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China's Arithmetic in "Mend Fence" Diplomacy with Japan



China is discernibly working its way through to mend fences with Japan. The latest Chinese initiative included Chinese Vice President Xi Jinping seeking at short notice audience with Japan’s Emperor Akihito, which, in imperial etiquette terms, as David Piling described, amounted to loud banging on neighbour’s door in the early hours to borrow a cup of sugar.[i] Amidst opposition and criticism, Yukio Hatoyama, the Japanese Premier, worked overnight to secure the appointment. In his off-the-cuff remarks, Xi reportedly cooed: “I hope my visit will contribute to the development of friendly co-operation between the two countries and boost friendship between the two peoples.”

In its perspective, the Chinese diplomatic move and Japanese response look at as a step forward in the direction of bringing a measure of thaw to their age old chilled relations. Seen in retrospect to what it used to be in the past, in particular during the six year stint of Japanese Premier Junichiro Koizumi, ending in 2006, each side trading fight to finish charges, some times scripted beyond diplomatic niceties, and hurting critical diplomatic and commercial interests, it is but a giant step.[ii] Interestingly, the development of the kind is taking place in a special context, when, on the one end, Japan and the US, normally the best buddies in the Pacific, have fallen out over alliance-related issues, specifically Japanese Premier Yukio Hatoyama’s reluctance to endorse a decade-old plan to relocate a US marine base on the island of Okinawa, and on the other end, surging China finds itself best placed to replace the US power projections wherever it can in general and in Asia-Pacific region in particular.

China and Japan are powers in their own rights. While sharing Confucian and Buddhist heritage and interdependence on various counts, the two have historically been feuding nations.[iii] They suffer ‘forked tongue’ syndrome, where China constantly made a point on Japan’s motive. Issues, plaguing all weather smooth sailing of their bilateral relations and having attracted a wide range of scholarly discourse including-one of China’s outcry about resurgent Japanese militarism (e.g. Wu X. 2000:298); the so called ‘history issue’ (e.g. Yang D.2002; cf. Tanaka 1983; Whiting 1989: Chapter 3; Sohma 1999: Chapter 3), the ‘text book issue’ (e.g. Rose C. 1998); the ‘comfort women issue’ (cf. Takagi 1995:201, 208; Ryo 1997:55; Johnstone 1998:298); and, the territorial disputes in South China Sea (e.g. Garver 1992; Wu and Bueno de Mesquita 1994; Hyer 1995; Lam P.E. 1996; Austin 1998:98-161; Hiramatsu 2001; Kivimaki 2002). Ceteris paribus. China is known for having publicly used policy instruments towards big as much as small, near home and distant states. Given proximity in all its dimensions, Japan can not be a distant case for Chinese policy makers.

The Chinese overture as such has not come as a bolt from the blue. The Chinese leadership and Chinese think tanks have been equally candid in acknowledging the wind of change in Japan’s political scene after the Democratic Party of Japan (DPJ) trounced the Liberal Democratic Party (LDP) for the first time in the last 50 years in election of the Lower House of the Diet after capturing Upper House in 2007. In his review of Chinese Diplomacy 2009, the Chinese Foreign Minister noted with glee that the DPJ stood for promoting ‘Friendly Diplomacy’. Equally welcome has been the statement of the Japanese Premier Yukio Hatoyama to work for setting up ‘East Asian Community’. While tight lipped, China must not have been less buoyed up at the Japanese shrug to the US plan to move Futenma Marine Corps Air Base from the centre of the busy city to scenic Henoko Bay in northern Okinawa. There could be possibly some thing more in China’s bid to cobble improved relations with a measure of urgency.

The aim of this paper is to understand China’s calculations in its diplomatic stride to mend fences with Japan. In its perspective, the study looks into the compelling factors at both ends, if any and plausibility of change with attendant costs in broad congruence to their respective interests and foreign policy goals. As Japan is as much a power, and unlike China, there are political parties and political groups with competing interests, the efficacy of Chinese foreign policy instruments to the desired ends thus remains open to a number of immediate and future possibilities.

