Page 1 of 2 Is China trying to implode
Japan's economy? By Peter Lee
Is the People's Republic of China (PRC)
trying to implode the Japanese economy? It is
starting to look that way. The PRC has
counterprogramed the US pivot to Asia - and US
advantages in military and softpower - by
leveraging its economic strengths.
When Japan kicked off this
year's edition of the Senkaku (Diaoyu) Follies
with the national purchase of the uninhabited
rocks, the PRC leadership responded by giving free
rein to nationalist Nipponphobic demonstrations,
boycotts, and occasional anti-Japanese thuggery -
and then refused to allow relations to
renormalize.
The PRC frequently reiterates
a hardline position during the press
conferences of the Ministry
of Foreign Affairs. For instance, on November 19:
Q: Is there
arrangement of meeting between the Chinese and
Japanese leaders during the East Asian Leaders'
meetings? What is your comment on the prospect
of Sino-Japanese relations?
A:
As far as I know, there is no arrangement of
Sino-Japanese bilateral meeting during the East
Asian Leaders' meetings.
On
your second question, as is known to all,
Japan's illegal "purchase" of the Diaoyu Islands
has led Sino-Japanese relations to the current
difficult situation. Japan should bear full
responsibility. China hopes the Japanese side
will seriously reflect on and correct its
mistakes, show sincerity and make concrete
efforts to properly settle the current problems
and push bilateral relations back to the normal
track of development.
By this
framing, "pushing bilateral relations back to the
normal track of development" would involve the
Japanese government publicly repudiating the
island purchase.
That simply isn't going to
happen.
Japanese public opinion is
rock-solid behind Japan's claims to the Senkakus,
a situation that has more to do with fear and
mistrust of Rising China in the Land of the Rising
Sun than it has to do with the validity and value
of Japan's claims to a cluster of uninhabited
Taiwanese islands.
As the Japanese parliamentary
elections - announced for December 16 - approach,
the PRC is doing nothing to reduce the political
profile of the issue, or its unpopularity in
Japan. Chinese coast guard vessels have
continually patrolled the waters near the
Senkakus, allowing the Japanese media to report
this affront in a style reminiscent of America's
humiliation during the Iran hostage crisis:
Chinese vessels
sail near Senkakus for 20th day [1] Chinese vessels near
Senkakus 30 days in a row [2]
And so
on.
The widely accepted
explanation for the PRC willfully pitching
Sino-Japanese relations into the deep freeze is
knee-jerk Chinese nationalism, with the emphasis
on "jerk". A variation on this explanation is
"weak and divided Chinese government is trying to
look strong for internal political reasons", an
explanation that has been trotted out for decades
by every government that found its tit caught in a
Chinese wringer, here floated by the current Noda
government to explain the current crisis and
obligingly circulated by the Asahi Shimbun:
In September,
the Noda administration officially decided to
put three of the Senkaku Islands under state
ownership, before China's Communist Party
Congress was held.
"If we purchased [the
Senkaku Islands] immediately after the new
leadership was established, it would bring shame
to China," a source close to Noda said. "We will
be able to improve our relationship with the new
leadership if we finish putting [the Senkakus]
under state ownership during Hu Jintao's era."
However, the friction
between Japan and China has only worsened. The
Noda administration has further strengthened the
belief that the new leadership in Beijing is
unstable, and Xi has no choice but to take a
hard-line stance against Japan, according to an
official at the prime minister's office.
[3]
Unfortunately for Prime Minister
Yoshihiko Noda, a nice Reuters backgrounder on the
Senkaku purchase reveals that the central
government could have delayed the sale of the
islands to the city of Tokyo for an indeterminate
period of time, thereby sparing the tender
feelings of the new Chinese leadership, by
insisting on parliamentary review, surveys and
other bureaucratic hoo-hah; indeed, a key reason
why the right-wing owner abandoned his ideological
soul mate, Shintaro Ishihara, to sell to the
central government was because he needed to see
the money pronto in order to pay down a mountain
of debts.
If Noda wants to see what
hardline posturing driven by leadership
instability looks like, he can take a peek in the
mirror. [4]
The PRC's high-profile,
unyielding position on the Senkakus seems to
reflect something other than reflexive
nationalism, political weakness, or the
blunderings of a disoriented and incapable elite.
It appears that the Beijing leadership may have
decided to edge beyond using the Senkaku dispute
as a mere demonstration of its economic
countermeasures to the US pivot into Asia, to
thinking seriously about actually trying to kick a
key prop out from under the US initiative - a
vital, but weakened and vulnerable ally: Japan.
I previously argued that the
PRC had decided that the best riposte to the
US/Japanese strategy of using maritime disputes to
polarize East Asia diplomatically and militarily
to China's detriment was to eschew overt
government-ordered military or economic action -
such as the counterproductive slowdown in rare
earth exports to Japan during the 2010 Captain
Zhan stand-off - in favor of "popular" but
state-sanctioned economic retaliation against
Japanese economic interests inside China. [5]
There is every indication
that this strategy is ongoing - and working.
Japanese exports to China
experienced double-digit drops in September and
October. Japanese investment in China dropped over
30% in October year-on-year. What is perhaps most
unnerving for Japanese leaders is that the nation
is now dealing with monthly trade deficits for the
first time in 30 years, having experienced four in
a row since August 2012, and the Senkaku crisis is
definitely not helping.
At
present, the most important question is whether
the PRC is simply pursuing its traditional
strategy of motivating Japan Inc - the powerful
Japanese business community that looks to China
for growth and profits - to pressure the Liberal
Democratic Party (LDP) into a more China-friendly
stance... or whether the PRC wants to put a
significant, permanent dent into the economy of
its local strategic competitor, Japan.
Government mouthpiece China
Daily recently ran an op-ed by think-tanker Jin
Baisong that explored a rather sinister tangent -
whether the slowdown in Sino-Japanese trade was
significantly debilitating the Japanese economy:
Some recent
discussions in the media have centered on
whether the Japanese economy really relies as
heavily on China as is made out to
be
. Jin's answer: Yes!
In my analysis,
Japan's direct and indirect exports to China are
estimated to be 30% of Japan's total exports.
Besides, 60 to 70% of China's total exports to
Japan are operated by Japanese companies.
Therefore, Japanese companies not only play a
key role in expanding China's exports to Japan,
but also get the lion's share of the profits.
The Japanese economy is
"gravely ill" now. Ever since Japan played out
the farce of "purchasing" China's Diaoyu
Islands, Sino-Japanese trade has been suffering
seriously, compromising the performance of
Japanese enterprises in China.
He
concludes that there is nothing the Chinese
government can or should do about it,
simultaneously shielding the PRC regime from
culpability in any economic warfare accusation:
But Japan
cannot blame China for its economic downslide
because the Chinese government has taken
measures to safeguard the legitimate rights and
interests of foreign companies, including
Japanese companies, doing business in China. In
fact, Premier Wen Jiabao has repeatedly said all
enterprises registered in China are Chinese
enterprises and their products are Chinese
products. Chinese laws protect all enterprises,
including Japanese-funded enterprises.
So
Japan has only itself to blame for the economic
mess it is in. [6]
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