5 Sino-Japanese Relations: Neither Confrontation Nor Partnership

Throughout much of modern history, the way that China and have related to one another has fundamentally shaped their respective regional roles and the contours of the East Asian international system. The Meiji Restoration, spawned by the Western intrusion, marked the beginning of Japan's effort to reconstruct a new national identity that was situated somewhere between Asia and the West. From the late Tokugawa period to the Meiji (1868-1912) and Taisho (1912-1926) periods through to the 1940s, the intellectual discourse centred upon how to reconstruct Japan's relationship with China and how Japan could emerge from the shadow of the crumbling Chinese empire. The critical issue for Japanese intellectuals was how to reconstruct China and Confucianism in a way that justified the devolution of regional leadership to Japan, 'the new possessor and authority of the spirit or essence of toyo' (East Asia). 1 During the Meiji period, China and the Chinese were described in the popular Japanese press as 'the epitome of weakness, selfishness, inefficiency, disorganization, and cowardice'.2 A pioneer of East Asian history (toyoshz), Shiratori Kurakichi, argued that China had 'fallen into decay because of historical circumstances'.3 A leading sinologist, Naito Konan, claimed that since 'the Way of the Sages in contemporary times should involve reform and reconstruction', the stagnant and decaying China could no longer claim to be the centre of Confucianism. Naito concluded that the classical culture of the Yellow River had 'crossed the China sea to Japan, where it found fertile soil in a setting that provided ancillary strengths of organ• ization and direction'.4 This image of China set the stage for Fuku• zawa Yukichi's Datsu-A-ron (casting-off Asia thesis), preparing Japan militarily to invade China and build its Sphere of Coprosperity in East Asia. The phenomenal 'Asian economic miracle' over the past three decades or so has started to shift the centre of gravity of the global political economy from the Atlantic to the Pacific, prompting many to

78

Y. Deng, Promoting Asia-Pacific Economic Cooperation © Yong Deng 1997 Sino-Japanese Relations 79 predict the dawning of a 'Pacific century'. But for some the denoue• ment of power rivalry between the Atlantic and the Pacific will be largely determined by how China and Japan work out their relation• ship. According to James Kurth, If Japan and China should again come into conflict,.&thinsp .. the outcome of the tension between the Atlantic alliance and the Pacific Basin paradigm is likely to be a descent into chaos and a journey into the unknown, although, of course, not necessarily in a way like the Pacific War. Conversely, if Japan and China should come into cooperation, even more than they have in the past decade, the outcome of the tension between the Atlantic Alliance and the Pacific Basin paradigms is likely to be the gradual waning of the first and waxing of the second, the dialect of yin and yang. 5 Arthur Cotterell concurs with Kurth by asserting that 'ultimately relations between the Chinese and the Japanese are the factor which will determine the future of East Asia'. 6 This chapter examines the dyadic relationship in the context of efforts towards regional economic cooperation. Two premises under• lie the analysis. First, the state of the Sino-Japanese relationship is a key factor in their respective stances on regional cooperation. Second, the pattern of their dyadic interaction greatly shapes the pace and structure of Asia-Pacific multilateral arrangements.

FROM THE LATE 1960s TO THE LATE 1980s

The outbreak of the Korean War in 1950 prompted the United States to incorporate Japan into its Asian containment strategy against communist expansion. Despite protests by China, the latter was not involved in the conclusion of the San Francisco Peace Treaty which granted Japan freedom from US occupation. The US-Japan Security Treaty, signed on the same day (8 September 1951), was perceived by the Chinese as specifically directed against China. 7 But as Ogata Sadako wrote in 1965, 'Not many Japanese regard Commun• ist China as a "cold war" enemy, nor do they accept the "China• Communism-enemy" equation that is so widely held in the United States. '8 Archival research has revealed that Prime Minister Yoshida had wished to recognize China instead of Taiwan. According to Chalmers Johnson, 'The "Yoshida letter" of December 24, 1951, promising that Japan would recognize the Nationalist government 80 Promoting Asia-Pacific Economic Cooperation on Taiwan, was written not by Yoshida but by Dulles [the chief American peace-treaty negotiator] and forced on the Japanese prime minister.'9 Nevertheless, under US pressure the Yoshida administra• tion had to recognize the nationalist regime in Taiwan as the sole legitimate government of China. Private diplomacy, however, survived the early period of the Cold War despite the 'bamboo curtain' that fell between China and Japan. On 1 June 1952 the first postwar private trade accord was reached, with both sides agreeing that by the end of the year bilateral imports and exports should amount to £ 30 million sterling for each side. Nonetheless, in order to enforce economic sanctions on China the US and Japanese governments intervened to block the implementa• tion of the agreement. As a result, even after the agreement was extended for another year only 5 per cent of the target trade volume was reached. 10 The difficulties of implementation notwithstanding, the agreement did open possibilities of private exchange. China allowed the Japanese Red Cross and the Japan-China Friendship Association to be involved in the return to Japan of the 30 000 Japanese who were still in China as late as 1952. Japan reciprocated by helping the Chinese in Japan return to their motherland. In October 1953 the second private trade agreement was signed. Again due to obstruction by the Japanese government only 38.8 per cent of the target volume was reached. In May 1955 the third private trade agreement was signed, again prescribing £30 million sterling of trade for each side. With increasing governmental acquiescence, 67 per cent of the target was reached. 11 Sino-Japanese trade increased drastically in the 1960s due to the growing strain in the Sino-Soviet alliance and its eventual rift. In 1965 Japan became China's leading trade partner and remained so for over two decades, until Hong Kong replaced it in 1987. During 1965-73 Japan's total trade with China ($7.67 billion) was close to its trade with Taiwan ($8.3 billion). 12 For much of the 1960s and early 1970s Japan was the only country to enjoy much freedom to conduct commerce with both the mainland China and Taiwan. But trade with China was still minuscule. Despite Japanese society's growing yearning for normal relations with China, had to act in line with the US Cold War strategy of containing communism in Asia. Postwar Japan's first wave of interest in Pacific cooperation in the late 1960s led Kiyoshi Kojima to propose a Pacific Free Trade Area (PAFTA), the Pacific Trade and Development Conferences (PAF- Sino-Japanese Relations 81

