Can China and Japan make up?
Play
This week China will host the Apec forum in Beijing and one of the most interesting things to watch for is whether it will lead to a thaw in its frosty relationship with Japan.
Japan’s leader Shinzo Abe has repeatedly requested a meeting with his Chinese counterpart, Xi Jinping, but has not (yet) received an affirmative response.
China and Japan are immediate neighbours, the second- and third-largest economies in the world and each other’s major trading partner, so the relationship is extremely important.
However, Abe and Xi have never had a formal meeting. This is all the more surprising given that both have spent much of the past two years in an intense diplomatic shuffle, building bonds with other leaders in all corners of the world.
The reasons for their cool association include historical grievances, military tensions and territorial conflicts. While these problems still persist, Japan has recently made efforts to make peace.
Abe says he wants “strategic and mutually beneficial relations” with China and there have been various diplomatic overtures to try to secure a meeting with Xi at the Apec summit.
These include a recent meeting between their finance ministers in Beijing and a friendly handshake between Abe and Chinese Prime Minister Li Keqiang in Milan last month.
Last Wednesday there was a meeting between Xi and former Japanese prime minister Yasuo Fukuda, which provided a good indication of the warming links between the two countries.
Abe also reshuffled his Liberal Democratic Party executive team in early September to make it more China-friendly and later that month there were high-level bilateral talks on security in the East China Sea.
A few years ago the economic ties between China and Japan were flourishing, despite political spats. In the decade from 2002, Japanese investment in China increased tenfold, trade reached record highs and the Japanese yen became the first currency after the US dollar to be directly convertible ino the yuan.
However, during the past two years the economic relationship has weakened and Japanese investment in China has plunged 40 per cent year-on-year in the first half of this year, after sliding by nearly 20 per cent last year.
Both economies are facing headwinds at the moment – record trade deficits buffeting Japan and the slowest growth in many years dragging down China. So mending patches between these two regional giants would help both, and is being urged by business leaders on both sides.
Since they are major investors in and trading partners with Thailand and Asean, closer cooperation between the two should bring benefits not only to themselves but also to this country and the region as a whole.
For more columns in this series please see www.bangkokbank.com
