Essay: East Asian Alliance

Superficial and largely theatrical bickering notwithstanding, Tokyo and Beijing are joined in a tacit East Asian alliance. (This article was first published in the London-based magazine Prospect in May 2004.)

China is now widely seen as the coming superpower. But few even among the
west’s China-watchers understand quite how fast this geopolitical freight train
is approaching. Moreover, most western observers assume that China’s ambitions
are being opposed by its east Asian rival, Japan. In the words of the Economist,
Japan is “standing in the way” of China’s superpower ambitions. As the Japanese
economy is still more than three times larger than China’s, Japan’s supposed
hostility has tended to tranquilise western concerns about the dragon’s rise.

All conventional wisdom to the contrary, however, Japan and China are not
enemies. The two east Asian great powers quietly buried the hatchet 25 years ago
and, at least as far as top policymakers are concerned, their relations have
long been remarkably close and even warm. It was in December 1979 that the
Japanese prime minister, Masayoshi Ohira, paid a historic visit to Beijing to
set the seal on wide-ranging plans for Sino-Japanese co-operation. What started
out as a simple economic partnership has now blossomed into a full-scale
alliance, with an increasingly obvious anti-western-and particularly

Japanese policymakers entered this alliance because they recognised earlier
than their western counterparts how radically the map of world power was likely
to be redrawn in the 21st century. They realised that, thanks to reforms
initiated in the 1970s, the Chinese economy was launched on a path of
sustainable growth. It required little prescience to see that a rise in China’s
military power would follow. As China’s growth has continued to meet and even
surpass Japanese expectations, the Japanese have become convinced that the US
will come off second best in the rivalry with China for global leadership.
Faced with this realisation, Japanese leaders had a choice. They could
obstruct China, sabotaging any hope of reconciliation with their neighbour, or
they could mend fences. All the evidence is that they chose the latter, and that
since 1979 they have been accommodating, and indeed encouraging, China’s
superpower ambitions.

Of course, all this must remain strictly sub rosa. Japanese leaders
understand that any acknowledgment of how close Sino-Japanese relations have
become would risk a backlash from America. After all, Japan has long presented
itself as one of America’s most loyal and devoted allies-and has enjoyed
uniquely generous economic privileges as a result.

Yet the fact that Tokyo and Beijing enjoy a special understanding is
becoming ever harder to conceal. A marked pro-China bias has long been apparent
in key areas of Japanese policy, including trade, technology transfer, foreign
aid and diplomatic co-operation.

On the Chinese side too, there is plenty of evidence that relations have
undergone a sea change. Reciprocating Japan’s preferential trade policy, China
now buys more than twice as much from Japan as from the US. The number of
Chinese students studying in Japan in 2002 was nearly 60,000, a fourfold
increase on the late 1980s. And manifestations of Japanese popular culture-from
Manga comics to karaoke-are now all the rage among young Chinese.

The origins of the Sino-Japanese rapprochement date to the early 1970s. In
the wake of President Richard Nixon’s historic visit to Beijing in 1972,
Japanese officials rushed to build closer trade ties with China. Then in 1978,
in a move almost unnoticed in the west, Japan and China signed a treaty of
friendship. This opened the door to extensive economic negotiations that
culminated in Ohira’s Beijing visit in 1979.

The most obvious change in Japan’s China policy was in official aid. Up to
1978, Japan’s aid to China had been negligible. Then the numbers suddenly
soared. China was the top destination for Japanese aid throughout the 1980s and
in every year but one of the 1990s. (Japan’s worldwide aid budget has exceeded
America’s in most of the period since 1989. In 2000, for instance, it totalled $
13.1bn, nearly 36 per cent more than that of the US.)

Seen from the Chinese side, Japan has long dwarfed all other donor nations.
In the 20 years to 1999, Japanese aid to China totalled YEN 2.7 trillion ($24bn), about two thirds of all China’s bilateral aid in the period. By contrast,
for all the Clinton era talk of a US-China “strategic partnership,” the US has
provided no significant aid to China in more than 50 years.

Perhaps even more important than the scale of Japanese aid is how it has
been applied. In a pattern that will surprise many in the west who have
perceived Japan’s China aid policy as a humanitarian gesture to atone for past
wrongs, little money is intended for humanitarian purposes. Japan does virtually
nothing to alleviate immediate poverty in China. Instead, it has generally
worked with the Beijing government to fund “muscle-building” projects that are
clearly intended to speed China’s emergence as an economic superpower.