TAD) and the Pacific Basin Economic Council (PBEC). PAFTA, PBEC and PAFTAD all limited membership to the capitalist econom• ies and Western industrialized countries. Economic rationale aside, all these proposals had an underlying strategic purpose, viz. to strengthen the regional social and economic basis against communism. It was not, therefore, without reason that China saw these proposals as part of US-Japanese strategy for regional dominance and an imperialist conspiracy against communist China. In light of China's deep displeasure with the idea of regional organ• ization, Tokyo refrained from openly declaring its official endorse• ment, and left initiatives to be taken at the private level. Moreover, after diplomatic normalization in 1972, bilateralism with China loomed large, topping Tokyo's foreign policy agenda. From 1975 to 1978 China and Japan were engaged in negotiating a peace and friendship treaty. The most controversial issue was Beijing's insistence on the inclusion of an antihegemony clause, which Tokyo feared might involve Japan in the Sino-Soviet confrontation. The priorities of the bilateral relationship at this stage were largely strategic and political, with a predominant concern over the Soviet threat. China's hostility towards attempts at regional cooperation put a significant brake on Japan's involvement and explains in great meas• ure why the initial Japanese interest in a regional multilateral arrange• ment subsided throughout much of the 1970s. However the gradual solidification of Sino-Japanese relations served as an effective cure for what Chalmers Johnson calls the postwar 'collective Japanese amnesia about Asia' .13 It removed an obstacle that for decades had con• strained Japan's ability to take diplomatic initiatives, and was instru• mental in Prime Minister Ohira's announcement of the Pacific community concept. Japan's renewed interest in regional cooperation and Ohira's diplo• macy culminated in the formation of the tripartite Pacific Economic Cooperation Conference (PECC) in Australia in 1980, consisting of academics, business representatives and state officials. Japan's renewed interest in promoting a regional multilateral regime coincided with the start of China's 'reform and opening up' programme under Deng Xiaoping. By the late 1970s economic coop• eration had begun to become the top priority in bilateral diplomacy. In May 1979 Japan decided to provide China with an energy loan of 420 billion yen to help jointly extract natural resources and energy. On his visit to Beijing in December 1979, Prime Minister Ohira committed Japan to providing China with a first package of official 82 Promoting Asia-Pacific Economic Cooperation development assistance (ODA) from 1979-83, amounting to 330.9 billion yen (about US $1.5 billion). The ODA was to finance major infrastructural projects, including the construction of two ports - Qinghuangdao on the Bohai Sea and Shijiusuo on the Yellow Sea - and two railroads linking Beijing to Qinghuangdao and Y anzhou to Shijiusuo. Tokyo also promised to grant Chinese products privileged tariff treatment. 14 Since both payment and repayment of Japanese ODAs are in , these long-term, low-interest loans are called yen loans. In principle, formal application and a detailed list of aid programmes should be submitted by interested countries before the Japanese government makes a decision. Before granting China the first yen loan package, Japan took careful measures to dispel strong misgivings from several international quarters. First, Japan reassured ASEAN that the provision of aid to China would not mean a reduc• tion in aid to ASEAN countries. Second, to placate the Soviets Japan stressed that its relationship with China was not directed against any third country and Japan would not provide military aid. Third, Japan emphasized that its China policy was not competitive with other Western powers and that China's modernization was conducive to peace and stability in Asia. In addition, Japan successfully persuaded some leading OECD Development Assistance Committee (DAC) members to admit China to the DAC as a 'developing country' in November 1979, just in time to make China eligible to receive the Japanese ODA. Japan also emphasized its non-tied-aid policy in order to assuage European and American concern about Japanese domination of the Chinese markets. The first yen loans became the first ODA that China received as a DAC member. Since yen-denominated loans reflect Japan's foreign policy orientation, the granting of this ODA signified the elevation of Japan's economic cooperation with China to an unprecedentedly high governmental level. 15 Since then China has been the first or second largest recipient of Japanese ODA. The rapid expansion of bilateral economic interactions reinforced Japan's interest in incorporating China into the proposed multilateral regional arrangement. Prime Ministers Ohira and Suzuki both indi• cated their wish for China to be included in any Pacific cooperation. However, although China's hostility to regional cooperation had abated, China nonetheless remained skeptical of Japanese and Amer• ican intentions. Chinese analysts still equated the Japanese concept of a Pacific community with a Japan-dominated economic sphere of Sino-Japanese Relations 83 influence. Through a Marxist-Leninist prism, Chinese commentators continued to perceive regional cooperation as a pretext to perpetuate and reinforce capitalist exploitation and domination of the developing countries.16 Thus despite the fact that some international relations scholars in China began to be interested in the concept of Pacific economic cooperation in 1979, the government did not declare its official position on this issue until 1984. 17 While China had serious reservations about any regionwide multi• lateral arrangement, it placed great emphasis on Sino-Japanese bilat• eral economic cooperation. For Beijing, China simply had more control and leverage in bilateral diplomacy than in multilateral under• takings. Thus the 1980s witnessed a significant strengthening of Sino• Japanese economic ties. Unprecedentedly frequent exchange visits between the leaders of both countries brought about a surge in economic interactions. In 1985, for the first time bilateral trade exceeded US $10 billion, reaching $16.4 billion or ten times that of 1972. Japan became China's top trading partner, accounting for over a quarter (27.3 per cent) of China's total foreign trade. Trade with China accounted for 6.2 per cent of Japan's total trade in 1985, making China Japan's second largest trading partner. Bilateral eco• nomic cooperation was also strengthened with respect to capital and technology transfers. In 1984 the Nakasone administration decided to provide China with its second yen loan package of 470 billion yen (around US $2.4 billion). Meanwhile the number of joint ventures increased dramati• cally, especially in cooperative projects to extract offshare oil and generate nuclear energy. The economic cooperation between China and Japan in great measure facilitated a learning process that, by the mid 1980s, had predisposed China to see multilateral regional coop• eration in a more neutral light, and Chinese observers began to see the possibility of mutually beneficial outcomes emerging from such coop• eration.18 For much of the 1980s, however, the euphoria over Sino-Japanese relations was dampened by a number of irritants, including the fol• lowing. First, in spring 1982 the Japanese Ministry of Education, when reviewing high school and elementary school textbooks, chan• ged the phrasing of text on Japanese wartime activities from 'invade North China' to 'enter into North China', and from 'all-out invasion' of China to 'all-out attack'. Moreover the cause of 'the Nanjing Massacre' in December 1937, in which over 300000 Chinese were killed by Japanese troops, was explained as follows: 'the Japanese 84 Promoting Asia-Pacific Economic Cooperation armies were angered by the great loss they suffered due to the Chinese armies' fierce resistance, so they killed many soldiers and civilians'. 19 Under Chinese pressure, Tokyo agreed to rectify the offending text and ordered the Ministry of Education to issue an instruction to teachers to carry this out. After the 'textbook incident', Chinese leaders missed no opportunity to warn their Japanese counterparts that 'there indeed existed a minority of people who attempted to revitalize militarism. We hope the Japanese people would not let these people prevail (dechen).' 20 To the dismay of the Chinese, another textbook incident occurred in 1986. Second, in 1985 the Japanese prime minister and other government officials paid official visits to the Y asukuni shrine, which is dedicated to the 2.4 million Japanese soldiers who died in war. The shrine also bears the engraved names of 14 Class-A Second World War criminals and a number of Class B and Class C war criminals. On 15 August each year the shrine is worshipped in an annual commemoration of the end of the war. Following protests by China and other Asian countries, Prime Minister Nakasone publicly expressed his under• standing that a prime minister worshipping at a shrine where class A war criminals were commemorated was offensive to the invaded peo• ples.21 Nakasone did not visit the shrine in 1986. Third, another thorny issue besetting Sino-Japanese relations involved the status of Taiwan. One instance centred on the ownership of the 'Guanghua Hostel', or Kokaryo in Japanese, a student dormi• tory in Kyoto purchased by what was then the Nationalist Chinese embassy in Tokyo immediately after the end of the war. The Japanese judiciary investigated the issue brought forth by Taiwan in the name of the Republic of China, and on 26 February 1987 the Osaka High Court granted the right of possession to Taiwan. Beijing argued that the Nationalist envoy had sold goods plundered by the Japanese armies in China to purchase the dormitory and it was thus state property. It followed that, according to international law, the property belonged to the People's Republic of China?2 The Japanese govern• ment did not attempt to overturn the court's verdict, using the excuse that the judiciary was independent. Beijing then accused Japan of violating the 'one China principle', and complained that 'events invol• ving the creation of "two Chinas" or "one China, one Taiwan" have often occurred'. 23 Fourth, yet another disturbing issue for the Chinese was Japan's defence budget, which in January 1987 reached 1.004 per cent of GOP, breaking the 12-year, self-imposed ceiling of 1 per cent. Deng Sino-Japanese Relations 85

