Japan-China Relations - China’s Rising Influence and Japan’s Foreign Policy -

1. Japan-China Relations- China’s Rising Influence and Japan’s Foreign Policy - Kazuyuki Katayama Deputy Chief of Mission Embassy of Japan February 2, 2011

2. Episodes • Chinese telecom market. • My old Chinese friends. • Chinese anecdote.

3. Japan-China Relations since Normalization of Diplomatic Relations ・1972-early 1990s: Period of “Yuko” (Friendship) ・ Late1990s-2006 : Period of “Seirei Keinetsu” (Politically Cold, Economically Hot) ・ 2006- : Period of “Senryaku-teki Gokei Kankei” (Mutually Beneficial Relations Based on Common Strategic Interests)

4. “Friendship” Period(1972-early 1990s) • Japan and China basically enjoyed a peaceful and friendly relationship.

5. “Politically Cold, Economically Hot”Period (late1990s-2006) • Political tension and vicious circle in trans-century period after Tiananmen Incident and collapse of the USSR. • Trade and investment grew steadily. (Japan-China (including HK) surpassed Japan-US in trade volume in 2004)

6. “Mutually Beneficial Relations Based on Common Strategic Interests” Period(2006-) • Prime MinisterAbe replaced Koizumi in September 2006. This became a turning point and changed a tone of bilateral relations. • Both Japanese and Chinese leaders agreed to promote a mutually beneficial relationship based on common strategic interests. • Win-win relationship.(common recognition that Japan and China gain from a sound relationship, but lose from confrontation)

7. Current Japan-China Link • Japan-China trade amount: US$297.8 billion (+30.2%) (2010, Chinese Customs) • The largest trade partner for Japan (China 20.7%, US 12.7% in 2010), third for China (after EU and US) • Japanese companies in China: 25,796 (3,370 in EU) • People-to-people exchange: 4.56million (2009)(Japan→China 3.32million, China→Japan 1.24million) • Japanese residents in China: 127,282 (2009) (Shanghai: 48,146) • Chinese residents in Japan: 680,000 • Japanese students in China: 18,640 (2007) • Chinese students in Japan: 88,074 (2008) • Sister cities: 336 pairs (2010)

8. Four Main Shaking Factors of Bilateral Relations • History Issue • Taiwan Issue • Senkaku Islands Issue • Maritime Issue

9. History Issue • Japan’s basic position on history issue: “Through its colonial rule and aggression in the past, Japan caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations, and expresses a deep remorse and heart-felt apology.”

10. Taiwan Issue • Former colony of Japan (1895-1945). • Japan renounced the sovereignty after the WWII. • Japan-China Joint Communiqué in 1972: China: Taiwan is an inalienable part of the territory. Japan: fully understands and respects China’s stand. • Japan does not support “Two Chinas” or “Taiwan Independence.” • Japan maintains non-governmental relations with Taiwan.

11. Senkaku Islands Issue <Japan’s Official Position> Japan incorporated the Senkaku Islands into the territory in 1895. Japan renounced the sovereignty over Taiwan under San Francisco Peace Treaty in 1952, but according to the treaty, the Senkaku Islands were placed under the administration of the US as a part of Okinawa Prefecture. The islands returned to Japan in 1972 together with the other areas of Okinawa. The Senkaku Islands are clearly an inherent territory of Japan, in light of historical facts and based upon international law. The Senkaku Islands are under the valid control of Japan. There exists no issue of territorial sovereignty to be resolved concerning the Senkaku Islands.

12. Maritime Issue • EEZ of East China Sea. • Recent Active operations of Chinese Navy. • Communication and dialogue should be promoted to reduce misunderstanding. • Negotiations should be patiently pursued to find a wise solution. • Make East China Sea a “Sea of Peace, Friendship and Cooperation.”

13. Japan’s Response to a Rising China • To recover Japan’s self-confidence. • To engage and cooperate with China. • To hedge against China’s future uncertainty. • To differentiate between Japan and China.

14. Recovery of Japan’s Self-Confidence • Pessimism prevails in Japanese society. • Negative factors: shrinking population, aging society, increasing national debt, frequent reshuffling of cabinet. • Positive factors: high quality of human resources, organized social system, high technologies, stable and safe society. • Japan needs a positive thinking.

15. China Engagement • Open and prosperous China provides opportunity. • Win-win economic partnership with China is a realistic option. • Further cooperation is needed in regional and global areas. • “Japan and China” instead of “Japan or China” is a choice for Asian countries. • China also needs stable international environments to resolve internal problems.

16. Hedge against Future Uncertainty • Japan does not share basic values with China. • China’s diplomacy seems to become more assertive. • China’s policy intention is not clear and China’s future is uncertain. • Japan-US relationship remains the cornerstone of Japan’s foreign policy.

17. Differentiation Policy • A perception spreads that China rises and Japan declines. • Japan’s choice is to compete with China not for the “size” but for the “quality.” • “China Model”(state capitalism vs. free market capitalism) • Japan needs to provide Asian neighbors and the world with what China cannot substitute for. (end)