The Economy is not Enough

Will increasing economic interdependence between Japan and China increase or reduce the risk of conflict?

The conventional liberal wisdom is the fact that economic interdependence between states improves peaceful relations — as in the saying attributed to the early 19th century France economist Frederic Bastiat: ‘if goods don’t cross borders, armies will’. However, experts have pointed out that on the event of World War II Germany and also the United Kingdom were each other’s major trading partners.

The particular patterns of Sino–Japanese relations also pose a possible problem to this theory. For a lengthy period, from the 17th century to the mid-19th century, trade in between China and Japan was limited to occasional visits by Chinese merchants to the port of Nagasaki. In addition, there were no wars. Then, not long following both China and Japan were ‘opened’ — China with the Very first Opium War in 1839 as well as Japan with gunboat diplomacy in the 1850s — the actual Sino–Japanese War of 1894–Ninety five broke out.

From the late-19th to the mid-20th hundred years Japanese aggression towards The far east was virtually uninterrupted: the Sino–Japanese War, military intrusion over the Boxer Uprising (Nineteen hundred), fighting on Chinese soil during the Russo–Japanese War (1904–05), annexing the actual erstwhile Chinese tributary state of South korea (1910), the Twenty-One Demands (1915), the profession of Manchuria (1931), the Rape of Nanking (1937) and the outbreak of Pacific War (1937–45). In the process, Asia established a substantial economic presence in China, especially in the northeast.

Then for three decades — from the Communist Revolution in 1949 to the start of the reform program in 1979 — China closed itself removed from the rest of the world economy there was very limited trade between China and Japan; nor was there any equipped conflict. Then, following Nixon’utes surprise visit to Beijing in 1972, Japanese Prime Minister Kakuei Tanaka hurried to Beijing, diplomatic relations had been renewed, trade resumed and Japanese aid flowed in order to China.

As noises began to spread in the 1980s that China’utes new economic program celebrated potential major transformations and opportunities, Japanese investors appeared unwilling to take a chance on China. The Japanese did not see the rise of China coming and they’re still reeling from the surprise.

To go forward, we first need to retrace our steps.

As Rana Mitter lately documented in China’s Battle with Japan, 1937–1945: The Struggle for Survival, historians possess grossly misrepresented, if not destroyed, China’s role in aiding the actual defeat of Japan within World War II. This reflects, among other things, in the prevalent view among Japanese that defeat was at the hands of the Americans, not really the Chinese!

American occupation policy underwent a dramatic 180-degree change after the Communist Celebration took control in China and the Cold War settled on the world. Japan metamorphosed from defeated enemy to pampered protégé. Inside a large part thanks to all the American support — massive transfers associated with technology, setting the value of the actual yen at a low, highly competitive exchange rate (360 yen to the US buck), opening of the US market to Japanese goods — the Japanese economy rose rapidly, engendering the ‘economic miracle’ from the 1960s. Within a dozen years after the war, it had become the world’s second biggest economy. During this time, the Chinese continued to be dirt-poor.

Throughout the actual 1980s, the Japanese economy increased rapidly and appeared to be poised to surpass the United States. After that, as the Japanese economy tanked into its lost decades — in stark contrast to China’s inexorable rise — economic interdependence intensified. China and Japan became major trading partners. Exports to The far east drove what meagre growth Japan was able to generate. Japoneses direct investments surged and Japanese technology played a critical role in the development and competitiveness of China’s worldwide supply chains. Most recently, with the advantage of the declining value of the yen, Japan has turned into a major destination for Chinese tourists.

While the mutual benefits based on economic interdependence would seem to indicate that is well, this is far from the case. There are disputes galore, including over territory (the actual Senkaku/Diaoyu islands), over history, and also over Japanese Prime Minister Shinzo Abe’s defence policy. In a Pew Survey upon Global Views of China, the Japanese stand out as having the most ‘unfavourable’ views of China at 89 percent. The second is Vietnam with 74 percent ‘unfavourable’, as the figure is much lower among China’s other Asian neighbours: 37 percent for South Korea, 32 percent for Indian, 22 percent for Indonesia and 17 percent for Malaysia. For the US, it is 54 %.

All this raises several crucial questions. Can economic interdependence erase or even attenuate such fundamental antagonisms? Are long-term sustainable economic relationships possible with people you mistrust? Because China’s economy seems to head for choppy waters, might Beijing be tempted to encourage popular venom towards Japan to deflect attention from domestic ills?

More fundamentally, can economic pragmatism trump nationalist fervour? The lessons from history in respect to this question are not encouraging. Economic interdependence is not enough: measures for confidence-building and conversation are urgently required.

Economic scarves won’t ensure peace between China and Japan is actually republished with permission from Eastern Asia Forum