Xiaoping told a group of visiting Japanese on 5 May 1987 that 'If there is some trouble in Sino-Japanese relations, it is that the Chinese people worry that there exists a tendency of militarist revival among a very, very small segment of the Japanese, possibly including politically influential figures.' 24 The Japanese military increase prompted the Chinese media to ask why it was necessary for Japan to increase its defence spending. 25 Finally, bilateral economic relations between the two countries were not free from problems either. Notably, China complained about the growing trade deficit with Japan and the Japanese reluctance to engage in direct investment and technology transfers. However, despite troubles and setbacks, bilateral economic interactions contin• ued to grow throughout the 1980s. From 1982 to 1988-89 China was the largest recipient of Japanese ODA. In June 1988 at the Toronto Group--7 summit Japanese Prime Minister pro• posed ODA worth $50 billion over the next five years. The following month Takeshita pledged to provide China with a third yen loan package in 1990- a lump sum of 810 billion yen (US $6.4 billion). Yet Japan's expanding economic presence in China by no means always bred good feelings between these two peoples, but instead frequently touched ofT latent yet sensitive Chinese nationalist emo• tions. In September 1985 and late 1986, students took to the streets of Beijing to protest about the 'second Japanese invasion'. During demonstrations in late December 1986 it was widely rumoured that the Japanese government had a policy of withholding advanced tech• nology from China to ensure that China would lag behind Japan for at least twenty years.26 All the problems described above beset bilateral relations, bred distrust and heightened Chinese suspicions about Japan's regional ambitions. For instance China's 'Mr Pacific' and leading scholarly adviser on Chinese foreign policy, Huan Xiang, voiced his concern about Japanese intentions in regional economic cooperation:

Japan is now gung-ho about extending its force in the Asia-Pacific region through investments and trade. It is an attempt to form a so• called East Asia economic ring led by Japan. The circle is supposed to encompass Hong Kong, Taiwan, Singapore, South Korea and the members of the Association of Southeast Asian Nations (ASEAN) .... Japan aims gradually to set up and lead an East Asian economic circle in preparation for further conquests in Aus• tralia, New Zealand and Latin America.27 86 Promoting Asia-Pacific Economic Cooperation

Chinese nationalist sensitivity is fuelled by volatile sentiments emanat• ing from a victim mentality nurtured throughout the 'one hundred years of humiliation and suffering' at the hands of Western powers and Japan. The Chinese consider that the Japanese invasion was the most bitter. As Deng Xiaoping asserted in May 1989, 'The harm the Japanese did to China is beyond calculation. In terms of death toll alone, tens of millions of Chinese people were killed by the Japanese. If we want to settle the historical account, Japan owes China the largest debt.'28 China's dependence on Japanese technology, markets, investment and loans has heightened the emotional reaction to areas of disagreement and reinforced China's scepticism about Japan's regional intentions.

