China, Japan tug-of-war over
Indochina By Hisane Masaki
TOKYO - Moves between Japan and China over
the development of the Mekong River basin show
signs of intensifying as Tokyo is trying to regain
some ground lost in recent years to Beijing in the
economic backwater of East Asia.
Japan
inaugurated a regular economic ministerial meeting
with four countries in the Mekong region -
Cambodia, Laos, Myanmar and Vietnam, or CLMV
countries as they are often called collectively -
in the Laos capital Vientiane at the end of last
month.
It
is the first such high-level dialogue forum
between Japan and the CLMV countries, although
various channels of dialogue for
cooperation already exist
between Japan and the whole of the 10-member
Association of Southeast Asian Nations (ASEAN) -
that includes
the CLMV countries - including annual gatherings
of top leaders and economic ministers.
The
four countries on the Indochina peninsula are the
least developed among the ASEAN members. Vietnam
joined ASEAN
in 1995, Laos and Myanmar in 1997 and
Cambodia in 1999.
At the inaugural
ministerial meeting, Japan and the CLMV nations
agreed on a package of new Japanese assistance
programs for the development of the Mekong region,
which include cooperation in building a production
and distribution network across the region and
facilitating intra-regional trade through the use
of IC tags (a digital medium that uses radio
frequency identification).
Japan will also
assist in capacity-building for economic planning
and fostering human resources for the management
of electric power networks. The Japanese
government will also hold an exhibition and a
seminar in Tokyo in February next year to promote
imports from and Japanese investment in the Mekong
region. The next meeting will be held in the
autumn of next year in Kuala Lumpur.
The
Mekong region has huge potential for economic
growth. In the late 1980s, then Thai prime
minister Chatichai Choonhavan advocated turning
Indochina "from a battlefield into a market". Now
that Cold War conflicts are a thing of the past
and the CLMV countries are accelerating
free-market reforms launched in the late 1980s,
Chatichai"s slogan is no longer a mere pipe dream,
it is a reality, although it will still take some
years for private-sector investment in the Mekong
region to become a flood, not just a trickle.
To be sure, Japan's inauguration of a
regular economic ministerial meeting with the CLMV
countries reflects a growing interest among
Japanese businesses in the region as a promising
investment destination. But the Japanese move is
also widely seen as a thinly veiled attempt to
counter the rapidly growing political as well as
economic influence of China in the region.
Japan is still the world's number two
economy, after the United States. But its economic
power - and its international clout - have
declined relatively amid a prolonged slump.
Official development assistance, or ODA, is
Japan's most effective foreign-policy tool because
its contributions to the international community
through military means is still strictly
constrained by the post-World War II pacifist
constitution. But Japan was replaced by the US in
2001 as the world's biggest aid donor, the
position it had held for a decade, due to
continued cuts in aid budget amid tight fiscal
conditions.
Meanwhile, China is rapidly
ascending as a new economic as well as political
and military power regionally and globally. The
world's most populous nation of some 1.3 billion
people is already the world's seventh largest
economy in terms of gross domestic product, or
GDP, and also the third-biggest trading nation
after Germany and the US. China's booming economy
attracted foreign direct investment worth more
than $60 billion in 2004, making it the world's
biggest recipient of such investment. China's
sharply swelling exports also brought huge foreign
reserves into its coffers - now more than $700
billion, the second-largest amount after Japan's
nearly $850 billion.
Japanese Foreign
Minister Nobutaka Machimura visited Brunei,
Vietnam and Cambodia in June to seek support for
Japan's bid for a much-coveted permanent seat on
the United Nations Security Council.
The
tour of the three ASEAN nations came shortly
before the Group of Four (G-4) countries - Japan,
Germany, India and Brazil - submitted to the UN
Secretariat a resolution to expand the Security
Council, thus paving the way for Japan and a few
other countries to obtain permanent council
membership. Many countries, led by the US and
China, which are permanent council members along
with Russia, Britain and France, vehemently
objected to the council expansion proposed by the
G-4. China launched a fierce diplomatic campaign
of rallying opposition to the G-4 resolution,
especially among Asian and African countries.
In their meeting with Machimura, leaders
of Vietnam and Cambodia as well as Brunei
expressed support for Japan's bid for permanent
membership, but stopped short of agreeing to
cosponsor the G-4 resolution. After realizing that
they did not have enough support for their
resolution among the some 190 UN members, the G-4
countries approached the 53-nation African Union
(AU), which had a council expansion resolution of
its own, in hopes of hashing out a unified
resolution to expand the Security Council, to no
avail. Both the G-4 and AU resolutions were
quashed without being put to a vote during the
last UN General Assembly session that ended in
mid-September, dealing a devastating setback to
Japan's bid.
