With the arrival of the 21st century, East Asia is now widely
acknowledged as a whole entity for the first time in Asian history.
Yet political differences between China and Japan remain one of the
main obstacles to further East Asian cooperation. Chinese scholar
Li Xiao, professor of economics with Jilin University and
vice-secretary of the Chinese World Economy Association, and
Japanese scholar Ogawa Yuhei, professor of business at the Business
School of Southwest College, present their insightful views on what
position of both China and Japan in East Asia cooperation.
The Sense of Union Taking Shape
Li Xiao: The year 2002 saw great progress in multi-lateral
negotiation and cooperation in East Asia as all nations and
sub-regions had become more cooperative in terms of economics,
politics and security. Being a now recognized entity, East Asia won
unprecedented collective acknowledgement. The East Asia Financial
Crisis in 1997 enabled East Asia to be seen as a whole. As a
result, the nations and regions of East Asia began to surpass the
limits of their history, and quickly strengthen the process of
integration and common union, which is called "East Asian
Identity".
Ogawa Yuhei: Before that, economic cooperation was conducted
within two geographic areas: one in the Southeast Asia region,
enabled by the development of ASEAN, the other in Northeast Asia,
represented by the Yellow Sea and the Japanese Sea, two huge
economic exchange circles. As matter of a fact, East Asia always
existed in various forms of economic exchange, which formed its own
strong separate identity but failed to establish a bigger regional
economic circle. That so-called East Asian Identity can be traced
back to the end of the Cold War. At that time, the development of
economic globalization and changes in international politics and
economic environment, the Yellow Sea areas and Japanese Sea areas
began to emerge as a whole new economic body which included ASEAN
countries. The conditions to form an East Asian Mediterranean Sea
Economy Circle are ripening. So the 1997 East Asia financial crisis
could be called a stimulator.
Li Xiao: In 1997 when the Asian financial crisis occurred
and the ASEAN+3 mechanism began, and later with the signing of the
Framework Agreement on ASEAN-China Economic Cooperation by China
and ASEAN in November 4, 2002, signals were appearing for the
creation of an ASEAN-China Free Trade Area. But how fast are the
steps of multi-lateral cooperation in East Asia going to be? At
that time, China and ASEAN signed two important papers on the
Conduct of Parties in the South China Sea, and Cooperation in
Non-traditional Security Issues. Being the first political paper
concerned with issues of the South China Sea, between China and
ASEAN, the two papers sent a signal to the world that China and
ASEAN could solve their existing differences through dialogue and
mutual trust. It also showed that China and ASEAN could not only
make progress in economic fields but also in political and security
fields too.
Ogawa Yuhei: Currently, the political and economic
development in East Asia is realistic and is in the interests of
the region. The reality is though that the economic development are
at various levels and multi-lateral cooperation is concentrated on
this area because development is a priority for the whole of East
Asia. With this background, it is wise for East Asia to set up a
multi-lateral mechanism and help solve the dilemma and problems
that hinder economic development in East Asian countries.
Li Xiao: If only to look from the point of view of regional
cooperation, there are two problems in East Asian economic
development. First, there is no large consumption market in the
region, so economic development seriously relies on overseas
markets especially the American market. Second, although trade
inside East Asia has been growing, the regional monetary system
prevents complete growth. It was one of the main contributors to
the 1997 East Asian financial crisis.
Roles for China and Japan
Ogawa Yuhei: China has already taken the first steps
concerning a free-trade zone with ASEAN, but it is expected to play
a bigger role in terms of economic development and an open market.
Ever since the Cold War, the establishment of free-trade zones have
been well developed. Until June last year, treaties regarding
free-trade zones in the WTO had already reached 143, nearly all
major powers being involved. In 1998, Japan had a plan to set up a
Japan and Korea free-trade zone. In addition, the Framework
Agreement on ASEAN-China Economic Cooperation stimulated Japan to
quicken its steps. However, in addition to the free -trade zone
with Singapore, Japan did not make much progress in talks with
other countries and other regions. Why? The answer has two parts:
trade imbalance and protection of farm products. In my opinion, a
"Japan-Korea Free-trade Zone" will be unlikely to come true unless
China joins in. On the other hand, Japan should learn from China
how to protect its farm products.