FROM 1989 TO THE 1990s

For much of the 1980s Sino-Japanese relations were characterized by extensive economic cooperation but heightened political tension. 29 Bilateral relations, however, reached a new maturity in the 1990s. China's trade deficit, which had marked much of the 1980s, was largely reversed and in 1991 was replaced by a small surplus. In 1993 the Japanese Ministry of Finance claimed a $3.3 billion trade deficit with China, whereas China claimed it had a $7.44 billion trade deficit with Japan. This discrepancy was partially attributable to the fact that the Chinese statistics included Japan's exports via Hong Kong while the Japanese statistics did not. Despite minor disagree• ments, however, China's trade deficit with Japan is no longer a major source of friction. During the late 1980s China grumbled about Japan's grudging foreign direct investment (FDI) in China, which accounted for only 1 per cent of Japan's total FDI. Technology transfers were also deemed inadequate, and indeed bilateral technology trade decreased for four consecutive years (1987-91), a trend that ran counter to the overall economic interactions. 30 However that too started to change from 1991, and in 1992 Japanese FDI in China reached $3.39 billion or 6.5 per cent of total Japanese FDI, thereby ranking Japan as the fourth largest investor in China after Hong Kong!Macao, the United States and Taiwan. Furthermore Japan substantially reversed its erst• while unwillingness to export advanced technology to China, and in 1993 Japanese technology accounted for 28 per cent of China's total technology imports. 31 Sino-Japanese Relations 87

Meanwhile China has replaced Indonesia and regained its position as the leading recipient of Japanese ODA. Japanese loans, totalling nearly $13.5 billion through three separate loan programmes, has contributed significantly to the building of China's infrastructure (Table 5.1). A fourth yen loan programme has been under consideration since Chinese Vice-Premier Zhu Rongji visited Tokyo in late February 1994, when he asked Japanese Finance Minister Hirohisa Fujii to extend another loan programme when the third one ended in 1996. At the time of writing a two-stage formula had been agreed, whereby the amount to be loaned for the first three years (stage one) would be negotiated first, and the amount for the remaining two years (stage two) would be decided at a future date. The amount for the first stage (1996-98) is close to 600 billion yen, but the remainder (1996-2000) has yet to be decided.

Table 5.1 Japanese yen loans to China, 1979-95

Amount (of yen billions) Leaders

1st loan Prime Minister Masayoshi Ohira (1979-83) 330.9 Premier Zhao Ziyang

2nd Loan Prime Minister Yasuhiro Nakasone (1984-89) 470.0 General Secretary Zhao Ziyang

3nd Loan Prime Minister Noboru Takeshita (1990-95) 810.0 Premier Li Peng

Total 1610.9

Sources: Jing Xide, 'Riben duihua ODA zhengche de yanbian he zhongri guanxi' (The Evolution of Japan's ODA Policy towards China and Sino• Japanese Relationship), Riben jikan (Japan Quarterly), no. 2 (1995), pp. 19- 33; Tokyo, ZAIKAI TEMPO (in Japanese), June 95, pp. 130-3, in Foreign Broadcast Information Service- East Asia, 27 July 1995, pp. 13-18.

Bilateral trade continued to surge in the 1990s. According to the Japan External Trade Organization (JETRO), China was Japan's fifth largest trading partner in 1992. In 1993, however, China overtook Germany, Taiwan and South Korea to become Japan's second largest trading partner after the United States. The volume of bilateral trade amounted to $17 billion in 1990 and $29 billion in 1992. In 1993 bilateral trade surged by 30.9 per cent to $37.8 billion, an annual record for the third consecutive year. In 1994, the trade between 88 Promoting Asia-Pacific Economic Cooperation

Japan and China reached $46.24 billion, a 22.2 per cent increase over the previous year, thereby setting a new record of bilateral trade. In 1995 Japan continued to be China's largest trading partner, with bilateral trade reaching $57.47 billion, a 19.9 percent increase from the previous year (Table 5.2).

Table 5.2 Sino-Japanese trade, 1990-95

Year Volume ($US bn)

1990 16.60 1991 20.30 1992 29.00 1993 37.80 1994 46.24 1995 57.47

Sources: Xu Changwen, 'Riyuan shengzhi yu zhongri jing• mao guanxi de fazhan' (Appreciation of the Japanese Yen and the Development of Sino-Japanese Economic and Trade Relations), Guoji maoyi (International Trade), no. 5 (19 May 1995), p. 95. Renmin ribao (People's Daily), 17 January 1995, p. 1, 13 January, 1996, p. 1.

Ironically, the political momentum of the bilateral relationship received a major boost through the Tiananmen tragedy. The official Japanese reaction to the killings on 4 June 1989 in Beijing was remarkably restrained in comparison with those of the West. On 6 June Shiokawa told a press conference 'The government watches carefully the result of the situation. The govern• ment thus does not consider any (sanction) measures at present.'32 After committing so many war atrocities in China, many Japanese felt it would be hypocritical to criticize the wrongdoing of the Beijing regime. Prime Minister Sosuke Uno stated on 7 June that 'I say clearly that Japan invaded China 40 years ago. Japan cannot do anything against a people who experienced such a war. Sino-Japanese relations differ from Sino-United States relations.'33 Japan did eventually go along with the West and signed a G-7 joint statement, issued at the July 1989 Paris summit, condemning the Tiananmen tragedy. However Tokyo carefully sought to distinguish its response from that of Washington. Japan only selectively adopted the sanctions implemented by the Western powers, especially the Sino-Japanese Relations 89

