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Foreign Policy

China-Japan Relations: Searching for a New Equilibrium

Aug 24, 2021

The importance of stable China-Japan relations cannot be overstated. As the world’s second and third-largest economies, respectively, the impact of steady bilateral ties goes beyond the Asia-Pacific. The complex bilateral relations both have deep linkages and serious fault lines. Proximity, history, territorial and maritime row, nationalist passions, and economic interdependence thus demand sturdy guardrails. The relations have shown remarkable resilience despite tortuous twists and turns, with Japan’s China policy seen as an exemplary model that other countries can emulate. But do recent developments suggest the template is under stress? 

Wither “cold politics, hot economics”? 

“Cold politics and hot economics” long defined the relations between the two powerhouse neighbors. Political and diplomatic wrangling is handled astutely, and trade is insulated. But curbs in rare earth exports, disruption in technology supply chains, and the Xinjiang cotton row demonstrate that the time-honored mantra is being put to the test. Beijing and Tokyo are increasingly competing in many fields, from providing health, economic, and security goods to shaping technology standards and regional trade architecture. But more than this rivalry, many aspects of which other countries welcome, distrust, and divergent outlook undermine the relations. 

Sino-Japanese competition unlocks numerous opportunities providing options to investment host countries, compelling reforms in aid delivery, and diversifying partners for many countries in the Global South. China already eclipsed Japan in the global construction space and began making forays in aid and development assistance. Japan, for its part, embarked on its own vaccine diplomacy to counter China’s growing influence borne out of its health outreach. Both countries are major outbound investors, and their foreign capital will play a crucial role in stimulating recovery from the pandemic. To counter Beijing’s Belt and Road Initiative, which was unveiled in 2013, Tokyo rolled out its Partnership for Quality Infrastructure in 2015. It also worked alongside the United States and other partners to offer the Blue Dot Network (2019) and, recently, the Build Back Better World (June 2021) as market-based alternatives to China’s state-backed infrastructure finance. In trade, Japan filled the void left by the U.S. in 2017 when Donald Trump withdrew the U.S. from the Trans-Pacific Partnership (TPP), continuing to lead the trade pact rechristened as the Comprehensive and Progressive TPP while hoping for Washington’s re-entry. Both China and Japan already ratified the ASEAN-led Regional Comprehensive Economic Partnership. The latter’s presence was seen as a counterweight to thwart the former from dominating the world’s largest trade deal expected to take effect next year. 

In the security domain, China is a significant arms exporter to Southeast Asia, with Japan also investing in the maritime capacity building of regional coastal states, including those with which Beijing has longstanding disputes over the South China Sea. The Japan International Cooperation Agency began financing the procurement of patrol boats for the Philippine and Vietnamese coast guards. Tokyo also bagged its first defense export deal to supply radar to Manila last year, an acquisition that would boost the latter’s maritime domain awareness. 

China’s paranoia over containment, Japan’s fear of hegemony 

China’s rise has put Japan in a quandary. As China becomes more confident and assertive, Japan becomes more wary and less reticent. Tokyo realized that it is not alone in its dilemma and that responding to the China challenge requires concerted action. The shifting regional balance of power makes working with allies and partners sensible. However, the durability of such alliances and partnerships and the desire to keep autonomy remain serious considerations. Japan welcomes working with others, but would not wait for them when they are indecisive, unprepared, or are slow to act. This became apparent when Japan launched its own infrastructure initiative and engaged in its own vaccine donation drive.  

China’s growing power projection and economic statecraft create grave difficulties for Japan on the security front. Beijing is stepping up the ante in the Diaoyu/Senkaku Islands and is keen to break out from the first island chain. This pressure compels Japan to double down on its defense posture and mitigate dependence on China, especially for critical goods. However, the reshoring and diversifying of production away from the mainland may take time. Growing Chinese incursions also reinforced Japan’s commitment to its alliance with the U.S. leading to greater convergence on many regional issues, including those Beijing deems as its internal affairs. The increasing importance of the Quad in Japan’s security and foreign policy and Tokyo’s interest to join the Five Eyes intelligence-sharing network indicate how the country values alliances and partnerships in its effort to meet China’s security challenge. Tokyo also relaxed restrictions to aid allies in distress by exercising the right of collective self-defense. However, Tokyo’s congruence with Washington and the West on Taiwan, Hong Kong, Xinjiang, human rights issues in China, and the South China Sea expectedly widens its rift with its big next-door neighbor.  

The wind of change in Japan’s views towards matters China deems domestic may have far-reaching implications to bilateral relations. Beijing may take it as Tokyo crossing its redlines and subordinating its position to its intense great power rival, the U.S. The tightening of the Japan-U.S. alliance, in turn, may forge closer China-Russia security ties which have quickened its pace in recent years, including the conduct of aerospace security exercises in response to possible missile contingencies and naval drills in the Sea of Japan. The U.S. withdrawal from Afghanistan may further boost such Beijing-Moscow security cooperation, as was shown in the recently concluded joint military drills in Ningxia. The U.S. exit may also increase the profile of the Shanghai Cooperation Organization, where China and Russia are key founding members. Beijing may signal displeasure to Tokyo’s stand on Taiwan by hinting support to Moscow’s sovereignty over the Northern Territories/Southern Kurils, a longstanding flashpoint between Japan and Russia. 

China’s fear of containment and Japan’s fear of a resurgent dominant big neighbor will continue to influence the policies and actions of both sides. While persistence of disputes may not impede overall relations, positions may harden, and threat perceptions heighten. China’s growing ambitions and Japan’s shedding of inhibitions portend possible stormy ties ahead. In this context, it will take more than the economic ballast and people-to-people ties to stabilize relations. Regular high-level strategic dialogue and crisis management will be vital. 

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