The aim of the study as such stems from a concern to understand the ramifications of change, if any, in power play in the region. Schematically, the paper has, thus, been organized to focus on: the Fundamentality of the Existing State of Relationship; the Convergence of Interests and Perceived Trade off; Efficacy of Statecraft and Policy Instruments; and, the Complexion of Regional Economic and Security Architecture in Offing. Methodological treatments include a synthesis of analytical tools and techniques, bordering and encompassing to ‘process tracking analysis, interest analysis and intention analysis. The assumptions of the study are: the Chinese initiative to mend historically estranged relationship with Japan is part of its strategy to forge cohesiveness among regional powers to meet challenges of existing and future global powers; the Japanese response to the Chinese initiative stands circumscribed to US factor besides quite a few domestic pulls and push components of its core interest in the end game; there are discernible writings on the wall that the Chinese initiative as such has meting grounds, albeit not outright linear in Japan’s calculations; and, the form and shape of end outcome would call for a number of tangible changes in micro and macro environments of relationship of the two Asian powers.

Fundamentality of the Existing State of Relationship

Over and above all diplomatic facts of life, China and Japan are two reckonable powers in the region, albeit circumscribed to exercise full throated power against each others for a variety of factors.[iv] Nonetheless, as part of multipolar Asia, and inextricably put to embrace of America, the super power, the options of the two to play the power game characterized as being ‘active and by design’ and/ or ‘passive and in reaction’ would conceivably depend on unfolding of an array of developments independent of strategic decisions of these two regional actors.

The fundamentality of manifest power relation between China and India discernibly range between ‘low fundamentality’ and ‘high fundamentality’, depending on how much the issue affected ‘real interest’ and how best one of the two was able to prevail upon in exerting its ‘verbal’ and/ or ‘non-verbal’ ‘statecraft’ and ‘policy’ goals at different points of time.[v] ‘Real interest’ here relates to revealed ‘wants and preferences’ of China over Japan, independent of the power of Japan and vice versa on issues of imminent and remote consequences. There is then veritable evidence of the two powers using variedly both military and non-military statecraft and policy instruments in all conceivable forms and shapes say direct and indirect, offensive and defensive, proactive and reactive, positive and negative, high and low costs and the like. The means employed by the two for the purpose again covers a large descript of actions including ‘E’ option as information technology has come to age. This is amidst signs of role reversal and counter reversal taking place in relation to third poignant actor, the United States of America (USA).[vi]

Crystallizing present and past fundamentality of China- Japan relation, Hanns Gunther Hilpert and Rene Haak once noted:

“The flow of goods, capital technology, and organizational know-how between China and Japan has increased dramatically, yet the relationship between the two countries remains far below its potential scope. The differing economic structures of the two countries, the mutual political distrust, and burden of unsettled historical past stands in the way of more intensive economic integration.” (Japan and China: Cooperation, Competition and Competition, Palgrave Macmillan, 2002)

Dan Denning scripts the contemporary dichotomy in the China-Japan relations in the same vein but with a different touch:

“Japan and China have a simmering argument left over from World War II. But it really goes back thousands of years. In its current incarnation, it’s an argument over who will be more important to Asia’s future. All the signs point to China’s emergence. But both countries have a lot at stake.” (The Bull Hunter: Tracking Today’s Hottest Investment, John Wiley and Sons, 2005)

Kent E. Calder looks at the end game of China-Japan relations and puts a perspective where two powers have to seek in terms of co-existence as matured powers:

“Historically, relations between Japan and China were clearly structured. One country was always more prosperous or powerful than the other. Before the nineteenth century, China was usually dominant; since the Meiji Restoration, in 1868, Japan has generally been preeminent. The prospect that China and Japan could both be powerful and affluent at the same time has only recently emerged, largely because while China’s economy and influence have grown rapidly, Japan’s has remained stagnant. China has nuclear weapons and intercontinental ballistic missiles, and its military budget has grown by double-digit rates for 17 consecutive years. Although Japan has a relatively low military profile, with its “no-war” constitution and strong alliance with the United States, its defense-relevant technology is sophisticated and it has recently become more proactive. The stage is now set for a struggle between a mature power and a rising one.” (Foreign Affairs: March/April 2006, China and Japan’s Simmering Rivalry)

