Chinese President Xi Jinping met with Republic of Korea President Park Geun-hye and Japanese Prime Minister Shinzo Abe on the sidelines of the G20 summit in Hangzhou, China. The once frozen China-ROK, China-Japan ties have thus seen opportunities for a thaw. Yet with disputes pending, the future of those relations remains uncertain, and will exert critical influences on regional order.
The China-ROK relationship is relatively simple, and has long remained stable and close. Cracks had not emerged until Seoul decided to deploy the US-provided THAAD system. During the G20 summit, North Korea conducted a new nuclear test on the heels of a recent missile launch from a submarine, taking one further step in its nuclear adventure. The United Nations Security Council responded with a new emergency sanctions regime, demonstrating a consensus on the nuclear threat. In the face of a common threat. In the wake of this consensus on the threat, China-ROK relations have displayed broader resilience and seen a higher probability of easing, significance of economic mutual dependency has hence become more prominent.
Though China and the ROK are not each other’s biggest investor or trading partner, they are key partners to each other when it comes to domestic economic development. The ROK economy and capital need the gigantic scales of the Chinese economy and market; Chinese industries and their regime of labor division cannot run well in the absence of ROK input. After the March 2011 East Japan tremor, chemical and semi-conductor spare parts industries previously concentrated in the area began to shift to the ROK and Taiwan, rapidly forming a new pattern of regional labor division with China’s mainland. This has been the structural motivation for the expansion of China-ROK trade, which has surpassed China-Japan trade lately, and the close Chinese-ROK investment relations.
In fact, since the 1995 Kobe Earthquake, Busan has gradually taken the place of Japan’s Kobe to become a main stopover seaport for East Asian container trade with North America, with about 80 percent of container vessels going to North American ports via the ROK port.
From the perspective of the “Maritime Silk Road”, Busan qualifies as a stopover port for Chinese and East Asian trade with the United States, as well as a port of departure for trade with Europe. In this sense, there is a structural basis for China and ROK to take the lead in kick-starting their FTA, and a structural reason for China and ROK to be the first in easing tensions.
The China-Japan conflict is not eternally static. In the post-financial crisis era, the Abe administration has found a challenging task of managing relations with China, the US and Russia, at the same time handling ties with ASEAN, India, the Middle East, and Africa. Ostensibly the thorniest job at Abe’s hands is straightening out relations with China, so much so that he has not paid a “state visit” to China during his four years in office. 2016 marks the 10th anniversary of his “ice-breaking trip” to China, and 2017 will see the 45th anniversary of the normalization of diplomatic relations between the two countries. If he cannot pay a formal visit to China by year’s end, it will be the failure of the “Abe diplomacy”.
From the perspective of the external environment, with the US economy facing a turning point, Japan-US contradictions in economy and trade, financial and currency policies are beginning to surface, and the so-called “common security threats” based on American political needs, on the other hand, have gradually ebbed. It is worth mentioning that then French President Nicolas Sarkozy proposed convening the G20 summit in 2008 with an eye on the US dollar regime, in the belief that the financial crisis had revealed dysfunction of the regime, and advocated rebuilding the international currency system at the G20 meeting, which was precisely what the US has been concerned about. Perhaps that was why France had not had the opportunity to host a G20 summit until 2011. While Paris was preparing for the summit, however, Washington prematurely triggered the “Jasmine revolution”, distracting Sarkozy with the “Arab spring”, sank him in the North African mess, making it impossible for him to come up with a script for shaking the dollar regime worthy of the Cannes Film Festival.
Washington had attempted to do the same with the South China Sea arbitration. Holding high the banner of development, advocating vitality, innovation, and inclusiveness, the Hangzhou summit cracked US and Japanese besiege with the conciliatory spirit of tai chi. Although the US and Japanese defense chiefs have clamored to “jointly patrol” the South China Sea, their respective eagerness for entering the Chinese markets is more than obvious.
There are three Chinese markets that have set the US and Japan vying for access, even at each other’s expense. First is the consumer market, including outbound tourism; second is the industry 4.0 market with Internet plus at its center, including “financial technology” investments; third is the environmental-protection market, which naturally includes the automobile and power industries. These markets, simple as they appear, mean tremendous potential profits. Yet without benign political interaction and trust, they cannot yield “market rules” and “international standards” that transcend the WTO, TPP, or FTA. Such is the prospect of China-Japan relations, which need to see changes in a matter of months, as well as why Abe has to consider, before the end of year, how to avoid being left aside again by the US, four decades after Richard Nixon visited China without informing Tokyo in advance.