Ja­pan’s Abe pur­sues China thaw as US-Bei­jing ties in deep freeze

Gulf Times Business - - BUSINESS -

While US Pres­i­dent Don­ald Trump ap­pears to wage a trade “Cold War” on China, Ja­panese Prime Min­is­ter Shinzo Abe will pro­mote a thaw with Bei­jing at a sum­mit this month where busi­ness ties will be in the spot­light.

A tough line on China helped Abe to re­gain of­fice in 2012 dur­ing a row over tiny East China Sea isles that put ties in a deep chill.

Now, Abe hopes to build on a rap­proche­ment wel­comed by Bei­jing, which is locked in an es­ca­lat­ing trade war with Wash­ing­ton.

Ja­pan shares US con­cerns about Bei­jing’s mar­itime as­sertive­ness and is ex­tend­ing its mil­i­tary reach to counter China. Ja­panese firms worry also about Chi­nese vi­o­la­tions of in­tel­lec­tual prop­erty rights and tech­nol­ogy theft.

Still, busi­ness ties with China, the world’s sec­ond largest econ­omy, are vi­tal for Ja­pan.

“To en­sure that Ja­pan has sus­tain­able eco­nomic growth, you can­not ig­nore eco­nomic re­la­tions with China,” said a Ja­panese for­eign min­istry of­fi­cial, who spoke on con­di­tion of anonymity.

Abe has met Chi­nese Pres­i­dent Xi Jin­ping many times since their first chilly con­ver­sa­tion in 2014 on the side­lines of an Asia lead­ers’ sum­mit in Bei­jing.

Abe’s Oc­to­ber 26 meet­ing with Xi, of­fi­cially con­firmed yes­ter­day, will be the first full-scale Sino-Ja­panese sum­mit since 2011. Both sides hope more mu­tual vis­its will fol­low.

The thaw has been linked to a shift in Bei­jing’s diplo­macy since late 2017 and in­creas­ing US-China fric­tion over trade.

Ja­panese firms want to see ties nor­malised so they can com­pete with US and Euro­pean ri­vals.

An ex­ec­u­tive at au­tomaker Toy­ota, speaking on con­di­tion of anonymity, said the mood had changed from the “China risk” theme of the past few years.”The sen­ti­ment...is shift­ing very fast, lead­ing to more for us to do in China,” he said.

China is Ja­pan’s big­gest trad­ing part­ner. Ja­pan is China’s sec­ond largest trad­ing part­ner, af­ter the United States, and fourth big­gest in­vestor.

Ja­pan’s di­rect in­vest­ment in China rose in 2017 for the first time in five years, a trend that con­tin­ued in the first eight months of 2018, the Ja­pan Ex­ter­nal Trade Or­gan­i­sa­tion said in a re­port that also flagged grow­ing Ja­panese ex­ports to China. A high­light of Abe’s visit is ex­pected to be a fo­rum at­tended by up to 1,000 ex­ec­u­tives and trade of­fi­cials to dis­cuss China-Ja­pan eco­nomic co­op­er­a­tion in third coun­tries.

China ex­pects Abe to make a rel­a­tively sup­port­ive state­ment on its Belt and Road ini­tia­tive, a ve­hi­cle to fund and build global trans­port and trade links in more than 60 coun­tries.

“We re­ally hope that Ja­pan on this is­sue is not in vi­cious com­pe­ti­tion with China,” said Wang Yi­wei of Ren­min Univer­sity in Bei­jing. “It could be pos­i­tive com­pe­ti­tion or even co­op­er­a­tion.”

Belt and Road has come un­der fire for sad­dling poor na­tions with un­sus­tain­able debt through big projects that are not eco­nom­i­cally vi­able. Bei­jing re­jects the crit­i­cism.

Ja­panese par­tic­i­pa­tion could help Belt and Road’s im­age and al­lay the fears of debtor na­tions, ex­perts and of­fi­cials said.

Abe may, how­ever, shun the Belt and Road la­bel. Ja­panese de­fence of­fi­cials are wary of its mil­i­tary im­pli­ca­tions, and Tokyo is push­ing its Free and Open Pa­cific Strat­egy to pro­mote free trade and in­fras­truc­ture across Asia, Africa and the Mid­dle East.

Ja­pan wants to en­sure joint projects with China are trans­par­ent, open, eco­nom­i­cally vi­able and fis­cally sound for debtor coun­tries, of­fi­cials said.

“This is not ‘sup­port’ for Belt and Road. We will not ease global stan­dards,” a Ja­panese trade of­fi­cial said.

Sev­eral non-bind­ing agree­ments, known as MoUs, are ex­pected from the fo­rum, in­clud­ing one on a project in Thai­land, a Ja­panese source in­volved in the fo­rum plan­ning said.

Such agree­ments “would be a sym­bol of im­prov­ing ties,” said Koji Sako, a se­nior econ­o­mist at Mizuho Re­search In­sti­tute.

Ja­pan is in­volved in ef­forts to forge a Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship among 16 na­tions in­clud­ing China, as well as in talks on a China-Ja­panSouth Korea free trade pact.

Tokyo would thus balk at the sort of “poi­son pill” found in a new US-CanadaMex­ico free trade pact, Ja­panese of­fi­cials said. The pro­vi­sion ef­fec­tively gives Wash­ing­ton veto power over any free trade deal with China.

US Com­merce Sec­re­tary Wil­bur Ross has said they might seek a sim­i­lar clause with other coun­tries. Abe and Trump have agreed to start talks on a new Ja­pan-US trade deal that Wash­ing­ton hopes will cut its trade deficit, while Tokyo aims to avert higher tar­iffs on its auto ex­ports.

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