A senior Japanese Foreign
Ministry official said of Machimura's talks with
leaders of Vietnam and Cambodia as well as Brunei,
"Consideration to China made their support for
Japan's bid betwixt and between." The official,
who accompanied the foreign minister on his ASEAN
tour, reportedly went on to say," We felt at every
turn how big China's presence is."
In the
early 1990s, after years of civil war ended in
Cambodia, Japan took the leadership role in
efforts to develop the Mekong region, backed by
its huge aid money, and secured a strong influence
in the region. With the turn of the millennium,
however, China began to turn the tables on Japan,
while Japan rested on its laurels.
China
woke up to the strategic as well as economic
importance of joining the regional development,
and Japanese policymakers have lost some sleep.
While the Japanese economy is going downstream,
the Chinese one is going upstream. Although Japan
has begun to move to regain some influence lost to
China in the Mekong region, it may be too late to
reverse the political and economic currents there.
Japan's gambit after the Cold War In 1977, then Japanese prime minister Takeo
Fukuda delivered a policy speech in Manila
spelling out what became widely known later as the
"Fukuda Doctrine". Fukuda declared, among other
things, that Japan would never become a military
power again, strengthen relations with ASEAN based
on "equal partnership" and "heart-to-heart
understanding", and also play the role of
intermediary between the then five-member ASEAN
and communist regimes on the Indochina peninsula.
ASEAN was established in 1967 with Indonesia,
Malaysia, the Philippines, Singapore and Thailand
as its original members. Brunei joined in 1984.
Fukuda's foreign-policy initiative toward
Southeast Asia came after the end of the Vietnam
War and also amid the detente in the Cold War
superpowers - the US and the Soviet Union. But
Japan's bid to play the role of bridge-builder
between ASEAN and communist regimes on the
Indochina peninsula was thwarted soon afterwards
by reignited regional and global tensions.
Vietnamese troops invaded Cambodia, and the
US-Soviet detente collapsed due to the Soviet
troops' invasion of Afghanistan.
About
1990, a year after then US president George Bush
senior and Soviet president Mikhail Gorbachev
declared the end of the Cold War at their Malta
summit, Japan began to play an active diplomatic
role in the Indochina peninsula again. Japan
hosted an international peace conference for
Cambodia in June 1990. It was the first time since
the end of World War II that Japan had hosted an
international conference to discuss peace in a
third country. The warring factions in Cambodia
signed a peace agreement in Paris in October the
following year, ending years of conflict.
In 1992, Japan enacted a historic law
enabling its Self-Defense Forces to participate in
UN-sponsored peacekeeping operations abroad. Under
the law, SDF troops were dispatched to join UN
peacekeeping efforts in Cambodia prior to the
country's first postwar election in the spring of
1993. It marked the first overseas mission for SDF
troops. Sending troops abroad had previously been
a taboo in Japan because of the country's
war-renouncing, post-World War II constitution.
Japan also showed the strongest enthusiasm about
assisting the development of the Mekong region.
The 4,425-kilometer Mekong River, the
world's 12th longest, originates in Tibet and
flows through China's Yunnan province, Myanmar,
Thailand, Laos, Cambodia, Vietnam and into the
South China Sea. It is the main artery for
Indochina.
The Mekong River basin,
abundant in natural and human resources, has
attracted much attention as an untapped frontier
for development since the early 1990s, following
an end to the civil war in Cambodia and other Cold
War hostilities on the Indochinese peninsula. The
river's development has been widely believed to
hold the key to the development of the
war-battered Indochina as a whole.
Reflecting the new focus on the Mekong
River basin, various international forums were
created in the 1990s to promote the region's
development. The Asian Development Bank (ADB), to
which Japan is the biggest financial contributor,
has sponsored the Greater Mekong Subregion (GMS)
Economic Cooperation program - the most
high-profile and powerful vehicle for promoting
development projects in the Mekong River basin -
since 1992. The GMS program includes as members
Cambodia, Laos, Myanmar, Vietnam, Thailand and
China, along with international organizations and
donor nations as observers.
The
long-dormant Mekong River Committee, another
international forum for Indochina development
organized in 1957, was reborn as the Mekong River
Commission in 1995. Its members are Cambodia,
Laos, Vietnam and Thailand. International
organizations and aid donor nations are
cooperating with the commission.