Li Xiao: I agree with you. One more thing I would like to
point out is that China must pay attention to the impact of the
so-called "China Threat". China has to prove that its actions will
benefit the economic development of East Asia as well as that of
the rest of the world. China has shown that it can be responsible
when in the 1997 East Asia financial crisis it did not devalue its
RMB. Today China still needs to prove to the world that with the
development of its economy, its market will be more open, and it
will contribute more to the rapid and steady economic development
of its neighboring countries. This is also the strategic background
that China offers to establish a free-trade zone with ASEAN and to
form a China-Japan-Korea free-trade zone.
Ogawa Yuhei: It is almost certain that China's position in
East Asian economic development and regional cooperation will
continue to rise. At the moment, because of China's rapid economic
development and the increase of the FDI in China, many Japanese
scholars think that the "flying geese model", which theorizes the
relocation of traditional industrial production to other East Asian
countries in search of lower production costs, no longer exists.
This is echoed in China, too. However, as I understand, it is the
participation of China that enables the "flying geese model". The
huge economic development gap inside China's east, middle and west
hides large markets and economic development potential. In other
words, the development of China's west and middle areas will be the
same process of transferring capital, as well as using successful
techniques from Japan, and the four dragons of Asia, ASEAN and
China's east to these deprived areas. In this sense, China has the
biggest market of the 21st century, not only in market scale, but
also in deepening regional market structure.
Li Xiao: Well, in this sense, Japan will continue to act as
a capital and technique provider while China becomes the biggest
market in East Asia, together the US, the biggest market outside
the East Asia, to promote the steady development of the region.
Thus, any contradictions in the East Asian economy will be largely
resolved. Accordingly, the position of the RMB as a regional
currency will rise and play a bigger role in the development of
East Asian regional monetary and financial cooperation. It is
estimated that the RMB is expected to become the coin currency with
the Japanese Ren in East Asia. At the moment, China stands second
in terms of foreign exchange reserves, only after Japan. So it is
necessary for both China and Japan to enhance cooperation in
financial currency fields.
Ogawa Yuhei: As for Sino-Japanese relations, 2002 witnessed
important achievements in the economic and trade sector. According
to Japanese official figures, the total Chinese export volume from
January to October (excluding Hong Kong) was US$50.168 billion, an
increase of 4.5 percent than the previous year, surpassing US
exports of US$47.861 billion to Japan. It is the first time since
1961 when China and Japan resumed trade that China beat the US in
terms of export volume to Japan.
Li Xiao: In addition to this, from 2001, the FDI of Japanese
enterprises in China has climbed to a new high, both the investment
scale and money volume increasing sharply. The East Asia regional
cooperation has two parts, economic cooperation, and security
cooperation. Sino-Japanese cooperation in the political and
security field is rather backward. Although the development of
economic cooperation will strengthen mutual connection so as to
push cooperation in fields like politics and security, deepening
political and security development will ensure the stability of
economic cooperation. In this regard, the development and change in
Sino-Japanese ties will have impact on the whole strategy of the
East Asia regional economic cooperation.
Ogawa Yuhei: Not long ago, DPRK declared to resume nuclear
research and withdraw from the Nuclear Non-Proliferation Treaty
[NPT]. The relevant countries, including Japan and China, enhanced
the dialogues and discussions. Actually the subject of cooperation
in the fields of politics and security between China and Japan is
important, yet I insist that economic development should always be
of top priority. Only after all parties have common economic
interests through exchange and cooperation, will they be more
likely to choose negotiations and dialogues instead of
confrontation when in conflict. For the Korean Peninsula, in the
long run, I have two suggestions: to promote the construction of
the Eurasian continental bridge, and to develop the Northeast Asian
energy union.