James C. Hsiung predicts dead end to thaw as the weight of past hangs fast to the detriment of cooperative much less strategic partnership, ostensibly espoused:

“The running saga of China and Japan at odds is unparalleled in world history. Its long stretch of recurrent conflicts, going back to the 16th century through two savage wars in the 19th and 20th centuries, saw a new surge in recent months, despite normal trade relations. The worst case scenario suggests that the two nations might go to war for their conflicting claims to the vast seabed oil resources in the East China Sea, further exacerbated by their festering territorial disputes”.( China and Japan at odds : Deciphering the Perpetual Conflict, Palgrave Macmillan, 2007)

These and hosts of other scholarly works in the field speak of abiding irritants, where the memory of past, broadly manifest in nationalist sentiments in different forms, stand to take the nature and character of the future relation of the two countries. From the Chinese angle, the issues of the past, outrageous to Chinese sentiments, included Japan’s history, much of which is borne out of an array of Sino-Japanese wars in different epoch and their cataclysmic impacts.[vii] Chinese hold out half a dozen other issues, where they differ and oppose Japan.[viii] Nevertheless, Japan’s rise to dominance in the region has been hard to swallow for the Chinese ruling elite as much as the common people. This fundamentality of China-Japan can perhaps be unlocked and the two warring nations get to strategic cooperation and partnership mode only when popular Chinese mind set could rise above its long held belief that ‘one mountain does not hold two tigers’ (yi shan bu rong er hu).

Convergence of Interests and Perceived Trade off

Amidst enduring distrusts, China and Japan have chartered their economic, social and cultural relations on nearly sound footing. This contradiction is hard to resolve even as the two sides have inched forward to sort out some of the critical irritants.

The memories the past events hitherto ruled the roost in defining the horizon of China’s relation with Japan. The most agitating ones relate to the alleged Japanese war crimes and human rights abuses during six–week period following the Japanese capture of Nanjing on Dec 9, 1937.[ix] The two sides agreeing to assign joint research to 10 scholars each from the Institute of Modern History of the Chinese Academy of Social Sciences and Japan Institute of International Affairs to unlock and resolve historical disputes in correct perspective, demonstrates willingness short of ‘congruence of interests’ to sort out the issues.[x] The latest statement of the Japanese Prime Minister Yukio Hatoyama to solemnly stick to the stand taken by former Japanese Prime Minister Tomiichi Murayama on the issue goes well to testify Japan’s earnestness.[xi] In political field, the two sides have three documents including the Japanese-Chinese Joint Statement signed in 1972, Japanese-Chinese Treaty of Peace and Friendship signed in 1978 and the Japanese-Chinese Joint Declaration signed in 1998. While adherence to the principles, enunciated in these three documents, could lead to meaningful dialogue, the net outcome depends on China not repeating the past of using Japan card to arouse Chinese nationalism and doubt Japan’s intension every now and then.

There are then disputes that await clear congruence of interests beyond just the will to find early resolution. They would call for a minimum trade off in terms of tangible political, diplomatic, economic and other such gains. China, for example, wants Japan to hold to “one China” stance.[xii] This is in particular on the sovereignty issue of Taiwan.[xiii] China and Japan have been at odds over China’s exploration for natural gas in the East China Sea. In June last year they reached a broad agreement on principles intended to solve the dispute by jointly developing gas fields. But progress has been slow, and Japan has accused China of drilling for gas in violation of the agreement. Japan says the median line between the two countries’ coasts marks the boundary between their exclusive economic zones. China says the boundary is defined by its continental shelf, extending its zone beyond the median line. Tokyo objects to Chinese development of the Chunxiao gas field in seas close to Japan’s claimed boundary. Japan fears drilling there could drain gas from what it claims is its side of the line through a honeycomb of seabed rocks. Both Tokyo and Beijing claim sovereignty over a group of islets, known as Senkaku in Japan and Diaoyu in China, in the East China Sea. Japan and China have hitherto laid their territorial claims using inconclusively history and international laws in their favour, albeit in their own way. The arguments hover round whether the Islands were terra nullius (unclaimed land) when Japan’s Meiji Cabinet decided to incorporate them or integral part of Chinese territory.