Japan
also jumped on the bandwagon. When he visited
Bangkok in January 1993 on a Southeast Asian tour,
then Japanese prime minister Kiichi Miyazawa
proposed the creation of the "Forum for
Comprehensive Development of Indochina". The forum
held its first ministerial-level meeting in Tokyo
in February 1995, with 25 nations and eight
international organizations attending.
Japan, by far the largest aid donor for
all CLMV countries, has funded infrastructure
projects transcending national borders on the
Indochina peninsula on its own or in partnership
with the ADB.
The most high-profile among
those transnational projects is the "East-West
Corridor" project to build a major highway,
including a bridge over the Mekong River, to link
Mukdahan in northeastern Thailand, Savannakhet in
southern Laos and the port of Da Nang in central
Vietnam. The highway, scheduled for completion
next year, is to be extended to Mawlamyine in
southern Myanmar down the road. The "Second
East-West Corridor" project is also under way to
build another highway linking Bangkok, Phnom Penh
and Ho Chi Minh City. This project is also
scheduled for completion next year.
China turns the tables on Japan
In December 1995, ASEAN took the
initiative of its own for the development of the
Mekong region. Top leaders of the then seven ASEAN
members - Vietnam joined earlier that year -
agreed to launch the Ministerial Meeting on
ASEAN-Mekong Basin Development Cooperation to
discuss assistance for Cambodia, Laos and Myanmar.
The first ministerial meeting was held the
following year.
During the 1997-1998 Asian
economic crisis, which originated in Thailand -
the most staunch proponent and major beneficiary
of the Mekong subregion's development - and spread
to much of the rest of East Asia, however, ASEAN
members were preoccupied by domestic economic
woes, pushing the Mekong subregion's development
to the back burner temporarily.
As Asian
countries recovered from the 1997-1998 economic
crisis, Mekong development began to gradually come
back into the spotlight about 2000. In November
that year, the ASEAN leaders adopted the
Initiative for ASEAN Integration (IAI), which is
primarily aimed at shoring up the economic growth
of the CLMV countries. Also, the Japanese and
ASEAN leaders agreed to step up cooperation in the
greater Mekong subregion as a means of narrowing
the wide disparity in the level of development
between the haves and have-nots within ASEAN.
Unlike Vietnam, which has a relatively
large economy, Cambodia, Laos and Myanmar have
been heavily reliant on Thailand for economic
growth. But Thailand's influence on the Indochina
peninsula has been eroded since the 1997-1998
economic crisis, and China has filled the gap.
In late 2000, China adopted its 10th
Five-year Plan starting in 2001. The basic
national economic development plan features, among
other things, the "Go West" strategy aimed at
turning the poorer western part of the vast
country into a magnet for domestic and foreign
investors and thereby correcting the widening gap
in wealth with the flourishing eastern coastal
areas, an issue that could threaten the country's
political stability and even the rule of the
Communist Party. Under that strategy, the Mekong
region's development became a top-priority
project.
In November 2002, the six member
nations of the ADB-sponsored GMS Economic
Cooperation program held their first summit in
Phnom Penh. Then Chinese premier Zhu Rongji
unveiled a package of financial and other
assistance programs for the development of the
GMS.
In a surprise announcement, Zhu also
told Cambodian Prime Minister Hun Sen that China
would forgive an estimated more than $1 billion in
debts owed by Phnom Penh to Beijing. The Chinese
decision was apparently aimed at improving
bilateral ties, which had been uneasy because
China supported the notorious Khmer Rouge regime,
which is blamed for the deaths of about 1.7
million Cambodians due to disease, overwork,
starvation and execution during its 1975-1979
rule.
In early July this year, the second
GMS summit was held in Kunming, capital of China's
Yunnan province. Chinese Premier Wen Jiabao
announced that China would individually expand the
range of products eligible for preferential
tariffs from Cambodia, Laos and Myanmar as of
January 1 next year.
Since 2002, China has
cut or exempted tariffs for 600 products from the
three underdeveloped ASEAN nations. China also
signed a number of documents with the other five
GMS countries to enhance cooperation in such areas
as transportation, animal epidemics prevention,
information superhighway construction, power
trade, tourism and environmental protection.
Geography is on China's side, not on
Japan's. Wen himself said in a keynote speech at
the GMS summit that all GMS countries are close
neighbors of China and that the peoples in the
region, nourished by the same river, have fostered
long-standing friendship. "A close neighbor is
more helpful than a distant relative," the Chinese
leader said.
"I firmly believe that
China's development not only benefits its more
than one billion people, but also presents
development opportunities to other countries, its
neighbors in particular, thus contributing to
prosperity and stability of the region and the
world at large," Wen said, adding,"May our
friendship and cooperation run as long and deep as
the Lancang-Mekong River."