In particular, as much as 60 per cent of Japan’s total aid has at times been
devoted to improving China’s transport infrastructure. Despite talk of China as
an economic threat, Japan is clearly intent on providing China’s export
industries with the modern roads, railways, and ports needed to serve world
markets. Not only that, in a reversal of its traditionally protectionist trade
policy, Japan has been providing a major market for China’s exports; so much so
that China, almost alone among manufacturing nations, enjoys large and growing
surpluses on its trade with Japan. In 2002, for instance, China ran a surplus on
visible trade with Japan of $21.9bn.

China can run surpluses on such a scale only because Tokyo has offered
Chinese goods highly preferential access to the Japanese market. The truth is
that Japan’s imports from China rose by 48 per cent in the five years to 2002.
Yet Japan’s imports from the US, ostensibly its closest ally, declined by more
than 23 per cent in that period. The end result is that, in 2002, China
displaced the US as Japan’s largest source of imports. Given that the Chinese
economy is merely an eighth the size of America’s, this is remarkable.

Japan has also favoured China in its tourism policy. Although the Sars
epidemic has disturbed the pattern, the long-term trend shows that China is one
of the fastest growing Japanese tourist destinations. This in turn reflects the
Japanese bureaucracy’s manipulation of airline landing rights and airport slots
(in regulator-ridden Japan, artificially tight limits on airport capacity
substantially shape holiday destinations). In 2000, 1.5m Japanese tourists
visited China, a 41 per cent rise in three years. While Japan’s tourist travel
to China multiplied 3.5 times between 1987 and 2000, travel to Taiwan increased
by less than 5 per cent.

China has also benefited from preferential Japanese technology policies.
Although Japan is famous for jealously guarding its technological knowhow, a
survey by the Japanese management specialist, Tomoyuki Kojima, found that Japan
had provided 28 per cent of all China’s receipts of foreign technology-the
largest share of any nation.

The pattern was set in the early days of the Sino-Japanese rapprochement
when officials agreed a deal to build the vast Baoshan steel mill near Shanghai.
The plant was designed as a replica of Nippon Steel’s Kimitsu mill, then the
world’s most advanced. Other early transfers of important Japanese technology
included two petrochemical complexes in Heilongjiang and Shandong provinces. By
the late 1980s, these plants and others using the latest Japanese technologies
provided 80 per cent of China’s ethylene needs. In 1997, NEC agreed to build a $
1.2bn semiconductor plant in Shanghai. This plant, which enabled China to make
computer chips for the first time, was so advanced that there were fears that it
breached US national security guidelines. Another striking case of technology
transfer was Matsushita’s decision in 2002 to establish a plant to make state of
the art plasma screens, a high-technology growth area in the television

Japan’s most surprising expression of favouritism towards China has been in
diplomacy. Over the years it has extricated China from several diplomatic jams.
In particular, in the wake of the 1989 Tiananmen Square massacre, the Japanese
foreign ministry pulled out all the stops in its damage control efforts in
western capitals.

In the immediate aftermath of the massacre, the ministry rushed out
statements that Japan’s policy towards China remained “unchanged” and that Japan
would not follow the US in imposing economic sanctions on Beijing. Officials
described the massacre as “a Chinese domestic affair.” A similar attitude was
apparent at the Asian Development Bank (effectively an offshoot of the Tokyo
ministry of finance).

Pressured by world opinion, Japanese leaders made a few token gestures of
censure-some aid payments, for instance, were delayed. But as soon as the
political climate seemed opportune, Japan not only restarted its funding
operations but expanded them. According to Greg Austin and Stuart Harris’s Japan
and Greater China
, Japan’s aid to China in the three years after 1989 totalled $
2.37bn, an increase of nearly 38 per cent over the total in the three years to

In 1991, the Japanese prime minister, Toshiki Kaifu, paid an official visit
to China-the first post-Tiananmen visit by any leader of an advanced nation. It
was important not only in itself but also for its ice-breaking function in
facilitating a visit a little later by John Major, then British prime minister.

Japan’s helpful attitude did not go unrewarded. The CIA recorded that China
imported more Japanese goods as a reward for Japan’s post-Tiananmen diplomatic
help. Figures quoted by the noted China-watcher James Mann in his book About
showed that Japanese companies increased their share of many key Chinese
markets at the expense of US and European rivals in the early 1990s.
In contrast, because of acute trade tensions at that time, Japan’s relations
with the US and Europe had hit rock bottom. Why was Japan willing to expend so
much of its scarce political capital “coddling tyrants”? It is hard to escape
the conclusion that building up China was a higher priority for Tokyo than
maintaining equable relations with the west.