There have been policy statements, supposedly to express will and earnestness of the two countries to find amicable answer to the festering all such bilateral disputes and differences. There have academic inputs as well. A press conference, held on Dec 24, 2009 to share the findings of the First Phase of Joint Historical Research on alleged Japanese war crimes and human rights abuses during the fateful days of the World War-II, ended up with unusual scene of Chinese and Japanese historians Bu Ping and Shinichi Kitaoka not just disagreeing but quarrelling on the very authenticity of the sources. While differing in tone and tenor, the Chinese and Japanese media agreed that the Chinese and Japanese historians failed to bridge differences. What is yet virtual music to the ears of Chinese populace is that the Japanese have acknowledged the event and responsibility for the massacre. As the issues are per se vexed, it is least likely that the two sides would bury the past in totality. Japan holds trade off in being ‘economic and technological’ super power while China as a ‘political and military’ superpower. Interestingly, the two hold prospects of holding cooperative relationship as the complementarities get on in times to come.

Efficacy of Statecraft and Policy Instruments

Notwithstanding intermittent rough sailing (nanko), the two sides have used various statecraft and policy instruments to exert power on each other and achieved a measure of breakthrough as well. The impacts are partly discernible on revealed and real interests of each others.

As of part of civilian statecraft, the two sides have variedly used ‘ideational policy instruments’, cutting across each others to their advantage. Interestingly, the idea, norm and symbols brought to bear upon for the purpose vary from one set of dispute and differences to the other. There is then a pattern, where, in otherwise positive stance, the top leadership of the two sides gives shape to a particular line that the middle and lower levels of political and bureaucratic elites tend to use in formulating their responses to set actions of the opposite side. There is then the other side of the coin. The middle and lower levels of political and bureaucratic elites vent out their views, which find currency in official and academic exchanges. The top leadership comes to the fore only at the end to modify the ruckus, whatsoever.

In his meeting with former Japanese Prime Minister Taro Aso after G-20 meeting in April 2009, much before the new Japanese government under Yukio Hatoyama with new political and diplomatic agenda came to power, the Chinese President HU Jintao made five point proposals to put China-Japan relationship on a sturdier edifice and, inter alia, noted:

“In the context of the changing international situation and the grave impact of the global financial crisis, it is more important for the two countries to strengthen cooperation and make joint efforts to overcome the current difficulties;…..reinforce bilateral cooperation in international affairs, especially in Asia; … the efforts of related countries in the region in dealing with the impact of the international financial crisis; push forward the building of a Free Trade Zone in East Asia; expand regional common market and promote regional economic and financial cooperation”.

The idea of ‘changing international situation’, ‘joint efforts’, ‘reinforce bilateral cooperation’, ‘expand regional common market’ and the like were the ideas created in a stride. This ‘ideational policy instrument’ created a policy space in Japan, in particular as the Democratic Party of Japan (DPJ) had been espousing a ‘new approach to Japan-US’ in its electoral battle with the then ruling Liberal Democratic Party (LDP). After the election, the DPJ and its Premier pledged to build “a close and equal relationship with the United States”, create so called “Asian Community” and so on and so forth. In its perspective, the ‘ideational policy instrument’, pushed and brought to bear upon by the Chinese top leadership has sown seed for role reversal in Japan’s relationship with traditional foe and friend. This is in stark contrast to ‘ideational policy instruments” ushered earlier when the China-Japan relationship had dipped down to all time low level in 2006. However, the net outcome of the Chinese endeavours as such awaits fruition of a number of other developments in the go.

Japan has been using this ‘ideational policy instruments’ to advance its interests in its territorial dispute over Pinnackle Islands, consisting of five Islets and three barren rocks situated about 300 km west of the main Island of Okinawa and 200 km north-east of Taiwan. Japan reiterates its ‘effective control’ over the Islets, applying ‘discovery-occupation’ principles under the International Laws. China as well relied on ‘ideational policy instruments’. It ushered ‘shelving policy’, taking advantage of provisions of Territorial Waters Law (TLW).

