One of your most popular articles for The Diplomat was your February piece offering seven reasons why China and Japan won’t go to war over the disputed Senkaku/Diaoyu islands. With Xi Jingping now in power in China and Shinzo Abe gaining control over both houses of the Japanese parliament, do you see tensions being exacerbated in the near future?
I wrote that article in response to excessive alarmism about the China-Japan situation – well-respected commentators saying that war in 2013 would be unsurprising, that they were on a slippery slope to conflict, and so on. Lo and behold, the two countries haven’t come anywhere near fighting a war in 2013.
Looking ahead, I think it’s more likely that relations will improve in the near term – unless one of the two sides does something foolish. Sino-Japanese tensions have entered a kind of holding pattern. Beijing continues to test Tokyo by sending ships and aircraft into Japanese territory, but Tokyo has grown accustomed to that, and is taking the long view in its response by bolstering its military in key areas, e.g. building helicopter carriers and proposing to set up a new marine corps. Reports also suggest that Abe and Xi are trying to organize a summit – that’s plainly a good idea.
Abe will be under pressure from conservatives in his party to visit the Yasukuni shrine (next week is the anniversary of the end of World War Two). If he’s interested in mending fences with China – and others – he won’t go anywhere near the place. As for his parliamentary majority, the jury is still out on how he intends to use it. He still lacks the super-majority needed to rewrite the constitution, so my hunch is he’ll concentrate on his “third arrow” of economic reform, and leave defense reform on the reasonably uncontroversial, incremental path it is now.
To what extent do you feel that Xi can resist pressure from domestic nationalists for a more aggressive Chinese foreign policy?
The weaker China’s economy becomes, the weaker the Xi regime becomes. If Beijing can calm the jitters over GDP growth and manage China’s economic transition, then Xi will retain the authority and the legitimacy to use nationalism selectively as a government tool, much like his predecessors. But if China really starts to suffer economically, there are two potential dangers: Xi may give in to nationalist demands in the hope of creating a distraction from domestic problems; or he may simply lack the power to resist them. In either case, a more aggressive foreign policy would be disastrous for China’s international standing, given the number of countries already uncomfortable about China’s regional activities.
You’ve also argued that Southeast Asia is facing a potentially painful economic correction, presumably one that would be exacerbated by a sharp Chinese slowdown. How do China’s attempts to achieve a “soft landing” look from your vantage in Hong Kong?
Well, Hong Kong’s fortunes are tied even more closely to China’s than those of Southeast Asia, so people here are obviously paying very close attention. What’s encouraging is that the Chinese leadership appears to have fully embraced the reality that the country’s old economic model has reached the end of its natural life – they aren’t just clinging onto that model in the hope that things will turn out all right. That’s ironic from a political standpoint, of course, since Beijing has so far clung onto its political model in the hope that things will turn out all right.
Who knows whether Beijing has a coherent plan that can really overcome the economic challenges the country now faces, such as the mountains of local government debt and the further weakening of exports? My take is that this all simply strengthens the case for urgent political reform. Beijing needs to restore confidence in its slowing economy in order to attract investors and prevent capital flight. But when there’s no transparency in government, and nobody feels they can trust your numbers, where is that confidence going to come from?
You recently wrote an interesting article on Okinawa’s independence movement. You acknowledge in the article that the movement is still very nascent, but what sense did you get of the depth of Okinawan discontent with Tokyo’s policies?
There is considerable frustration in Okinawa about Tokyo’s policies, but for most people that hasn’t translated into support for independence. Okinawa is a lynchpin of the U.S.-Japan security partnership: that is highly unlikely to change for at least the next couple of decades, and almost everyone recognizes it. But I think Okinawans can reasonably expect Tokyo and the U.S. military to try harder to ease the burden. They’re currently talking about returning the much-despised Futenma base in 2022: that sounds like a timetable that could be significantly accelerated.
You’ve written on the U.S. “pivot” – or “rebalancing” – to Asia, and questioned the effectiveness of the China aspect. How do you see a Trans-Pacific Partnership changing the dynamics of the critical U.S.-China relationship?
The TPP could adversely impact U.S.-China relations, if it continues to exclude China while at the same time China’s own economic initiatives, notably the China-Japan-Korea free trade agreement and the Regional Comprehensive Economic Partnership (RCEP), fail to gain traction. If that happens, China will feel that the TPP is damaging its interests. Then again, if the TPP flies while the other initiatives bomb, the U.S. will have a great opportunity to improve relations with China in a meaningful and lasting way, by inviting China into the TPP at the very time when the Chinese economy could use a boost. Whether or not it involves the TPP, that could be the silver lining of the Chinese downturn – an enhancement of economic ties, and the improved security outlook that comes with it.