Flexing its
economic muscles, China has funded the
"North-South Corridor" project to build a highway
linking Kunming and Bangkok via Laos. The highway
is scheduled to be completely opened to traffic in
2007. Japan balked at funding the project, partly
for fear of lending China a hand to increase its
influence southward on the Indochina peninsula.
China also set up a special fund totaling $20
million within the ADB for poverty alleviation of
the region last year.
Aside from the
Mekong development, China has strengthened
political and military as well as economic
relations with Myanmar in defiance of US and
European sanctions against the military-ruled
country. China wants to secure stable oil and
other energy supplies by land, as well as by sea,
many experts agree. Speculation is rife about the
idea of building an oil pipeline running across
Myanmar to Kunming at an estimated cost of $2
billion.
China became a net importer of
crude oil in 1993. It has continued to sharply
increase oil imports to fuel a booming economy. It
is now the world's second-largest oil consumer,
after the US. China already depends on imports for
as much as 40% of its oil needs, nearly half of
which come from the Middle East. About 80% of oil
imported into China is shipped through the Malacca
Strait, a waterway notorious for rampant piracies.
There are also growing concerns after September 11
that tankers and other ships sailing through the
waterway might be become a target for terrorism.
Leadership battle over East Asian
community For ASEAN, correcting the
so-called "ASEAN divide" - the huge gap in wealth
between rich and poor members - is a high priority
as the grouping accelerates its economic
integration with an ultimate goal of creating a
fully integrated "ASEAN Economic Community" by
2020. Per-capita income of Myanmar, for example,
is less than one-hundredth of that of Singapore.
For countries outside ASEAN, like Japan and China,
assistance in the development of the poorer ASEAN
nations is becoming a very important avenue to
strengthened ties with the entire ASEAN.
Amid growing talk of creating an East
Asian Community (EAC) in recent years, Japan and
China have been jockeying for the leadership role
in what will be the long and arduous process of
community building. And the two Asian powers have
competed for stronger and closer ties with ASEAN.
Although the 10 ASEAN members are much smaller
than Japan and China in economic size
individually, they wield a strong voice in East
Asian affairs as a group on the strength of their
number.
For Japan, further fortifying ties
with the ASEAN has become important all the more
because of its frosty ties with China and South
Korea. Japan's relations with the two other Asian
economic powers have plunged to their lowest
points in decades in recent years because of Prime
Minister Junichiro Koizumi's repeated visits to
the war-related Yasukuni Shrine in Tokyo, a
dispute over Japanese school textbooks authored by
right-wing scholars and territorial disputes,
among other things.
China has aggressively
cozied up to the individual ASEAN members and
ASEAN as a whole in recent years. A greater
commitment to the development of the Mekong region
is part of such efforts.
China had a head
start over Japan in strengthening ties with ASEAN.
On the economic front, China and ASEAN signed the
Framework Agreement for Overall Economic
Cooperation in November 2002, kicking off the
process of creating the world's biggest free trade
zone with more than 1.8 billion people. Under that
agreement, China and the non-CLMV ASEAN members
will start zero tariffs on most normal products by
2010. China and the CLMV countries will do the
same by 2015.
A year after the China-ASEAN
framework agreement, Japan and ASEAN signed the
similar Framework for Comprehensive Economic
Partnership in October 2003, starting the process
of creating a free trade zone by 2012. Japan has
already concluded a free trade agreement, or FTA,
with Singapore and reached basic FTA agreements
separately with the Philippines, Malaysia and
Thailand. Japan's FTA negotiations with Indonesia
and the whole of ASEAN got under way earlier this
year.
Two-way trade between China and
ASEAN has been growing at a much faster pace than
that between Japan and ASEAN in recent years.
China-ASEAN trade topped $100 billion in 2004, and
soared 25% in the first half of this year from a
year earlier to nearly $60 billion amid ongoing
reductions in tariffs, compared with the about $74
billion trade conducted between Japan and ASEAN
during the same period.
ASEAN is now
China's fourth-largest trading partner after the
25-nation European Union, the US and Japan. China
has already superseded the US as the biggest
trading partner of Japan and South Korea. For
ASEAN, the US and Japan are still the two biggest
trading partners. But many experts say that it is
just a matter of time before China will replace
the US and Japan as ASEAN's biggest trading
partner. China's investment in ASEAN is also
surging sharply. In 2004, ASEAN-bound Chinese
foreign direct investment totaled $226 million,
although the amount is still dwarfed by Japan's
such investment worth nearly $3 billion.