In the use of ‘economic policy instruments’, China’s economic boom and Japan’s economic slump constitute new factor. For long until China acquired a measure of bargain power, Japan Inc had upper hand. A veritable case in point included Japan’s insistence for China committing to live up to the norms and principles of ‘market economy’ in tandem to the demand from several other countries. Japan’s preponderance was again evident when the two sides had come to set up Japan China Investment Promotion Organization (JCIPO) and sign Japan-China Bilateral Investment Treaty (JCBIT). Japan’s foreign direct investment did not flow to China sufficiently until then and it again trickled after the Tiananmen Incident of June 1989. Nevertheless, Japan had then prevailed upon China to sign ‘investment protection agreement’ before concluding third official development assistance (ODA). China’s muting and/ or relative lack of assertiveness then and in subsequent years all through the three distinct waves of investment of Japan Inc testify the point.[xiv]

As China fared creditably better than Japan in facing the global financial crisis and economic down turn, the absolute and/ or relative vulnerability of the Chinese Inc. against the Japanese ‘economic policy instrument’ has receded. Earlier also, as the Chinese economy raced closer to the Japanese economy in its prowess, and the Chinese Inc. started acquiring Japanese assets, the effectiveness Japanese ‘economic policy instrument’ suffered due sharpness.[xv] This is one reason the Japanese politicians and business persons are literally silent on China’s exchange rate regime. In order to meet its commitment at the just concluded Copenhagen climate change summit, China needs Japanese clean energy technology. One has to see how the two come to use their ‘economic policy instrument’ in times to come.

‘Diplomatic policy instruments’ ushered by the two sides carry the side effects of historically cold political relations. China has quite often used anti-Japan card to arouse nationalist card. It has gone to jeopardize several high level exchanges in the past. In the recent past, it was a common sight during the epoch of Junichiro Koizumi.[xvi] The two sides are since conscious. High level exchanges at party and government levels hold place of pride as ‘diplomatic policy instrument’ to deal with mistrusts of different orders.[xvii]

Japan has hitherto not used ‘military policy instruments’ beyond symbolic level to advance its interests. The same holds good in the case of China except one instance in 1978 when it dispatched a hundred armed fishing boats to the vicinity of disputed Islands. Following Hu-Fukuda meeting, the two sides have exchanged several high level meetings of military brass. Besides, there have been port calls of warships. In Nov 2009, the two sides have agreed to have their first ever joint military exercise. This is apparently a case of ushering ‘military policy instrument’ for positive ends. There is much to be seen how China will reconcile its long held apprehension of Japanese ‘militarism’.

Complexion of Regional Economic and Security Architecture in Offing

The development is per se far reaching. There has been US factor in China-Japan relations, which is on down slide following DPJ charting a different course from what LDP has had for most times after the World War II. Japan’s shrugging off US pressure on the issue relocation of US Futenma Marine Corps air base on Okinawa Island is a definite pointer of shifts in scenario.

Chinese initiative to mend relations with Japan has not come a day too soon without calculations. Chinese Communist Party’s (CCP) Leading Group on Foreign Affairs, headed by President Hu, recently decided that Beijing needed to take some initiative in mending fences with Japan. This has followed Chinese think tank earlier deliberating at length and advising the Chinese leadership to ‘shelve or play down differences over political and diplomatic issues such as the “question of history” and set aside sovereignty disputes over the Diaoyu/ Senkaku islands for the next generation, the think tank see an opportunity for China to replace the US and settle all issues including the Taiwan issue in a stride to its advantage.

There was a million dollar question in China achieving its objective in near future. It would call for Tokyo taking “neutral” stance in a possible China-Taiwan military conflict. There are reports that the US and Japan have come to share a “broad-band information chain”, which would provide hard military intelligence on China’s intensions and actions. Notwithstanding, Japan has a special ‘complex’ regarding Taiwan for various reasons including history, culture, economics and strategy. However, there is an imminent possibility of power shift in the Asia Pacific region.