United States, and worked laboriously to persuade other Western countries not to isolate China. Soon after the Paris summit Japan resumed its non-governmental interactions with China. The goodwill of the Japanese was like 'sending charcoal in snowy weather' (xuezhong songtan) to the Chinese leaders, who had been condemned as the 'butchers of Beijing' by the Western media. On 1 December 1989 Deng Xiaoping spoke to leaders of a delegation from the Japanese Association of International Trade Promotion: At the time when the international monopoly capitalism imposes sanctions on our country, you lead such a big envoy to visit us. This move is reflective of genuine friendship. As an ancient Chinese saying goes, true friendship is tested in adversity (huannan jian zhenqing). Although we are not exactly in trouble, your visit to our country at this time really shows precious friendship .... Although I am retired, I am still concerned with the development of Sino-Japanese relations. We are, after all, close neighbors. I have a special feeling toward Sino-Japanese friendship. Even when the Japanese militarists launched war against China, there were still a lot of Japanese who were against the invasion. We should have a comprehensive view on history. We should not only talk about the history of Japanese invasion, but also talk about the history of the Japanese people and numerous Japanese friends struggling for Sino-Japanese friendship. There are a lot of such peop1e! 34 To signal further that its stance differed from that of the Western powers, at the 1990 G-7 summit in Houston Japan officially reaf• firmed its third yen-loan package to China and began to implement it in November the same year. The 1990 diplomatic blue book of the Foreign Ministry (Gaimusho) claimed that the decision to adopt a different approach to China 'was symbolic of the present era that Japan decided to act on Asia-Pacific issues on its own initiative and responsibility'. 35 The director general of the Asian Affairs Bureau, Sakutaro Tanino, asserted that Japan, 'as a country that is both Asian and a member of the Western bloc', should 'move a step or two ahead of other Western nations' in its China policy. 36 Prime Minister Takashi Kaifu was the first G-7 leader to visit Beijing. During his visit from 10-13 August 1991, Kaifu expressed his sympathy with the Chinese views on human rights, and was quoted as saying that 'Clothing and food are the basis and starting point of human rights. It is an enormous progress that China can solve its problems of clothing, food, housing, and transportation (Yishizhuxin). 90 Promoting Asia-Pacific Economic Cooperation

Each country has its own cultural background, and outsiders are not in a position to judge others with their own standards ..37 Kaifu also informed his Chinese hosts that when meeting with other Western leaders he often emphasized the fact that the Asian countries first needed to develop their economies. Only after the economies had been developed and people's life improved could political stability be secured. At a meeting with President Jiang Zemin, Kaifu revealed that he had stressed at the two previous G-7 summits that China should not be isolated, and that Sino-Japanese relations should con• tinue to progress. Kaifu took the opportunity to notify his host of the details of Japan's third yen-loan package to China, including a lump sum of 126.9 billion yen for 22 projects in the 1992 fiscal year. Kaifu reportedly mentioned many times the need to promote 'Japa• nese-Chinese relations in the Asia-Pacific region and stressed that the solid, friendly, and cooperative relationship between Japan and China provides one of the extremely important preconditions for peace and stability in the Asia-Pacific region'. In turn, Chinese leaders repeat• edly stressed that bilateral friendly cooperation would not only be in the interests of both peoples but would also play a major role in promoting peace, stability and development in the Asia-Pacific region. On the day that Kaifu arrived in Beijing, China announced its decision to sign the Nuclear Non-Proliferation Treaty. Kaifu acknowledged this as indicating the importance that China attached to Sino-Japanese relations. Kaifu's visit marked the full restoration of relations between the two countries after the brief setback caused by the Tiananmen tragedy. In Aprill992 Jiang Zemin paid a return visit to Japan to commem• orate the twentieth anniversary of Sino-Japanese diplomatic restora• tion, thus making him the first senior Chinese leader to visit Japan since Tiananmen. Jiang extended an invitation for the Japanese emperor to visit China. In a meeting with the chairman of Democratic Socialist Party (DSP), Keigo Ouchi, Jiang promised that in China the emperor would not be confronted with contentious issues such as the Senkaku Islands dispute and war reparation claims. 38 After being reassured that there would be no popular protests in China, Prime Minister finally endorsed Beijing's invitation. Emperor Akihito's visit in October 1992 was the first time that a Japanese emperor had visited China in the 2000-year history of the monarchy. In an extensive preview of the emperor's visit, the Beijing Review declared that Japan had placed Sino-Japanese relations 'on a par with Japan-U.S. relations .... Japan perceives Sino-Japanese Relations 91

Sino-Japanese relations as a "trump card" to counter U.S. pres• sure .... Japan must rely on China as a "pillar" to transfer its diplo• matic focus to Asia.'39 Chinese officials and analysts appear to have been appreciative of Japan's yearning for a greater political role. During his visit to Japan, Jiang expressed his understanding of 'Japan's positive role in building peace and prosperity in Asia as well as the whole world, as long as lessons are learned from history'. When the Japanese Diet passed the bill on Cooperation in UN Peacekeeping Operations in June 1992 (which would allow the Self-Defence Forces to participate in UN Peacekeeping operations, thus easing the ban on sending the nation's military forces abroad that had been in force since 1945), no strong protest was made by the Chinese media. China's mainline media called only for the Japanese government to exercise caution in dealing with this kind of issue even though one Chinese scholar recommended 'looking behind the true intentions of flowery lan• guage'.40 For the Chinese, a greater Japanese political role is permis• sible so long as it does not damage the framework governing Sino• Japanese relations and Japan does not move to fill the military vacuum in the region. Japan has generally been in favour of including China in all multi• lateral regional fora. Japan had supported China's membership of APEC when APEC was created in 1989, and facilitated China's eventual entry in 1991. The official Japanese view is that China's continuing reforms and opening-up serve Japanese interest, and the active involvement of China in regional fora composed of capitalist economies would help ensure that China would not be diverted from that course. Moreover, tying China into the interlocking networks of regional cooperation is believed to be the best way of coping with the growing Chinese power. As Prime Minister Kaifu emphasized, 'Our aim is for China to become an integral part of the regional framework of peace and prosperity.'41 Thus, in the words of Robert Manning, 'Integrating the PRC is an important motivating factor in Japanese support for establishing multilateral economic and politicaVsecurity institutions in the Asia-Pacific.'42 Finally, given China's unique role in Asia, it will be impossible to establish a meaningful multilateral regional arrange• ment without China's participation. According to Hiroshi Kumagai, minister of international trade and industry, 'APEC's future success depends on whether China will continue to maintain its current eco• nomic reform line'.43 92 Promoting Asia-Pacific Economic Cooperation

