general public – and the attendant demonstrations in Beijing and to a lesser extent Tokyo – have the power to seriously derail the bilateral relationship, a relationship carefully rebuilt since 1972. Furthermore, continued media attention and naval intrusions from September 2012 indicate that the crisis is merely dormant, rather than resolved. How Abe deals with the issues vis a vis the Japanese public, his own party, and with China over this issue are likely to shape shape Sino-Japanese ties for some time into the future.

Abe 2.0

It is difficult to predict which way Abe’s policy vis a vis China will go in the next 12 months. There is a very great possibility that the Senkaku / Diaoyu issue will flare up again and lead relations to further deteriorate. Indeed, a number of Western media outlets have recently reported concerns that an escalation in incidents could lead to an outbreak of war between Japan and China. While it is true that Abe has often made ‘hawkish,’ ‘nationalistic,’ and ‘anti-China’ statements, it is clear from his first premiership that he is also extremely pragmatic in his foreign policy principles. The political dynamic in Tokyo is fairly similar to that during the previous Abe cabinet, which might lead one to believe that Abe will attempt to repeat his pragmatic approach to China this time as well.

Election Pressures

Less than six months after assuming office, Abe must face his first electoral challenge in the form of an Upper House election, due to take place in late July 2013. In many ways this situation mirrors that of his first administration in 2006, in which Abe was constrained by the need to achieve a two-thirds majority in the Upper House as part of his constitutional revision policy. Stabilizing the Sino-Japanese relationship at that time became an important way to gain political support in the Diet, beyond the small coterie of Anti-China Diet members. This time, Abe is faced with serious economic problems, has already sought a wide-ranging set of economic reforms, now known as ‘Abenomics’. While, critics contend that these resemble the traditional LDP cash injections into the economy, Abe changed leadership at the Bank of Japan and has devalued the Yen, boosting exports. In many ways, Abe’s concentration on economics over foreign policy is just good politicking. According to a poll by the Asahi Shimbun, 48% of respondents answered that they expected Abe to focus on ‘economic-boosting policies’ and ‘employment measures’, while only 11% of respondents wanted the administration to step up its ‘diplomacy and security’ policies. In other words, economic recovery is more important than security concerns for Japanese voters. Moreover, Abe himself analyzed a factor in being reelected might be his past track record with having made improvements in the relationship with China. Therefore, it is likely that Abe seek to win the Upper house election through strong economic performance, avoiding confrontational policies with China. On the whole, he drew a curtain over his ‘hawkish’ and ‘anti-China’ political inclination and devoted to his entire attention to ‘safe driving’ to maintain stable government. At the post-election news conference on December 26th, he spoke about restoring the economy, and at his inaugural policy speech at the opening of the Diet on January 28th 2013, Abe indicated that Japan’s economic recovery is his first priority. In both speeches, he avoided discussing China or historical issues and clearly prioritized economic measures over diplomatic issues. Indeed, Shinzo Abe told the interviewer of the Washington Post that his duties and mission that he must fulfill is ‘to regain a strong and robust economy, and also to restore Japan’s strong foreign policy capability’. Thus, economic recovery is much emphasized than the China issue. Moreover, in an interview with Asahi Shimbun, one of Abe’s aides indicated that the administration exclusively focuses on economic recovery until the coming Upper House election and Abe will be in power for a longer period by avoiding a ‘twisted Diet’, and thus avoid the humiliating setback experienced in his first premiership when he lost the Upper House to the opposition Democratic Party of Japan. Given these calculations, Abe’s policy of avoiding tensions derives not only from his desire to strengthen economic relations, but also stems from internal Japanese political dynamics. As a result, it can be argued that Abe want to avoid the further escalation of diplomatic crisis with China before wining the election and taking a to firm grip on power.

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Options for China and Japan in the East China Sea

RUSI Newsbrief, 17 Jan 2013


The recent resurfacing of tensions between China and Japan over the Senkaku/Diaoyu Islands in the East China Sea now seems to have died down. Yet given its perfect (or perhaps imperfect) combination of drivers – nationalism, resources and strategy – the dispute continues to present leaders in both countries with a real dilemma, and is unlikely to be resolved any time soon.

Economically interdependent, the destinies of the two states – as well as future regional economic growth – are bound inexorably together. And at the same time, the dispute seems only to worsen each time it resurfaces, with ever-deeper political repercussions. Given the fact that the two countries also have the region’s most powerful militaries after the United States, this is a worrying trend. Perhaps even more alarmingly, leadership changes in both states seem to favour a hardening of positions with regard to each other. The danger that this will have economic repercussions is therefore very real, raising the prospect of a potential economic decoupling.

Given these trends, what can be done to ameliorate the situation? There are three possible strategies for resolving the dispute. The first is to utilise the relevant international dispute-resolution mechanisms – such as the International Court of Justice or the International Tribunal for the Law of the Sea – to settle the issue of sovereignty in relation to the islands. The second is a strategy involving the shelving of the territorial issue to allow for the joint development of undersea gas fields in the contested areas, a factor said to underlie the entire dispute. The third involves reasserting total political control over the issue in order to maintain the status quo.

