By Feng Zhaokui
Today's resumption of China and Japan's attempts to resolve
their dispute over gas exploration rights in the East China Sea
will test the two countries' dramatic ice-thawing talks in Tokyo
last month.
The Beijing meeting to draw up a joint development proposal is
rich with potential for the newly minted "strategic relationship of
mutual benefit".
Seven earlier rounds of talks starting in 2004 ended in
failure.
Despite the recent diplomatic breakthrough, some in Japan are
still using the East China Sea issue as an excuse to reverse the
increasingly positive bilateral ties.
Finding a way to resolve the East China Sea issue is the first
major task policymakers must tackle within the framework of the new
strategic relationship of mutual benefit.
The solution or lack of solution of the East China Sea issue
will directly affect the overall development of bilateral ties.
Deng Xiaoping once characterized Sino-Japanese friendship as
"more important than anything else between our two countries". The
two countries' economic interdependency has been continuously
growing. A Japanese economist characterized the economic ties
between China and Japan as "closer than people can imagine".
Similarly, the two countries' energy needs are seen as both
competing and shared. As for the environment, which is closely
linked to energy resources, China and Japan's interests are almost
indistinguishable as they are separated by only a strip of
water.
Simply put, at a time when globalization and the environment are
both major concerns, the interdependency and similarity between the
two countries' national interests are increasing.
Strategic mutual benefit reflects the contemporary
characteristics of interdependency and similarity, with the East
China Sea issue a case in point.
For example, a few years ago many Japanese-owned enterprises
located in the Shanghai-led Yangtze River Delta region suffered
from power shortages and both countries were concerned.
Obviously, if the Chunxiao natural gas field not far from the
coastal areas of Zhejiang and Jiangsu provinces was able to supply
natural gas to these areas, it would be beneficial not only to
China's energy supply and environmental protection in China's
coastal regions but also to numerous Japanese-owned businesses
there.
Surprisingly, some Japanese politicians have been pressuring
China to stop the development of the Chunxiao natural gas field in
a show of strategic ignorance. They choose to ignore the interests
of Japanese businesses with a misguided patriotism.
In order to resolve the East China Sea issue, China and Japan
must consider their energy interests and energy security. Some
observers believe the energy issue can only pit China and Japan
against each other.
This is a very narrow point of view.
It is fair to say China's emphasis on cooperation in energy
development has been a prominent feature in the development of
bilateral relations since the start of its economic reforms. China
supplied oil and other energy resources to Japan for many years
while Japan provided huge amounts of yen-denominated interest-free
loans including energy-development loans.
In the early years of economic reform, loans from Japan helped
finance the Shisanling, or Ming Tombs, hydropower plant in Beijing,
the Ezhou coal-fire power plant in Hubei, the Wuqiangxi hydropower
plant in Hunan as well as the Qinhuangdao Port's coal handling
facilities and Dalian-Qinhuangdao coal-shipment railway, both for
coal export to Japan and other foreign destinations.
From the angle of a broad energy resource strategy that covers
oil, natural gas, nuclear power and energy conservation, it is
completely inaccurate to argue that China and Japan can only
compete rather than cooperate. They can carry out exchanges in the
following eight areas:
Raising the efficiency of energy use. Japan leads the world,
with its energy efficiency 8.9 times greater than China's;
Developing renewable resources such as solar energy;
Teaming up as energy buyers to boost their bargaining power
against Asia premium pricing. Middle East oil sold to Asia costs
US$1 to US$2 a barrel more than that sold to the West;
Conducting energy resource exchanges. South China's natural gas
consumption peaks in summer whereas Japan's peaks in winter;
Keeping oil shipment routes secure. Middle East oil accounts for
50 percent of China's oil imports and 86.5 percent of Japan's;
Learning from each other's strengths in deep refining and
petrochemical production technology. China is more advanced in
heavy oil refining while Japan maintains an edge in plastics and
synthetic rubber;
Developing oil and natural gas reserves. Japan had 10 national
oil reserves in 2003 and will build five national liquified
petroleum gas reserves by 2010. Currently the country's private and
national liquified petroleum gas reserves can last a total of 168
days, whereas China has just started building its own oil and
petroleum gas reserves;
Cooperating on nuclear energy, including manufacturing related
equipment and safety technology.
There are ample reasons for the two countries to cooperate in
these areas.
But when it comes to resolving the East China Sea issue, it all
depends on whether we can make the necessary diplomatic efforts to
combine joint development there with China's energy conservation
and Japanese assistance. This is putting the strategic relationship
of mutual benefit to the test.
Considering the huge gap between China and Japan in terms of
energy efficiency, it is possible for China to save several
super-large oilfields' worth of petroleum if it can effectively
apply Japan's experience and expertise.
It is also possible for the two sides to conduct joint
development in China's exclusive economic region of the East China
Sea west of the so-called middle line as long as Japan recognizes
China's sovereign rights in these waters. It's similar to Japanese
businesses on Chinese land being allowed to invest directly and
build manufacturing bases.
Japanese technology in deep water oil refining and construction
of natural gas facilities is among the most advanced in the world.
This will be of great importance when China and Japan jointly
develop the East Sea oil and natural gas resources.
For the sake of both nations, people have every reason to expect
China and Japan to give wide-ranging consideration to the issues
related to the East China Sea. Its bountiful natural resources
include fisheries and shipping routes.
The goal is turning the East China Sea into a sea of peace,
friendship and cooperation.
The hope is that the two nations will transform the natural
resources buried under the East Sea into the mutual benefits of
real wealth.
The author is a senior researcher with the Institute of
Japanese Studies at the Chinese Academy of Social
Sciences.
(China Daily May 25, 2007)
