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STOPPING THE FREE-FALL IMPLICATIONS OF SINO- JAPANESE RIVALRY FOR REGIONAL STABILITY AND CANADAIAN INTERESTS Jing-Dong Yuan Centre for Non-Proliferation Studies Monterey Institute of International Studies Prepared for the International Security Research and Outreach Programme International Security Bureau March 2007 PREFACE The International Security Research and Outreach Programme (ISROP) is located within the Continental Defence Relations Division of the International Security Bureau. ISROP’s mandate is to provide the Department of Foreign Affairs and International Trade (DFAIT) with timely, high quality policy relevant research that will inform and support the development of Canada’s international security policy in the areas of North American, regional and multilateral security and defence cooperation, non-proliferation (nuclear and non-nuclear), arms control and disarmament. The current ISROP research themes can be found at : www.dfait-maeci.gc.ca/ arms/isrop/menu-en.asp. ISROP regularly commissions research to support Canadian officials by drawing on its think-tank and academic networks in Canada and abroad. The following report, Stopping The Free-Fall: Implications Of Sino-Japanese Rivalry For Regional Stability And Canadian Interests, is an example of such contract research. DFAIT wishes to acknowledge the work performed under contract by Dr. Jing-dong Yuan. Disclaimer: The views and positions expressed in this report are solely those of the author and do not necessarily reflect the views of the Department of Foreign Affairs and International Trade or the Government of Canada. The report is in its original language. PRÉAMBULE Le Programme de recherche et d'information dans le domaine de la sécurité internationale (PRISI) fait partie de la Direction de la défense continentale, qui relève elle-même de la Direction générale de la sécurité internationale. Il a pour mandat de fournir au ministère des Affaires étrangères et du Commerce international (MAECI), en temps utile, des études stratégiques de haute qualité et pertinentes qui permettent d’orienter et de soutenir l’élaboration de la politique canadienne de sécurité internationale concernant l’Amérique du Nord, la coopération régionale et multilatérale en matière de sécurité et de défense, ainsi que la non-prolifération (nucléaire et non nucléaire), le contrôle des armements et le désarmement. Les thèmes de recherches actuels du Programme de recherche et d’information dans le domaine de la sécurité internationale (PRISI) figurent à l’adresse suivante : www.dfait-maeci.gc.ca/arms/isrop/menu-fr.asp Le PRISI commande régulièrement des études pour faciliter le travail des fonctionnaires canadiens, en faisant appel à ses réseaux de spécialistes et d’universitaires au Canada et à l’étranger. Le rapport suivant, intitulé Stopping The Free-Fall: Implications Of Sino- Japanese Rivalry For Regional Stability And Canadian Interests, est un exemple de ce type d’étude. Le MAECI souhaite reconnaître le travail exécuté à contrat par le Dr. Jing-Don- Yuan Déni de responsabilité : Les vues et opinions exprimées dans le présent rapport appartiennent exclusivement à l’auteur, et ne reflètent pas nécessairement celles du ministère des Affaires étrangères et du Commerce international, ou celles du gouvernement du Canada. Le rapport est présenté dans la langue de rédaction. EXECUTIVE SUMMARY This report discusses developments in Sino-Japanese relations since the end of the Cold War and analyses some of the underlining causes of mistrust, misunderstanding, hostility, and emerging rivalry between these two major Asia powers. It presents a preliminary assessment of the key issues and controversies ranging from Chinese views on the evolving U.S.-Japan military alliance, Japan’s aspiration to become a normal state and its pursuit of greater international role and enhancement of military capabilities, to historical legacies and rising nationalism in both countries, unresolved territorial disputes and competition for resources, and growing Japan-Taiwan ties. The report argues that the end of the Cold War, the changing international security environment in East Asia, domestic politics and leadership transition in both China and Japan, especially China’s rise as a major power, present serious challenges for the regional balance of power and the need for adaptation and adjustments to the power shift and transformation. This dramatic shift in the power balance also leads to worst-case interpretations by both Beijing and Tokyo of the other’s intentions and behavior. Under such circumstances, the old wounds of history are further aggravated by new nationalism, personality, and changing domestic foreign policy making processes where societal pressures impose significant constraints on conciliatory gestures and “new thinking” on managing bilateral relations. The report also reviews and evaluates the validity of limited confidence building measures and security dialogue between Beijing and Tokyo and concludes that their utility is constrained by the overall political relationship between the two countries. At the same time, the report also notes that growing economic interdependence, the recognition that continued deterioration of relations serves neither side’s interests; consequently, the resolve of Chinese and Japanese leaders in the post-Koizumi era to mend fences and promote common interests at least for now have prevented the free fall in Asia’s most important bilateral relationship. Sino-Japanese relations have important implications for Canada’s interests. Canada has long maintained good relationships with both China and Japan for economic and politico-security reasons. Japan has been a traditional trading partner of Canada while China’s phenomenal growth over the last quarter century has drawn significant interest from Canadian businesses. Ottawa made significant efforts in promoting its ties with Asian Pacific countries in the 1990s, as well as participated in and introduced multilateral security institution-building. In this context, the continuing free fall of the Sino-Japanese relationship could seriously affect Canadian interests in the region. Canada remains a “stakeholder” in the future developments in Sino-Japanese relations for at least three reasons: • China’s rise and its future direction affect both regional peace and stability and the geo-strategic landscape at the global level. China has become an important trading partner for Canada and Canadian “soft power” in engaging and encouraging China to adopt a multilateral approach to regional security and good governance has achieved important results. Ottawa should continue to play an active role in engaging Beijing to promote a disarmament agenda and encourage military transparency so that China’s emergence could be better integrated into the existing international norms and frameworks, values a middle power such as Canada holds dear. • Japan and Canada share many common values and interests. Both are members of the G-8 and OECD, and are concerned with emerging non-traditional security challenges, human security, and international peacekeeping. However, Ottawa and Tokyo have placed different emphasis and have different priorities due to their respective threat perceptions, geography and alliance commitments. • Continued Sino-Japanese rivalry has serious implications for Canadian interests. Prolonged instability and deteriorating security in that region would negatively affect Canada’s interests. Intensified disputes leading to militarized conflicts between China and Japan could result in a number of negative developments. There is the potential for an arms race. Japan strives for greater military capabilities, including nuclear and missile capabilities as Tokyo’s confidence in U.S. nuclear umbrella and the alliance protection wanes. Canada revitalized its diplomatic activism in the early 1990s when it introduced concepts of cooperative security and multilateralism to the region and played an active role in helping to develop the region’s multilateral security institution. Given the stakes involved, Ottawa should: • develop and introduce concepts and frameworks that could re-energize the North Pacific security dialogue that could attract both China and Japan, in addition to the region’s other key players, to discuss security mechanisms that could prevent incidents, respond to crises, and seek solutions to disputes; • engage in Track-II activities and re-instate the North Pacific Working Group within the CSCAP framework; • avail itself of the CBM and arms control expertise to engage Chinese and Japanese officials and analysts in discussing, refining, and developing mechanisms that promote