(The writer , Dr. Sheonandan Pandey,is an eminent China analyst based in New Delhi.He can be contacted at

Notes and References

[i] David Pilling, “Beijing Finds Fine Words for its Old Enemy”, Financial Times, Dec 16, 2009

[ii] China banned former Japanese Premier Junichiro Koizumi’s entry into China in protest to his penchant to Yasukuni Shrine, a Japanese war memorial, vilified by China. The relationship entered most dangerous epoch in 2005 when three week long Chinese anti-Japan demonstration against Japan’s bid to secure a permanent seat sought to hurt all Japanese diplomatic and commercial interests in China.

[iii] Beginning in the 17th Century, Japanese society was regulated for over 250 years by Confucian values adopted from China. Buddhism did as well reach Japan from China via Korea. There is then evidence of constant cultural exchanges between Chinese and Japanese monks, scholars, teachers and artists throughout the medieval period. Notwithstanding, quite a few architects of modern China did as well get their education in Japan.

[iv] “Power” is a highly contested concept. This is evident from cross-discipline anthologies on the subject. There are at least three clear dimensions. Espousing a pluralist concept of power, Robert Dahl defined power as “a successful attempt by ‘A’ to do something he would not otherwise do”. Accordingly, of the two actors, on e who sets the agenda- initiates, opposes, vetoes or alters the decision, can be called powerful among the two. Bachrach and Baratz are the two gave out a rather reformist concept of power. Power relations, as they hold, exists only when (1) there is conflict over values, interests or course of action between “A” and “B’ ; (2) “B” complies with “A’s) wishes; and, (3) “B” does so out of fear of getting deprived by “A” of values, interest or course that “B” considered precious. Luke has given the third dimension, where he defines power relation when: “‘A’ exercises power over ‘B’ contrary to the wishes of ‘B’. As apparent, all thee three views give weight to ‘actor’ and not ‘structure’.

[v] State craft has been variously defined as ‘the art of conducting state affairs”. David A. Baldwin prefers it rather as a ‘means for the pursuit of foreign policy goals’. Policy, in turn, is conceptualized as ‘an agent’s line of action with regard to an object’.

[vi] For quite long since World War II, the political and military landscape of Asia Pacific region has witnessed all sets of machinations where Japan acted as staunchest ally of the US while China remained antagonistic element, if not a threat to the critical interests of the US and Japan. Before and after the election success, the Democratic Party of Japan (DPJ) under Yukio Hatoyama has been talking to build a ‘close and equal relation with the United States’, which implies that the US-Japan relation is on veritable anvil of marked change. On the other hand, as Xu Caihou said in the wake of his US visit, the US-China relation is moving towards ’positive direction’.

[vii] Notwithstanding seeds of common heritage in one account or the other, China and Japan have had several battles. In modern times, there were two such incidents. First Sino-Japanese war,(diyice zhongri jiawu zhanzheng) took place in from Aug 1, 1894 to April 17, 1995. Second Sino-Japanese war (dierci zhongri zhanzheng) took place from July 7, 1937 to Sep 9, 1945. Chinese ideologues refer it as War of Resistance against Japan (kangri zhanzheng). In Japan, it is referred as Japan-China War (rizhong zhanzheng). The two have quite a few battles earlier, the most prominent one being the Battle of Baekang in AD 663.

[viii] China and Japan dispute territorial sovereignty of each others on what Japanese call Senkaku and Chinese call Diaoyu Islands. There is then Taiwan factor, in particular due to China’s mistrust of Japan. War reparations, Guanghualiao, chemical weapon issue etc constitute part of the long list of issues.

[ix] China claims that the invading Imperial Japanese Army killed around 300,000 civilians and raped 20,000-80,000 women. The International War Tribunal of Far East puts the casualty to 2, 60,000. The incident is being referred as ‘Massacre of Nanjing’ or ‘Rape of Nanjing’. In Japan, public opinion of the massacre varies, and a few deny the occurrence of the massacre outright. There are yet Japanese scholars who call the death toll as being of military nature, and deny culpability of the occurrence as war crime. There is then the issue of Imperial Japanese Army and Imperial Japanese Navy committing an array of human right abuses against established conventions which included torture of POWs, Unit 731 testing biological weapons among other experiments, use of chemical weapons i.e. red and mustard gas, forced labour, in particular, Koa-in (Japanese Asia Development Board) mobilizing and tormenting over 10 million Chinese civilians for the construction of Burma-Siam Railways, military comfort women (Jun i an fu), and numerous other abuses.