China took a lead over Japan on the
political front as well. In October 2003, China
signed ASEAN's 1976 Treaty of Amity and
Cooperation, a few months before Japan did. Japan
initially balked at signing the ASEAN treaty,
which provides for, among other things, peaceful
settlement of conflicts and non-interference in
internal affairs, out of political consideration
to its most important ally, the US.
A
cacophony of alarm bells from the US can be heard
these days about the embryonic EAC, which some
American experts see as a development that would
lead to the formation of a regional trade bloc
that not only excludes the US but also could
reduce and even challenge the currently unrivaled
US influence in the region under the domination of
China.
There are some critics of the
proposed community in Japan as well, many of them
nationalists. They share fears that such a
regional community could fall under the sway of
China. The participation of India, Australia and
New Zealand in the first East Asian Summit may
ease concerns in Japan and the US about a possible
Chinese domination of the proposed community.
Meanwhile, China is increasingly alarmed
by the ongoing global "transformation" of the US
military. The Bush administration insists that the
transformation is aimed at ensuring stability in
the "arc of instability", an area stretching from
the Middle East to Northeast Asia via South Asia
and Southeast Asia. There are deep suspicions in
China, however, that the real motive for the
transformation might be what some people call the
"soft containment" of China.
In 2001,
China signed a "Declaration of Conduct" with ASEAN
to prevent conflicts in the South China Sea, where
China, four of the ASEAN members - Vietnam, the
Philippines, Malaysia and Brunei - and Taiwan
claim all or part of the Spratly Islands. In March
this year, China agreed with Vietnam and the
Philippines to explore for oil in the disputed
waters in the South China Sea.
These
aggressive Chinese peace overtures toward ASEAN
apparently reflect a desire to assuage the
perception of China among some in ASEAN as the
most serious security threat to their countries
and thereby to forge closer ties with the
grouping. Cementing ties with ASEAN in general -
and the joint oil-exploration agreement with
Vietnam and the Philippines in particular - is
also seen by some as part of efforts to preempt a
possible US-led containment of China.
The
proposed EAC will get a political boost when the
first East Asia Summit is held in Malaysia in
December. Leaders of the so-called ASEAN plus
Three, India, Australia and New Zealand, will
attend. ASEAN plus Three is made up of the 10
ASEAN members plus Japan, China and South Korea.
It remains uncertain, however, how far the
region will go in integrating itself - and how
fast. East Asia is immensely diverse in political
systems, cultures and religions. Countries in the
region are also at various levels of development.
What is East Asia? Who are East Asians? What do
"East Asians" have in common? What common values,
if any, do they share? All these basic questions
remain unanswered. Will the regional community
come into fruition with relative smoothness and
eventually become the Asian version of the
European Union with common foreign and security
policies and a single currency in the
long-distance future? This is anybody's guess.
At this moment, however, the proposed EAC
appears very likely to develop in several stages,
with the first significant stage coming with the
formation of a region-wide FTA in the years ahead.
Although there is no specific agreement yet on
forming a region-wide FTA, a web of bilateral FTAs
is now in the pipeline.
Whatever the final
shape of the proposed EAC, the development of the
impoverished Mekong region as a means of
rectifying the wide wealth gap among regional
countries is widely deemed one essential building
block for any such community. So, how the
tug-of-war between Japan and China over the
development of the Mekong region will be played
out could have ramifications for the future
political and economic landscape of the entire
East Asia.
In a speech made in Singapore
in January 2002 during an ASEAN tour to spell out
his Southeast Asian policy, Koizumi reminded the
audience of the helping hand Japan extended to the
countries battered by the 1997-1998 economic
crisis.
"Japan at the time of Asia's
financial crisis played a role in easing that
crisis," he said. Japan extended a total of $80
billion in financial assistance, including $30
billion under the so-called New Miyazawa
Initiative, to help Asian economies weather the
crisis. "A friend in need is a friend indeed,"
Koizumi said in the speech. Koizumi also said that
in the 21st century, as sincere and open partners,
Japan and ASEAN should strengthen their
cooperation under the basic concept of "acting
together - advancing together".
For the 10
ASEAN members, the two sayings Wen and Koizumi
cited - "A close neighbor is more helpful than a
distant relative" and "A friend in need is a
friend indeed" - may both be true. And the ASEAN
members do not play the devil's advocate with
Koizumi's call for them to act together and
advance together. But perhaps they want to do so,
not only with Japan, but also with China.
Hisane Masaki is a Tokyo-based
journalist, commentator and scholar on
international politics and economy. Masaki's
e-mail address is yiu45535@nifty.com
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in 1995, Laos and Myanmar in 1997 and
Cambodia in 1999. 