When referring to the Japanese role in regional cooperation, Chi• nese commentators tend to emphasize the rivalry between Japan and the United States, but refrain from specifying China's role. One Chinese scholar writes: Open strife and veiled struggle over leadership between Japan and the US in Asia-Pacific region will intensify. After the Gulf war, Japan shifted its diplomatic focus to Asia .... As the world is evolving toward regionalization, Japan wishes to construct its own economic circle and build its own 'backyard'. For the sake of reinvigorating its economy, the U.S. economic locus has begun to tilt toward Pacific. This will inevitably conflict with the Japanese strategic interest.44 For China's Japan watchers, Japan's emerging re-Asianization will intensify US-Japanese economic competition and rivalry in the Asia• Pacific region. The active diplomacy of the United States in regional cooperation fora, particularly APEC, is viewed as an American attempt to curtail Japan's influence in the region. China's Japan watchers also regard the active engagement of the United States in the area as in part geared to containing China and other Asian countries, as well as being motivated by a desire to use APEC to enhance its leverage over Europe. In the meantime, Chinese commentators recognize that mutual inter• dependence and mutual coordination will continue to govern Japan• US relations and ensure that the two will not part company. Conversely, the United States' China policy has been widely per• ceived by Tokyo as displaying an aspect of rivalry with Japan over business opportunities. At another level, some Japanese scholars and officials have begun to see the common fate that might bind together the two Asian powers. One prominent Japanese political scientist at Tokyo University, Takashi Inoguchi, writes that Both Japan and China are apt to be isolated in the world. On more than one occasion Japan has been obliged to bear the brunt of criticism because of its economic success, political timidity and historical liability. China is apt to breed suspicion or distrust because of human rights, undemocratic government and military expansion. Above all, the United States distrust of Japan and China sometimes goes to extremes.45 Frustrated by the United States' aggressive pressure on matters of trade, some Japanese have recently begun to talk about the revival of the 'Asian ethos'. Prime Minister Hosokowa explicitly emphasized the differences between Western and Asian concerns on human right Sino-Japanese Relations 93 issues. In the meantime, Chinese officials and intellectuals have become more self-assertive in resurrecting traditional values and are eager to forge 'Asian values' to counter Western pressures for the observance of human rights.46 One Chinese commentator writes that 'in the present East Asian economic cooperation, the flying geese format is being replaced by the 'double locomotives model' [Chinese railway engineer Zhan Tianyou adopted the measure of having one engine at the front to pull, and one at the rear to push in order to increase locomotive power]. In current East Asian economic cooperation, some people think that Japan and China are playing the respective roles of front and rear locomotives.'47 Despite a growing and, converging rhetoric of Asianism in both societies in the 1990s, the possibility of a joint Sino-Japanese effort to organize Asia-Pacific cooperation nonetheless remains a minority view among both the Chinese and the Japanese. Moreover Asianist sentiments have not made a substantial inroad into the official think• ing of either government. For example, despite the fact that Japan played a critical role in breaking China's post-Tiananmen diplomatic isolation, Chinese com• mentators have been highly ambivalent about the Japanese attempt to act as spokesperson for Asia and China. According to one Chinese commentator, 'Since 1989, Japan has always acted as "the China expert" at G-7 summit meetings, thus setting up a "bridge" between [the] West and China.' The 'China card' served as a springboard for Japan 'to win the initiative' in diplomatic transactions'. It was aimed at dominating the establishment of a new order in Asia and setting up an East Asia economic rim centering on Japan to match the North American Free Trade Zone and the Single European market. Of course, without the support of China, Japan cannot achieve these goals. Whether or not Japan becomes a political power will depend, at least partly, on China's support and influ• ence.48 On the other hand, even when Japan acted as spokesperson on behalf of Asian to allay Western sanctions against China, the Japa• nese were under no illusion that China would genuinely regard Japan as a political partner. As one Japanese scholar put it, 'When U.S. pressure has grown stronger through its human rights diplomacy, China has on occasion put on a show of tilting toward Japan or leaned toward it, asking Japan to take the role of a bridge to the United States.'49 94 Promoting Asia-Pacific Economic Cooperation

THE 'EMOTIONALISM' IN BILATERAL RELATIONS

Due to their unique historical and cultural relationship, there is an 'emotional' component of Sino-Japanese relations that often defies the rational calculations ofeconomic and political interests. Public opinions and mutual perceptions in both countries thus have a unique impact on bilateral relations. As Chalmers Johnson argues, 'The dilemma of Japanese flattery ( omoneri) of China versus Japanese national contempt (anadori) for China is as great an influence on Sino-Japanese relations as the changing national calculations of political and economic interest.'50 In a similar vein, the animosity that is the legacy of historical enmity often generates political passion that defies economic rationality and 1 cause a strain in the Sino-Japanese relationship. 5 Fifty years after the event, Japanese leaders remain in disagree• ment as to whether they should apologize for the war that some hold was intended to liberate Asia from Western colonialism.52 Each time bilateral frictions arise, China unfailingly brings up the historical episode. In response Japan comes up with a modus vivendi to placate the Chinese, while leaving the source of disagreement unaddressed. The emotions stemming from historical enmity often run so high that they have frequently brought down high-ranking officials in both capitals, particularly in Tokyo. Time and again Japanese cabinet members have lost their jobs, because of remarks they made about the war that were particularly offensive to the Chinese and Koreans. On the other hand, the downfall of the late Chinese Communist Party General Secretary Hu Yaobang in 1987 was in part due to his 'exces• sive' friendship with the Japanese, which Party elders believed trans• gressed the principles governing China's handling of Japan. It can be argued that ambivalence and uncertainties characterize the emotional underpinnings of the bilateral relationship. A survey con• ducted by the Association for the Study of National Conditions immediately before the Japanese emperor's visit to Beijing in 1992 showed that anti-Japanese feelings were still very strong among the more than one thousand student respondents in Beijing University, the Chinese People's University and the Beijing Normal University:

• 89.1 per cent favoured seeking war reparations from Japan. • 67.6 per cent thought the emperor should publicly apologise to the Chinese. • 98.6 per cent supported the movement to protect the Diaoyu Islands (Senkakus in Japanese). Sino-Japanese Relations 95

• 50 per cent believed that Japanese militarism would definitely revive; 46.3 per cent believed it probably would revive; only 3.7 per cent thought it would not. • 84.5 per cent thought that the increase in Japanese military expen• diture would pose or had already posed a threat to China. • 50.9 per cent thought the two decades of Sino-Japanese relations since normalization in 1972 had not been satisfactory. • 32 per cent thought that Sino-Japanese relations would not make great progress; 19.5 per cent thought they would; 46.5 per cent were uncertain. 53

The image of Japan held by China's leading film director, Xie Jin, captures the complexity of the Chinese perception of Japan. Accord• ing to Xie Jin, one piece of the 'mosaic of images' is composed of fond reminiscences' of cultural exchanges when Japan was an earnest stu• dent, especially during the Tang dynasty. As a whole, the positive images of post-Meiji modernization, of Japan as the sanctuary of Chinese nationalists, the host of Chinese intellectuals wishing to learn Western culture, and an economic powerhouse, are juxtaposed and· intermingled with negative ones of the first and second Sino• Japanese wars and Japan as a cultural dwarf. For Xie, all the aspects are striking, yet put together the overall image of Japan is obscure and confusing. Xie holds that the economic giant is 'culturally impotent', in that when it is 'compared with Western and Chinese cultures, the Japanese culture does not have strong religious and philosophical support'.54 Many other Chinese commentators share Xie's view, and also believe that Japan does not have a highly efficient political structure and value system, namely the 'soft power' needed to sustain a legitimate leadership role in regional affairs.55 For them, Japan is good at adapting culture but does not have the ability to transmit and socialize its values abroad. To be sure, perceptions and emotions are frequently entangled with more tangible areas of disagreement. Since 1992 Chinese leaders have warned Japan not to fuel the rhetoric of the 'China threat' and urged Japan to adhere to the 'one China' policy over the issue of Taiwan. For the Chinese, the Japanese concern about China's nuclear tests and its double-digit annual increase in defence outlays since 1989 is unwarranted, given, among other things, the fact that Japan is still under the protection of the US nuclear umbrella. 96 Promoting Asia-Pacific Economic Cooperation

Another issue of concern to Beijing has been Japanese relationship with Taiwan. According to one Chinese commentator, the Japan• Taiwan relationship has recently moved from an economic one toward greater emphasis on the political dimension, and from covert, low-level contact to overt, direct and higher level engagement. 56 Beij• ing has been concerned that regional fora such as APEC may provide a channel for Japan to escalate its relationship with Taiwan. Indeed at the 1991 APEC ministerial meeting in Seoul, Japan and Taiwan had their first ministerial meeting since 1972. In October 1994 Beijing expressed strong displeasure at Japan's permitting the Taiwanese Vice-Premier Hsu Li-teh to attend the twelfth Asian games in Hir• oshima. Hsu was the highest ranking Taiwanese official to visit Japan since 1972. To placate China, Prime Minister Murayama and Foreign Minister Y okei Kono emphatically reassured China at the 1994 APEC summit that the Japanese government would act (and it did) strictly in accordance with the Seattle and Bogor model and would not allow Taiwanese President Lee Teng-hui to attend the 1995 Osaka meeting. Meanwhile, there have been growing calls within Japanese society to bring Japan's governmental loan programmes for China into line with the four principles of ODA policy that were promulgated in 1990. The principles stipulate that Japan's ODA policy should be based on the consideration of the recipient countries' behaviour with regard to human rights, military spending, arms trade and the devel• opment of nuclear weapons or other weapons of mass destruction. In June 1992 the Official Development Assistance Charter reaffirmed Japan's commitment to these principles,57 but in general Tokyo has refrained from getting tough on China. It has often found itself with very limited room to manoeuvre when dealing with China. Mutual distrust dictates that both China and Japan should keep a wary eye on each other's regional ambitions. The result is a lack of stable consensus on the kind of role each party would like to assign to the other, thereby precluding any significant political collaboration in organizing regional affairs. Chen Luzhi, vice-chairman and executive director of the All-China Committee for Pacific Economic Coopera• tion, argues that Beset by [its] domestic political situation and economic recession, Japan adopts a low-profile posture toward Washington's strategic adjustment in its Asia policy. Japan deliberately avoids head-on confrontation with the U.S., and would rather promise the U.S. Sino-Japanese Relations 97

to expand domestic needs and increase imports. In actuality, Japan is taking advantage of the opportunity to build up its 'Asian net• 8 works' and solidify its sphere of influence (di pan) in East Asia. 5 Many Chinese commentators compare Japan to a migratory bird and see Japan's recent 're-Asianization' as indicative of Tokyo's opportu• nistic response to the cultural, power and economic shift from the West to Asia. The 'flying geese-format' is considered to be Tokyo's means of dominating Asia. According to this format Japan, as the 'head goose', would gradually pass less advanced indus• tries and technologies back to the following 'geese'. Chinese commen• tators unanimously express disapproval of this format. One observer writes: Japan's move to 'dissociate Europe and Return to Asia' attempting to be the head goose has attracted the attention of countries con• cerned. Asian countries that suffered immensely from the Japanese 'Great East Asia Coprosperity Sphere' welcome Japan's technolo• gical transfers and investment, and are willing to develop equal economic and trade relations. But they have no intention whatso• ever to become markets for Japan to dump its outdated indus• tries .... Other Asian countries are catching up, and are demons• trating themselves as 'group geese' in a character 'one'(-) format, rather than what the Japanese envision Japan-headed character 'person' ((_) format. 59