This was not the first time that Japan had risked its diplomatic capital in
support of the new China. In the first shaky years of the Deng Xiaoping regime
in the late 1970s, Japan used its aid money to prop it up. Japanese officials
justified this to Americans and Europeans by portraying Deng as a pro-western
reformist. As subsequent events made clear, notably Tiananmen Square, this
should have been taken with a pinch of salt. For Japanese officials, Deng’s
attitude to the west was beside the point. What they saw in him was a leader who
would embrace the east Asian-in other words, Japanese-economic model.
Japan’s pattern of diplomatic helpfulness was established during the
earliest years of Japan’s rapprochement with China. Henry Kissinger records that
Mao Zedong advised the US to maintain good relations with Japan. Tokyo
reciprocated by downgrading diplomatic relations with Taiwan before Washington
did, paving the way for China to take Taiwan’s permanent seat on the UN security
council in 1971.

More recently, Japan’s favourable attitude to China’s bid to join the WTO
helped to quell the concerns of US policymakers. After all, they reasoned, if
Japan, which they took to have the most to lose from China’s rise, saw no reason
to press China harder on the terms of membership, why should the US?
Robert Novick, a senior US trade negotiator, recounts that the Japanese sat
back and left the Americans to play the tough cops. Novick confesses to having
been surprised at Japan’s attitude, given its history of bad blood with China.
“I can’t remember the Japanese being visible in the talks,” he says.

Perhaps Japan’s biggest favour was its conspicuous promptness in granting
final approval to China’s WTO entry in July 1999-four months before the US and
nearly a year before the EU. By setting such a “good example,” Japan seems to
have been intent on pressuring the Americans and Europeans to acquiesce to a
distinctly inadequate deal.

Japan’s diplomatic support for China’s economic expansionism is obliquely
apparent in countless other ways. A case in point is the behaviour of
pro-Japanese opinion leaders in the US establishment, loosely known as the
“chrysanthemum club.” Virtually without exception, they have taken a strongly
pro-China position on trade and diplomatic issues. A key figure here is the
Clinton administration’s last ambassador to Tokyo, Thomas Foley, long considered
one of the most committed proponents of Japan’s interests in the US. As leader
of the House of Representatives, he also played an important role in persuading
Clinton to grant China “most favoured nation” status, and to renounce the former
policy of making its access to the US market conditional on meeting minimum
human rights standards.

Given the wealth of evidence that Japan is supporting China’s superpower
ambitions, a question remains: if the two nations are so friendly, why is this
not reflected in their rhetoric? Part of the answer is that rhetoric has much
less meaning in east Asia than it does in the west. East Asians say what they
think is expected of them-and in the case of east Asian leaders that means
paying lip service to positions established by their predecessors decades ago.
Such rhetoric placates important domestic interest groups. Moreover,
perpetuating the impression of sullen hostility between the two nations also has
the crucial advantage of disguising from the US the depth of their co-operation.

But there is more than a hint of humbug in the extravagant denunciations of
Japanese military aggression that sometimes emanate from Beijing. When it
counts, Chinese leaders stand on Japan’s side-even against the interests of
their own people. Specifically, they continue to debar Chinese citizens from
pursuing claims against Japan for compensation in respect of wartime atrocities
that are believed to have claimed at least 10m victims in China. Japan’s
compensation to victims of all nationalities represents less than 5 per cent of
the sum Germany has paid to Jews and other victims of the Nazis.

One of the more contrived manifestations of Sino-Japanese hostility concerns
Japan’s remembrance of its war dead. The principal form this remembrance takes
is visits by Japanese politicians to the Yasukuni shrine in Tokyo. The shrine is
notorious for the fact that among the 2.5m people it commemorates are war
criminals who visited terrible atrocities on millions of Chinese citizens in the
1930s and 1940s.

The Chinese press is regularly outraged by the Yasukuni visits. But it is
also possible to see the visits as part of an elaborate smokescreen to deflect
attention from the true closeness of Tokyo’s relations with Beijing. The visits
first became a flashpoint at a crucial time in Sino-Japanese relations in April
1979. Just a few weeks previously, Deng Xiaoping had paid a historic visit to
Tokyo. He had evidently been warmly received-so much so that it was felt on both
sides that some contrivance was needed to hide the true closeness of
Sino-Japanese relations. The Japanese authorities found the solution in a leak
to the press: the previously unexceptionable Yasukuni shrine was now officially
said to commemorate 14 top Japanese war criminals. Prime Minister Ohira then
announced that he planned to visit the shrine regardless. In contrast to Deng’s
epochal visit to Tokyo, which received little attention in the western press,
Ohira’s Yasukuni outing made the front pages worldwide. The story served the
interests of Deng and other Chinese leaders by allowing them to sound suitably
ferocious in condemning Tokyo-while at the same time blocking American lawyers
from helping Chinese citizens pursue war claims against Japan.

