Europe in the World

Japan's relations with China and India: friction and future prospects

21 March 2006


The European Policy Centre held a Policy Dialogue, with the kind support of the Mission of Japan to the European Union. The keynote speaker was Yukio Okamoto, Former Special Advisor to Japanese Prime Ministers Ryutaro Hashimoto and Junichiro Koizumi, and President of Okamoto Associates. Panellists were Antonio Tanca, from the Asia/Ocenia Unit of the Council of Ministers' External and Politico-Military Affairs Directorate-General and EPC Senior Policy Analyst Axel Berkofsky. The dialogue was chaired by David Fouquet, Director of Asia-Europe Project Brussels.

David Fouquet emphasised the extent to which Europe had become enmeshed in Asian issues, not just because of the inevitable trade and economic links, but also because of the EU's greater involvement in global security concerns.

There are EU strategic partnerships with Japan, China and India, and the establishment of East Asia summits with the Union is a positive signal. But the Asia-Europe project is troubled by current tensions in Asia, and the real risk of a period of disruption in the region over the next few years.

Yukio Okamoto recalled how the rise of Asia in 1960-70 had been largely due to the Japanese economic miracle. That had collapsed in 1997-98, but Asia now was on the rise again - this time thanks to the boom in China and India.

India is enjoying rapid growth, but most of its goods and services are for domestic consumption: of more concern to Japan is the Chinese boom, which has highlighted the continuing historical tensions between the two countries.

It is now clear that the Chinese economy will surpass that of Japan in the next decade or two. At the moment, the Chinese economy is only one third the size of Japan's, but China is now the world's second largest importer of oil after the US and is a “mighty nation” with a labour force the size of three European Unions. In 2004, it accounted for 40% of the world increase in consumer demand.

The question now in Japan is whether China will abide by the laws of comparative advantage. But the most serious concern in Tokyo is over China's military capabilities and its intentions.

Mr Okamoto said Japan had endured two “shocks” in Asia recently. The first was the violent anti-Japan demonstration in China, and the second was the lack of support in the region for Japan's bid for a permanent seat on the United Nations Security Council.

The demonstrations reflected China's increasingly aggressive attitude towards Japan - something Mr Okamoto acknowledged might be connected to Japan's imperial expansion in the early 20th century.

Reconciliation remains incomplete, with successive generations of Chinese still antagonistic towards Japan. One problem is a Chinese education system which, according to Mr Okamoto, exaggerates the scale of undoubted Japanese atrocities during the Second World War. There was no doubt that very large numbers of Chinese had been victimised by the Japanese army, and some events had been “swept under the carpet” by Japan. But apologies had been made for the actions of previous generations.

Nevertheless, signs of the continuing tensions were evident in the other “shock”, when only three countries - Afghanistan, Bhutan and the Maldives - backed Japan's UN bid. Mr Okamoto said this had been a “great embarrassment” to Tokyo, particularly the lack of support from those who had benefited so much from Japanese investment. This resulted from the reluctance of many Asian nations to “take on” China by siding with Japan.

If Japan and China are to resolve such problems, and have fruitful and friendly relations in future, they have to “confront the legacy of the past”.

On both sides, this means a re-education programme in schools, so that new generations have a better and more accurate understanding of what happened. “China must stop creating a young generation strongly orientated towards anti-Japanese feeling - we must come out of this dark abyss,” said Mr Okamoto.

It could take both Japan and China decades to make the necessary adjustments, but Asia's future depends on it.

The best scenario for the region is the establishment of a multi-polar group of nations committed to free trade, and built around Japan, China and India. The worst scenarios would be an unstable Asia caused by an unstable China or a weak and stagnant India.

But for any positive future scenario for the region, European support is a sine qua non. “China won’t necessarily listen to Japan, but it will listen to Europe, so please help us,” said Mr Okamoto.

Antonio Tanca said EU-Japan relations had accelerated fast in recent years. There had been an increasing interest in talking to each other, with annual summits and ministerial meetings every six months.

Part of this drive was triggered by the EU arms embargo against China, which has prompted a realisation that what the EU does in the Asia region will have a major impact. The EU decided it had to “put the picture together” and the last year has seen the launch of a strategic dialogue with Japan, China and the US.

This process of engagement is just getting under way, and, whenever the arms embargo is lifted, the EU will be working to ensure that this does not have an adverse effect on the geo-political balance in Asia.

EPC Senior Policy Analyst Axel Berkofsky said a lot of nations now shared concerns about China's domestic development and, in particular, how the country bridges the gap between the “haves” and the “have-nots”. About 850 million Chinese are now living in poverty, with major potential consequences for the country's domestic stability.

Mr Berkofsky said the anti-Japanese demonstrations in China had been “unacceptable” and tolerated by the authorities for too long, and it had been no surprise that China had not supported Japan over its UN Security Council bid.

All this time, Japan had been sending billions of dollars in aid to China, just when China was increasing its defence spending. Japan's defence budget, meanwhile, is decreasing. Talk in China of a Japanese return to militarism is “nonsensical” and it is a simple fact that China does pose a potential threat, particularly to Taiwan.

On the positive side, Japan-China business relations are much better than the political mood, with 200 billion dollars of bilateral trade a year - something nobody wants to see put at risk. And while there is evidence of growing nationalism in China, the same can be said of Japan.

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Head of Europe in the World programme and Senior Fellow

Giovanni Grevi
g.grevi@epc.eu

Senior Policy Analysts

Paul Ivan
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Amanda Paul
a.paul@epc.eu

Policy Analyst

Marco Giuli
m.giuli@epc.eu

Programme Assistant

Ivano di Carlo
i.dicarlo@epc.eu