Whether the energy supply is stable or not is vital for regional
security in East Asia. So all East Asian countries, including China
and Japan, should be active in promoting the Northeast Asian energy
union. Natural gas is a so-called green energy whose carbon dioxide
release is much less than oil. If natural gas in Sakhalin and
Siberia in Russia could be transported to China, North Korea, South
Korea and Japan through pipes, it would certainly stabilize energy
provision in those areas. Further more, with the development of
super conducting material research, natural gas can first be
generated into electricity, then transferred to China, North Korea,
South Korea and Japan through electric lines made of
superconductors. No matter how it happens, the Northeast Asian area
can achieve political stability and regional security by the
exchange of material, personnel as well construction of the
Northeast Asian energy union. In this respect, China and Japan
share the same interests.
Political Difference Between China and Japan
Li Xiao: What you talk about is very good. If it was
realized, it would help the prosperity and stability of Northeast
Asia. However, I stick to the point that no further development can
be achieved without good cooperation between China and Japan, no
matter in the field of economics, politics or security. It is
important to realize that Sino-Japanese relations are first
"Sino-Japanese relations within Asia". If China and Japan fail to
handle East Asian cooperation well, it is impossible that
Sino-Japan relations will work. From this perspective, by taking
advantage of the Korea nuclear issue, both China and Japan should
give priority to multi-lateral security cooperative mechanism
construction in Northeast Asia consisting of China, Japan, the US,
Russia and South Korea.
Now there are three contradictions in the Japan-China policy:
Japan's close economic cooperation with China, in contrast with
Japan's dependence on the US in the field of politics and security;
Japan's increasing sense of "returning to Asia from Europe"
conflicting with the right-of-centre domestic politics in terms of
"war attitude" and the supervening of the only developed nation in
East Asia challenged by China's rapid development. Due to the
existence of these contradictions, the Japan-China policy obviously
shows signs of difference between economics and politics, that is,
in the economic field dominated by the private sector Japan still
wants to enhance economic exchanges with China, while government
affairs maintain a persistent "cold war" hostility.
Ogawa Yuhei: I have been in China many times and I also feel
a similar lack of confidence for Japan. Japan is right-of-centre in
its politics and feels uneasy about China's growth, but it is
mainly because for the past ten years Japan has been in a
recession. In fact, in today's Japan, the right-of-centre Japanese
are becoming less while most Japanese cherish the China-Japanese
friendship, and are friendly towards China and think China's
economic development will benefit Japan.
One thing needs to be stressed however. Whenever some
right-of-centre Japanese politicians speak out with their
hyperbole, China always worries that Japan is going to commit the
same historical mistake again. But I know it is impossible. Perhaps
the Japanese are now among those who really understand the meaning
of peace in this world. There has been more than 50 years of peace
since World War II that has helped Japan to become an economic
power and enable them to live a rich life. So they are opposed to
war. As for military activities where Japan sends its war ships to
the Indian Sea to help the Americans, it has greater political than
military meaning. Of course, according to the Japan-US Military
Alliance, the US has the right to ask Japan for military
support.
Li Xiao: Personally I do not think Japan will choose the
road to be a militarist nation. The problem is that Japan should
give more understanding to the Chinese people why do they have such
a profound lack of confidence in Japan? In today's economically
globalized world, the global reach of a nation's outlook is of
vital importance. Japanese leaders must be clear that Japan should
remember its responsibilities. Japan should be cautious of its
actions and deeds. Otherwise a nation, which cannot rethink its own
history and cannot fully appreciate the feelings of suffering
countries, can hardly shoulder the leadership of regional and
global affairs.
Ogawa Yuhei: In history it is the failure and mistake of
Japan's China policy that caused historical catastrophe, bringing
huge material and personal losses and psychological wounds to China
as well as other Asian countries. So today's Japan must be peaceful
and right. The China strategy will secure the friendship between
China and Japan in order to enhance economic exchange as well as
political and security dialogues, all of which are a precondition
of East Asian regional cooperation.
(China.org.cn translated by Zheng Guihong, June 16, 2003)