Empty posturing is also apparent in other much publicised Sino-Japanese
spats, such as the cluster of bilateral Japan-China agricultural disputes that
broke out in 2001. The goods concerned-long-stem onions, shiitake mushrooms, and
tatami rushes-accounted for less than 0.2 per cent of bilateral trade. And while
Chinese officials were talking up the prospects of a trade war, trade between
the two nations was growing by more than 20 per cent a year.

Another recent scandal that allegedly damaged Sino-Japanese relations
centred on a three-day orgy by Japanese executives in a southern Chinese hotel
in September 2003. A party of employees of a Japanese construction company
bought the services of 500 Chinese prostitutes who, at various times, would
congregate in the public spaces of the hotel in full view of other guests.

A spokesman for the Chinese foreign ministry described the episode as “an
extremely odious criminal case.” Reflecting the official stance,
government-controlled newspapers aired extravagant charges that the Japanese had
planned the orgy to humiliate the Chinese people, since it coincided with the
anniversary of Japan’s 1931 attack on Chinese Manchuria.

But were Chinese officials really outraged? Foreigners’ hotels in China are
notorious for the brazenness with which prostitutes are permitted to proposition
guests. This is not only officially tolerated; it is considered a useful
contribution to foreign exchange receipts. The episode was reported in the media
of both nations in a highly artificial way. In Chinese press reports-and even in
denunciations in China’s internet chatrooms-the company’s identity was carefully
withheld. Indeed, as far as Chinese reports were concerned, the men were simply
“Japanese tourists.” The fact that they were on a company jaunt came out in
subsequent Japanese reports-but the Japanese press too withheld the company’s

Had the Chinese been so minded they could have gravely punished the company
by releasing its name. If, as seems certain, the company is a major one with
global operations, it would stand to suffer significant losses of business in
the west, particularly in the US.

None of this is to suggest that the Chinese do not remember the past. They
do. But history is full of cases where former enemies find it within themselves
to reconcile. A long pre-1945 history of military conflict has not prevented
France and Germany from co-operating closely. Then there is America’s own
experience with Japan. In the space of a couple of years in the 1940s, Americans
switched from demonising the Japanese to treating them as close allies.
The Japanese and the Chinese are pragmatic people who rarely let history get
in the way of good business. And there is no question that, for both sides, the
alliance is good business. The two economies are highly complementary: Japan’s
ultra capital-intensive manufacturers supply the sophisticated components and
complex equipment needed by China’s labour-intensive factories. As the resulting
consumer goods are exported mainly to the west, the relationship is a win-win in
trade terms for both nations. For Japan in particular, the benefits are far
larger than is generally understood: it has an enormous interest in China’s
exporting success. Thus although China’s exports to the US now exceed even Japan
‘s, the widely voiced conclusion that China’s success has come at Japan’s
expense is misguided. The truth is that a large proportion of the high-tech
components and materials used in China’s exports originates in Japan. As David
Pilling of the Financial Times has reported, China accounted for nearly 80 per
cent of the increase in Japan’s exports in 2003. In effect, much of what Japan
exports to the US these days goes through China. This helps explain a crucial
fact: Japan’s aggregate current account surpluses with the world as a whole are
three to four times greater than China’s.

Short-term economic considerations are not the decisive factor in Japan’s
changing diplomatic priorities. Japan’s preference for a world led by China
rather than by the US is based on culture. Though many westerners imagine
otherwise, Japan is deeply uncomfortable with many aspects of western culture.
Although Japan presents a thoroughly westernised face to the world, this
reflects no sincere acceptance of Judeo-Christian values.

Japan and China share Confucian and Buddhist traditions. Both are ruled by a
traditional east Asian ethos of father knows best. Citizens are saddled with a
heavy burden of duties while being denied many rights taken for granted in the

Because of their common cultural heritage, the Japanese and Chinese think
alike in economic matters, too. Officials in both nations have huge powers to
direct savings flows, build export industries, and generally shape economic
outcomes. This means the two nations find themselves making common cause in
opposing American efforts to reshape other nations’ economies along US lines.
Human rights is another area in which a common cultural heritage has helped
align the two nations’ diplomatic interests. Japanese and Chinese leaders are at
one in viewing a nation’s human rights policies as a purely internal affair.
Thus Japan does not try to dictate China’s human rights policies, any more than
China tries to dictate Japan’s.

All this should be understood in the context of the well known xenophobia
common to Japan and China. Both nations believe that good fences make good
neighbours. Since the second world war this has inclined them to a keen respect
for national sovereignty. By the same token, they resent the universalist nature
of America’s agenda on political, economic and social issues. This resentment
explains why Japan and China are now quietly looking forward to a day when the
US-led world order will no longer dominate.

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