The Asian Paradox

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Seoul – Given that the 21 members of the Asia-Pacific Economic Cooperation forum account for some 54% of global GDP and about 44% of world trade, the agenda for this month’s APEC summit should be drawing much global attention. Yet the only issue in which anyone seems interested is whether or not Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe will meet on the sidelines, and, if they do, whether a substantive discussion to ease bilateral tensions will take place.

Of course, this is not altogether unreasonable, given the two countries’ importance in shaping East Asia’s future. Indeed, the uncertainty about whether two of APEC’s key leaders will even speak to each other highlights the grim reality of Asian international relations today. The supposed “Asian century” is being thwarted by a paradox: deep economic interdependence has done nothing to alleviate strategic mistrust.

Given the recent deterioration of Sino-Japanese relations – a decline that accelerated in 2012, when Japan purchased the disputed Senkaku Islands (Diaoyu Islands in Chinese) from their private owner to prevent Japanese nationalists from taking control of them – the mere fact that Abe will attend the summit is a major step. A meeting between Abe and Xi – their first since either came to power – would offer concrete grounds for hope.

The Japanese government has made significant diplomatic efforts to orchestrate a meeting, with former Prime Minister Yasuo Fukuda visiting Beijing in July to try to ease tensions. According to some media reports, in order to secure China’s agreement to participate in a meeting during the APEC summit, Abe even agreed to acknowledge that Japan’s claim to the Senkaku Islands is disputed.

Given that such a move would imply that China’s claim to the islands may have some legitimacy, Abe’s possible concession on this point is no trivial matter; it could even mean that he will agree with China to restore the status quo ante. In that case, one hopes that Xi will follow Deng Xiaoping’s counsel and allow the issue to be “shelved for some time” so that the “wiser” next generation can “find a solution acceptable to all.”

That now seems to be a realistic possibility. Indeed, lately Xi seems to have softened his tone, if not necessarily his diplomatic line. For example, he allowed Li Xiaolin, the daughter of a former Chinese president, to meet with Abe, with whom she watched a performance by a visiting Chinese dance troupe in Tokyo. And Chinese Prime Minister Li Keqiang shook hands with Abe at the recent Asia-Europe Meeting in Milan.

One reason for Abe and Xi’s newfound flexibility may be domestic political shifts in both countries, which have created a more equal balance between conservative, nationalist groups and more internationally-oriented business interests. With both leaders having spent the last two years overcoming domestic opponents and consolidating their power, they may have gained confidence in their ability to compromise.

In Japan, Abe has satisfied his conservative supporters with cabinet resolutions to allow for expanded self-defense. Despite domestic opposition to Japan’s new security doctrine, no politically influential group was able to organize an effective challenge to Abe’s approach.

Now, as Japan’s economic recovery stalls, the country’s business sector seems to be pressuring Abe’s government to work harder to mitigate the impact of its deteriorating relationship with China. According to a Chinese government report, in the first half of 2014, Japanese direct investment in China was almost 50% lower than during the same period last year – a clear sign that Japanese business leaders fear for the future in Japan’s second largest market.

Meanwhile, in China, Xi has gained considerable confidence through his massive anti-corruption campaign, with the punishment of top military officers indicating that he has solidified his control over the People’s Liberation Army (PLA). As a result, Xi may believe that he now has more space to address the country’s economic slowdown, including by lessening the damage wrought by weakening ties with Japan.

If this assessment is accurate, the obvious next question is how much further Abe and Xi can move toward détente, thereby appeasing their business sectors, without losing the backing of nationalists, who tend to view the bilateral relationship as a zero-sum game.

For Abe, the choice is whether to tone down his nationalist rhetoric and moderate his position on contentious historical issues. This would include halting visits to the controversial Yasukuni shrine (which honors, among others, 14 Class A war criminals who were executed after World War II) and abandoning revisionism regarding the Korean “comfort women” who were forced to provide sexual services to the Japanese Imperial Army. How Abe decides is likely to depend on his confidence in his political position.

Similarly, if Xi remains confident enough in his control of the PLA and truly follows China’s official policy of “peaceful development,” he will be able to take the kind of prudent approach that Deng advocated. This would entail recognizing and trying to assuage the fears that China’s rise is causing among its neighbors, as Otto von Bismarck did after German unification in 1871. Observers might then read his recent efforts to improve relations with Japan, not to mention Vietnam, as a genuine strategic shift, rather than a temporary tactical adjustment.

In this uncertain context, the APEC summit could shed much-needed light on the intentions of Abe and Xi, thereby providing crucial insight into the trajectory of Sino-Japanese relations – and thus the future of East Asia.

Copyright: Project Syndicate, 2014.

Yoon Young-kwan
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