APEC Summit: Will It Matter for Northeast Asia?

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APEC Summit: Will It Matter for Northeast Asia?

The region’s shifting realities require more than handshakes and photo opportunities.

APEC Summit: Will It Matter for Northeast Asia?
Credit: REUTERS/Romeo Gacad/Pool

The post-Cold War geopolitical balance in Northeast Asia has been askew for the last two years. While most students of foreign policy would attribute this imbalance to a more nationalistic and assertive Japan, particularly since Prime Minister Shinzo Abe came to power in December 2012, that is only part of the reason for the recent drift away from Japan. Economics and security are beginning to reassert themselves in the regional calculus, which has begun pushing relationships in unexpected directions.

Abe will attempt to use this year’s APEC Leaders Summit to reset relations with several of Japan’s neighbors. While a photo opportunity and a vague public commitment to improve relations may provide a mild form of short-term relief, it will do little to address the underlying issues that have been gradually transforming the region. Japan’s relationship with each of its Northeast Asian neighbors will not be dramatically altered by one meeting, however hard Abe has been lobbying over the past few months. Nevertheless, the summit provides an opportunity to see the transformation the region is currently undergoing.

Japan and China have for the last few decades enjoyed an improving bilateral relationship, underwritten by an economic symbiosis between heavy Japanese investment in China, and cheap Chinese labor for Japanese companies. Unfortunately for their relationship, the fundamentals of this relationship are beginning to change. While the shift in Japanese investment from China to Southeast Asia has been attributed in large part to their dispute over the Senkaku/Diaoyu Islands and China’s insistence that Japan more formally accept responsibility for atrocities committed during the Second World War, that is only part of the story.

In fact, Japanese investment is moving to areas where labor is cheaper. As China rebalances away from an export dependence to a consumption-driven economy, its labor costs will have to rise to meet inflation, otherwise the ruling Communist Party of China will likely need to contend with considerable unrest.

Another result of China’s economic growth miracle has been its ability to sustain annual double-digit increases in military spending for well over a decade. This, more than any other factor, has created growing tenisions with Japan, as well as many Southeast Asian countries. China now has the ability to contest disputed airspace and maritime territory with Japan, which already has a military comparable in size to France and with substantial surface vessel and submarine firepower. The increasing size of both countries’ naval assets, combined with Japan’s recent push to normalize its Self-Defense Forces, have shrunk the East China Sea and, in the absence of clear protocol and lines of communication, have ramped up the likelihood for conflict.

The relationship between South Korea and Japan has deteriorated over roughly the same time span, but the reasons for this are more difficult to assess. Publicly Seoul is unhappy with Japan’s recent questioning of the Kono Statement, and argues that Tokyo hasn’t taken full responsibility for Imperial Japan’s use of “comfort women” in Korea. There is also the delicate matter of the disputed Dokkodo/Takeshima Islands, which is a much more volatile and nationalistic issue in South Korea than it is in Japan.

However, while these issues have received more media attention over the last few years, they are not new problems. Abe’s more nationalistic approach certainly does not help matters, yet these issues obscure the fact that Japan and South Korea are two very similar countries experiencing the same set of problems. Their rapidly aging populations are creating structural economic fissures that both are attempting to address through government spending. While Japan is farther along in the process, South Korea is taking largely the same course.

This situation is not drawing them closer together, however, as they compete globally in the automotive, shipbuilding, and consumer electronics sectors. It is further exacerbated by the fact that South Korea is outperforming Japan in these industries, which leaves Tokyo with less room to maneuver as Japanese companies seek protection from strong regional rivals.

Finally, there is the specter of increasing Russian influence in the region. As Moscow and Washington continue to spar in Europe over Ukraine, Russia’s once dominant hand in European energy markets is likely to decline as the U.S. makes Europe a prime target for its new shale gas industry over the next five years. In response, Russia has already signed a natural gas deal with China that is highly favorable to Beijing. It is also reviving talk of an underwater pipeline to Japan linking Sakhalin Island with Japan’s northern island of Hokkaido, which could supply almost 20 percent of Japan’s total natural gas imports. Even without the Japanese pipeline, cheaper natural gas to China could drive down the premium that all of Northeast Asia currently pays.

A greater role for Russia could further offset regional politics, as Japan has shown it is willing to continue negotiating with Russia despite Moscow’s continued tensions with the U.S. and EU.

In short, there should be no expectation of a dramatic statement or initiative to improve ties between the region’s leaders at APEC this month. For all of Abe’s well-publicized diplomacy over the last few months, even a cordial meeting with all three of his regional counterparts will not change the long-term trajectory of their relationships. A more fundamental realignment of their interests will need to take place before that can happen.

Clint Richards is an Associate Editor at The Diplomat.