As is typical, Chinese apprehension about Japan's regional ambitions is tactically and euphemistically expressed by speaking for the con• cerns of the Asian countries as a whole. The economic integration of China, Taiwan and Hong Kong in the 1990s has triggered concern among some Japanese about possible Chinese dominance in the region. Hong Kong and Taiwan now rank as two of China's top trading partners, and have become the largest direct investors since 1990. This economic triangle has proved mutually beneficial and mutually strengthening, and is facilitating the upward mobility of the 'three Chinas' in the world and regional economy. Lacking viable alternatives Tokyo continues to hold that China's rise could be better dealt with by tying it into bilateral and multilateral institutions and regimes. Nonetheless Japan is under• standably concerned about the possible emergence of a 'Greater Chi• nese Economic Empire' or a 'Super China' which could challenge Japan's regional role. 98 Promoting Asia-Pacific Economic Cooperation

Moreover the extensive US presence in the regional economy and in the calculations of both Beijing and Tokyo precludes the likelihood of a joint Sino-Japanese alliance in forming an exclusively Asian bloc. Indeed China is at least the second if not the most important country for Japan. Former Prime Minister Kiichi Miyazawa stressed that relations with China and the United States constituted the 'two main wheels of Japanese diplomacy'.60 Likewise, Japan's importance is second only to that of the United States in China's national inter• ests. The US presence clearly looms large. For example in 1993 Japan-US trade amounted to $160.5 billion in comparison with only $37.8 billion in Sino-Japanese trade; Sino-US trade reached $40 bil• lion, slightly higher than Sino-Japanese trade. With regard to security, on balance China prefers the status quo of the US-Japan security arrangement to embed Japan as long as China itself is not the target. In light of this, a more relevant question is: to what extent can China and Japan jointly bargain with the United States to forge a multi• lateral regional regime that reflects Asian values and interests? In Japan, a consciousness of the United States and China is indeed brewing that differs subtly from that of the Cold War era. Arguments by Asianists in favour of a Japan-China alliance have arisen, but the mainstream Japanese view is that promoting regional cooperation to the exclusion of the United States would be not only impossible but also destabilizing and harmful. In a similar vein, Chinese commenta• tors generally hold that Sino-Japanese relations should not develop in a fashion that would fundamentally challenge the broad framework of Beijing's relations with the United States and other Asia-Pacific countries.

CONCLUSION

Since diplomatic normalization in 1972, Sino-Japanese economic and cultural exchanges have moved ahead amid irritants and setbacks and the overall relationship has tended towards increasing detente. In the 1990s, Sino-Japanese relations seem to be moving towards greater solidification. China's strident nationalism in the aftermath of the 1989 Tiananmen tragedy conspicuously did not target Japan, whereas the same stance in the early 1980s had been mainly directed against Japan.61 Both China and Japan have recently emphasized the devel• opment of a bilateral relationship 'in the global context' and 'in the context of Asia-Pacific', and especially since the Tiananmen event Sino-Japanese Relations 99

Tokyo has tried to make its China policy somewhat distinct from that of Washington. It appears that the complementarity between the two countries is so natural that it could bring them closer together. Both China and Japan clearly exhibit a discrepancy between political prestige and economic prowess, albeit in different ways. If they were to form a 'political partnership', as some have suggesied,62 their combined poli• tical clout and economic power would enable them to dictate the terms and form of any regional multilateral arrangement. Yet as the preceding analyses suggest, mutual suspicion and genu• inely conflicting interests stemming from present irritants and histor• ical enmity loom large on both sides, engendering an element of rivalry in shaping regional multilateral regimes. It is unlikely that China and Japan would antagonize each other through open confron• tation, 63 as that would lead to the failure of any attempt at regional cooperation; it is equally unlikely that the bilateral dynamics could sustain a political partnership to shape a regional order. Mutual ambivalence about each other's regional role is causing too much uncertainty in the bilateral relationship. Although Asianist views are beginning to emerge among intellec• tuals in both countries, questions that perplexed and eluded Pan• Asianists at the turn of century remain. To what extent would Japan differentiate its China policy from that of the United States? Would the Japanese risk offending the Western countries to seek an alliance with the Chinese and form a Pan-Asianist bloc? Can China and Japan work out a mutually satisfactory power relationship in a regional order? As China moves to narrow its own power discrepancy, the prospect of finding positive answers to the above questions in order to forge a Sino-Japanese political alliance is becoming ever more remote and improbable. Sino-Japanese relations are taking on an importance in Asian affairs that is at least comparable to that of Franco-German relations in determining European affairs. Thus the nature of the Sino-Japanese relationship has a number of consequential implications for attempts at regional cooperation. The mutual mistrust in Sino-Japanese rela• tions that is rooted in present difficulties and historical legacies cau• tion against activism from both countries in shaping a regional order. Moreover both China and Japan are ascendant and aspiring powers, so neither would like there to be a set of highly structured, rigid and well-institutionalized regional multilateral arrangements to constrain their ambitions. It is likely that China and Japan will cooperate in 100 Promoting Asia-Pacific Economic Cooperation some areas to assert a stronger Asian voice in endeavours of Asia• Pacific cooperation. Nonetheless, given the looming US presence in the region and in the calculations of both capitals, an exclusively Asian regional bloc centred upon a strong Sino-Japanese political partnership seems improbable, if not inconceivable.