Can Ja­pan, China co­op­er­ate over in­fra­struc­ture?

The China Post - - COMMENTARY -

Will Ja­pan and China be able to boost co­op­er­a­tion to aid eco­nomic devel­op­ment in Asia?

The Ja­pan-China Fi­nance Dia­logue was held for the first time in about three years in Bei­jing on Satur­day, with the two na­tions’ fi­nance min­is­ters and other of­fi­cials in at­ten­dance. In the meet­ing, an ac­cord was reached to push for the im­prove­ment of Asia’s in­fra­struc­ture. The two sides also agreed to hold an­other round of fi­nance talks in Tokyo next year.

Taro Aso, deputy prime min­is­ter and fi­nance min­is­ter, stressed at the meet­ing’s out­set that he be­lieves the dia­logue “will help ad­vance the strate­gic and mu­tu­ally ben­e­fi­cial re­la­tion­ship” be­tween the two coun­tries.

The dia­logue had been brought to a halt by tense bi­lat­eral re­la­tions over the Senkaku Is­lands and other mat­ters. The re­sump­tion of fi­nance talks be­tween Ja­pan and China — de­spite the host of pending po­lit­i­cal and se­cu­rity is­sues be­tween them — should be con­sid­ered sig­nif­i­cant.

Re­gard­ing the Bei­jing-led Asian In­fra­struc­ture In­vest­ment Bank, which has been po­si­tioned as a core fi­nan­cial in­sti­tu­tion for boost­ing the re­gion’s so­cial over­head cap­i­tal, Chi­nese main­land fi­nance chief Lou Ji­wei said in the meet­ing that the AIIB “has been wel­comed by the in­ter­na­tional com­mu­nity.”

Ac­cord­ing to one es­ti­mate, Asia re­quires in­fra­struc­ture in­vest­ment worth an an­nual US$800 bil­lion. There is no deny­ing that such mas­sive fund­ing needs can­not be fully met by ex­ist­ing fi­nanc­ing in­sti­tu­tions, such as the Asian Devel­op­ment Bank, alone.

The num­ber of par­tic­i­pants in the AIIB stands at 57, in­clud­ing Euro­pean coun­tries. But Ja­pan and the United States have re­frained from join­ing the new in­vest­ment bank.

Dur­ing the re­cent meet­ing, the Chi­nese side again called for Ja­pan’s par­tic­i­pa­tion, not­ing that “the door is open.” China is said to be seek­ing Ja­pan’s membership to en­hance the bank’s trust­wor­thi­ness in the mar­ket and gain man­age­rial ex­per­tise in run­ning a global fi­nan­cial in­sti­tu­tion.

Ex­plor­ing the Main­land’s True

In­tent

Main­land China will ex­ert a pre­dom­i­nant in­flu­ence over the bank, as it will hold nearly 30 per­cent of shares. Thus con­cerns re­main as to whether fair­ness and trans­parency in its op­er­a­tions can be en­sured.

Is there no fear that lax loan­screen­ing pro­cesses will be­come ram­pant among fund­ing projects deemed prof­itable for main­land China? Won’t the in­sti­tu­tion sup­port devel­op­ment projects that could have harm­ful ef­fects on the en­vi­ron­ment or sup­press hu­man rights? The build­ing of ef­fec­tive Ja­pan-China co­op­er­a­tive ties for the im­prove­ment of Asia’s in­fra- struc­ture — much less Ja­pan’s par­tic­i­pa­tion in the AIIB — is un­likely as long as th­ese anx­i­eties are not dis­pelled.

In the lat­est fi­nance talks, the Ja­panese side ex­plained its plans to of­fer US$110 bil­lion to help fund in­fra­struc­ture projects in Asia over a five-year pe­riod through col­lab­o­ra­tion with the ADB and other chan­nels.

Ja­pan’s idea to foster “high­qual­ity” in­fra­struc­ture, namely by mak­ing use of its ad­vanced tech­no­log­i­cal ca­pa­bil­i­ties to build struc­tures that are more durable and oth­er­wise su­pe­rior, is right and ap­pro­pri­ate. This stance can work as a coun­ter­weight to the AIIB. Such an ap­proach should be steadily im­ple­mented.

Prior to the fi­nance talks, Aso met with Zhang Gaoli, who tops the list of vice premiers.

In the talks, Zhang avoided dwelling upon is­sues re­lated to his­tor­i­cal per­cep­tions, say­ing only that he hopes to see Ja­pan “con­front his­tory and work to nor­mal­ize bi­lat­eral re­la­tions.” It seems China is now plac­ing pri­or­ity on en­hanc­ing co­op­er­a­tion with Ja­pan in the eco­nomic sphere.

Does the ad­min­is­tra­tion of main­land China leader Xi Jin­ping earnestly want to bet­ter Ja­pan-China re­la­tions? Ja­pan must be ex­tremely care­ful in this re­spect. This is an ed­i­to­rial pub­lished by The Yomi­uri Shimbun on June 8.

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