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Why China Needs to Change its Japan Policy

The Diplomat, 12th November, 2012

The Chinese Communist Party’s 18thNational Congress is one of the most important political events of the year, beginning a turnover in Party (and ultimately state) leadership. In addition to the leadership transition, the National Congress will define the party line in all major policy sectors, including foreign and defense policy. It is an excellent opportunity for Chinese leaders to turn the current disastrous Japan policy around before it’s too late.


The recent tensions between China and Japan over disputed islands in the East China Sea continue to simmer after the Japanese government purchased the islands from a private owner in mid-September. Following the purchase, nationalists from both Japan and Taiwan made publicity landings on the islands, revealing the extent that nationalism on both sides has hijacked the issue from political leadership. While order has been restored, extreme views of the dispute are beginning to prevail in the media of both China and Japan. It is no longer a question whether a new crisis will take place over the islands, but when.

While Beijing and Tokyo are said to be renewing talks over the disputed territory, the islands will continue to bedevil relations unless both China and Japan reset their policies with regard to each other. While Japan has an unfortunate sense of timing (purchase of the islands coincided with the anniversary of the Marco Polo Bridge Incident), China has also encouraged anti-Japanese sentiment in its school texts and (war) history museums. The gravest sin of Chinese policy toward Japan however seems to be a growing perception in Beijing that ‘Japan doesn’t matter’ and that China can get on without Japan. This erroneous perception weakens the Chinese leadership in the region and at home.

The most important bilateral relationship in the Asia Pacific is thought to be that between the U.S. and China. While that is true, a second bilateral of great importance to the Asia-Pacific – the Japan-China relationship — gets far less attention than it deserves. This bilateral has long been a bellwether for any Asian order, and is important for both medium- and long-term reasons. Medium-term trends show Chinese growth slowing, with double-digit growth slowing to around 7-7.5 percent. There are signs that the next Congress will push for reforms of the state-owned enterprises sector, encouraging instead a larger private sector, and overhaul local government finances. This will require regulatory framework, which returns ebbing confidence of foreign investors on a host of areas such intellectual property and impartial legal process in law. To carry out these reforms, China will need massive flows of foreign direct investment, particularly to its’ banking and manufacturing sectors.

For this, China needs Japan and Japanese investment badly.  More than 20,000 Japanese companies ranging from apparel, electronics, and the auto industry have operations in China, with an annual turnover of $345 billion. Now, that could be at risk. According to a Reuters poll taken in Tokyo in September, more than 37 percent of Japanese companies have expressed caution about future operations on the mainland, and suggested redirecting investment to Southeast or South Asia. This would not be good. The global economy needs Chinese reforms, just as the Chinese economy needs Japanese investment.

And this financial debate is overlaid by the long-term great power cultural and military rivalry between the two powers. While both countries remain wedded to the modern liberal rules-based order, memories are short, and the possibilities for miscalculation ever-present. For all the talk of China’s defense modernization,  Japan’s defense budget is the world’s sixth largest and it has one of the region’s largest navies.

But Beijing needs Japan much more than it realizes. Declining or not, Japan is still big. It has the world’s third largest economy, and is the second largest holder of US treasury bonds. It has a large impact on global commodities and energy: it is the largest importer of liquid natural gas (LNG) and third largest importer of crude oil. Despite its financial troubles, it still carries considerable weight in financial global institutions like the IMF, the World Bank, and the World Trade Organization.Then there are Japanese activities in the Chinese market itself: in 2011, Tokyo invested $6.3 billion of operations on the mainland (while the U.S. only invested $3 billion that same year). Japan is said to have provided more than $45 billion in development loans to China since the 1970s.  China simply cannot afford to use Japan as a foil for its nationalism and domestic security.

Allowing national sentiment to rule foreign policy has hurt Beijing’s own ambitions. By encouraging or allowing nationalism at home, China’s regional policies alienate and isolate it from the very regional powers that it needs to renew its economy and develop its place as a power in the region. One result, as has been seen, is the shift of China’s neighbors from open engagement to cautious hedging. Worryingly still, Chinese policy-makers continue to see negative regional reactions to its growing Chinese assertiveness as part of a grand U.S. containment strategy. At one conference (governed by Chatham House rules), a senior Chinese scholar noted that in the China-Philippines dispute, it was clear that the U.S. was ‘leading from behind’, a grotesque inversion of political realities and a belittling of Philippine autonomy and decision-making.  What is worrying is that China is not only blind to its negative impact on Japan and other regional powers, but it believes the responsibility for that lies elsewhere. As long as this situation continues, then no matter what the delegates at the Party Congress decide in November, the future will look less rosier than it is now.

Jeremy S. Maxie

Energy & Political Risk Consultant

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