[x] The joint research will address 2,000 years of bilateral exchanges, modern history including the Japanese invasion of China and other Asian countries, and the development of bilateral relations in the 60 years since the end of World War II. The purpose is to “deepen the objective understanding of history and increase mutual understanding.”

[xi] In his August 15, 1995 statement, the former Japanese Prime Minister made unconditional apology and committed to tell ‘younger generation’ about the horror of war.

[xii] “One China” holds different connotation for different countries and agencies. UN Resolution No 2758, which unseated the Republic of China (ROC) and the People’s Republic of China (PRC) in lieu as UN representative of China did not arbiter the sovereignty issue. Beijing holds Taiwan as renegade province on the plea that the PRC succeeded the ROC as the sole government of China. Taiwan finds Beijing’s position on the issue untenable: first, since it meets the statehood criteria of Montevideo Convention on Rights and Duties of States such as a permanent population, a defined territory and a functioning government with the capacity to enter into foreign relations; and, lastly, ever since its founding in 1912, the ROC has never ceded as a state. Neither Japanese occupation nor creation of PRC extinguished ROC’s statehood for even a day.

[xiii] Japan’s basic position on Taiwan’s status is first contained in Article 2 (B) Article 10 of the Sep 8, 1951 San Francisco Peace Treaty. Article 2 (b) says: “Japan renounces all right, title and claim to Formosa and the Pescadores”. Article 10 reads as follows:” For the purposes of the present Treaty, nationals of the Republic of China shall be deemed to include all the inhabitants and former inhabitants of Taiwan (Formosa) and Penghu (the Pescadores) and their descendents who are of the Chinese nationality in accordance with the laws and regulations which have been or may hereafter be enforced by the Republic of China in Taiwan (Formosa) and Penghu (the Pescadores); and juridical persons of the Republic of China shall be deemed to include all those registered under the laws and regulations which have been or may hereafter be enforced by the Republic of China in Taiwan (Formosa) and Penghu (the Pescadores)”. The document thus does not commit to China’s sovereignty over Taiwan. The transfer of administrative rights was instead in favour of the US.

[xiv] Japan Inc’s investments in mainland China have come in three waves. The first wave, which really only tested the water, came in the 1980s. Japanese investors of that period felt that Chinese lacked sufficient buying power to make the investments worthwhile. In 1993-95, as Chinese growth began to accelerate, the second wave arrived. Still, however, Japanese investments remained limited in scope and reach. China was treated as a factory, not a market. Goods made in China by Japanese manufacturers were largely sent to overseas markets. But by the late 1990s, seemingly all of Japan Inc rushed in – the third wave. By 2005, not only giant Japanese multinationals, but also countless small and medium-size firms had arrived. Basically, Japan Inc is now completely hooked on China.

[xv] Notable acquisitions of Japanese assets by the Chinese Inc. included: Shanghai Electric Group acquiring high tech printer manufacturer ‘Akiyama’; Guangdong-based Midea acquiring entire microwave oven division of Sanyo Electric Co; Chinese company 999 forging joint venture with a Japanese pharmaceutical concern; and a lot many other Japanese assets.

[xvi] China froze high-level contact with Japan from 2001 to 2006 during the premiership of Junichiro Koizumi in reaction to his repeated visits to the Yasukuni Shrine.

[xvii] Shinzo abe, who succeeded Junichiro Koizumi made efforts to thaw out tensions by making China his first official diplomatic visit as Japan’s premier. Yasuo Fukuda who succeeded Abe went a step ahead. He made China focus as his priority. Chinese President Hu Jintao went on record to say that Sino-Japanese relations were then at “historic starting point”. There have been a lot of developments including the policy line of the DPJ and its leaders including the Prime Minister Yukio Hatoyama to give forward look to China-Japan diplomatic relations.


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