Japanese Prime Minister Shinzo Abe’s olive branch to the “One Belt, One Road” Initiative (OBOR) last week heralds the potential of a relaxing of Japan’s posture toward China. Speaking at a forum on Asia’s future in Tokyo on June 5, Abe said that Japan was ready to cooperate with OBOR under certain conditions.
OBOR is Chinese President XI Jinping’s 2013 initiative, involving both a land-based economic Silk Road and a maritime trade corridor linking China, Southeast Asia, India, Africa, and Europe. While Xi states he wants to create a “big family of harmonious coexistence,” skeptics see a thinly disguised attempt for China to position itself as a regional leader, replacing the United States’ traditional role.
Japan would, of course, prefer a U.S.-based regional order and has thus been leery of OBOR. But after watching the United States retreat under President Donald Trump – most dramatically by pulling the U.S. out of the Trans-Pacific Partnership (TPP) – it is understandable that Japan is considering alternative options, such as limited cooperation with China. Abe specifically stated that one of the conditions that would have to be met for Japanese participation in OBOR is “harmony with a free and fair Trans-Pacific economic zone,” in reference to the requirements, including labor and environmental regulations, painstakingly negotiated in the 12-country TPP deal.
Abe also noted that it is “critical for infrastructure to be open to use by all, and to be developed through procurement that is transparent and fair. … I furthermore consider it essential for projects to be economically viable and to be financed by debt that can be repaid, and not to harm the soundness of the debtor nation’s finances.”
Japan’s concerns about OBOR’s lack of transparency mirror its criticisms of the Asian Infrastructure Investment Bank (AIIB) – which Japan is also considering joining, after resisting it for so long. With rumors that the United States might join, Japan may find the idea more attractive.
Tokyo is in a delicate position – as concerned as Japan is about China’s economic hegemony, it needs improve ties with China given the United States’ wavering commitment. This marked shift in Japan’s policy has been welcomed by China, and will help foster a positive atmosphere in the lead up to a potential summit between the leaders this summer.
In response to Abe’s remarks, Chinese Foreign Ministry spokesperson Hua Chunying said, “We believe the One Belt, One Road initiative can be a new platform and a testing field for China and Japan to achieve mutually beneficial cooperation and common development.” Hua also reiterated China’s insistence that OBOR is committed to being a series of projects committed to “fair” and “transparent” rules of international trade and investment.
However, cooperation is still tentative, and nothing is formalized yet. Instead, China and Japan are directly competing for port rights along the OBOR – including Sihanoukville Autonomous Port in Cambodia, the Port of Colombo in Sri Lanka, and Thilawa Port in Myanmar.
Furthermore, it is an open-ended question how on board the Japanese business community is with the government’s agenda. Only 5 percent of 220 respondents in the monthly Reuters Corporate Survey said they would participate in the Chinese project. Japanese companies see greater opportunities elsewhere, ranking a free trade agreement between the Japan and the United States, an 11-country TPP without the U.S., and economic cooperation with Russia as better business opportunities. Due to unresolved concerns about transparency and access for foreign companies, Japanese companies are opting to take a wait-and-see approach for now.