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Why Japan-China Spat Hurts Both (Page 4 of 4)

Will there be a repeat this time? So far, it seems unlikely, with the Chinese government apparently wanting to keep any mass demonstrations better contained (authorities have reportedly already increased the number of Chinese guards around the Japanese embassy in Beijing).

Ironically, although the Chinese were happy to see Koizumi leave office, the weak popular support for his successors has impeded negotiations over the islands, with the political weakness of the five prime ministers that have followed him making it difficult to sell any compromise to the public. Since Chinese officials doubt that the Japanese government has sufficient domestic support to negotiate and implement major concessions regarding the issue, they are disinclined to make any of their own.

But it’s not just about the disputed islands—the tensions come against the backdrop of increasing Japanese concerns about China’s growing military capabilities (and intentions). Even under the new Democratic Party of Japan, which took office last year and expressed a commitment to improving relations with China, Japanese security leaders have identified China’s military modernization as potentially threatening and called on Beijing to make its defence programmes more transparent.

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And, in the midst of the current dispute over the islands, the Japanese Defence Ministry published its annual defence white paper, which took a more critical approach to China than has been the case previously. For example, the text noted that while Japan’s defence budget has declined over the past decade, China's military spending has nearly quadrupled during the same period, and it observed that China’s armed forces have about ten times as many personnel as Japan, despite the roughly equal size of their economies.

In addition to this disparity in spending and capabilities, the report warned that, ‘China has been intensifying its maritime activities including those in waters near Japan.’ The report further claimed that China’s ‘lack of transparency of its national defence policies, and its military activities are a matter of concern for the region and the international community including Japan.’

In many cases, it might be expected that there’d be economic pressures on both countries to resolve their differences expeditiously. Yet the Sino-Japanese economic relationship has been developing robustly despite these differences. Bilateral trade between China and Japan reached $149.2 billion in the first half of 2010, maintaining China’s status as Japan’s largest trading partner. And, while the Chinese purchase almost 20 percent of Japan’s exports, the Japanese for their part provide the biggest national source of foreign direct investment in China.

The fear, though, is how long these robust ties can continue to develop should, for example, some of the recent labour protests in China at Japanese firms be exploited for political purposes. Should this happen, the disputes will become harder to resolve and could threaten their deeper economic relationship. With relations across the East China Sea already turning frosty, it’s the last thing either economy would want to see.

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