View metadata, citation and similar papers at core.ac.uk brought to you by CORE ICCS Journal of Modern Chinese Studies Vol.11 (1) 2018 論文 Re-examination of the Economic Interdependence between China and Japan LU Longjiang1 Abstract China and Japan, the world’s second and third largest economies. They have established one of the biggest bilateral trade relationships in the world and also is considered as close economic interdependence. However, tensions between these two countries have further escalated in recent years. Why economic interdependence cannot prevent the escalating tensions between China and Japan? This article tries to re-visit the theory of economic interdependence, in order to tackle the puzzle between economic interdependence and conflict in the case of Sino-Japanese relationship. I will demonstrate the key features on the development process of this economic interdependence relationship and show the dynamic change of increasingly obvious flaws in this relationship. In this context, I emphasize the necessity of establishing coordination mechanism between China and Japan, which can ease the anxiety of the two governments for the unfavorable situation brought by the worsening flaws in this economic interdependence. The Sino-Japanese relationship was seriously affected by these two factors: the increasingly obvious flaws on the one hand and the effort of both governments to build the coordination mechanism on the other hand, during the first decade of 21st century. These two factors working together have led to the repeated unstable situation between China and Japan in the 2000s. More importantly, the frustration with the establishment of the coordination mechanism in the case of Sino-Japanese relationship is the most important factor leads to the escalating current tensions. Keywords: Sino-Japanese Relationship, Economic Interdependence, International Relations economic interdependence leads to war or I. Introduction peace. The liberal scholars have argued that Economic interdependence among the closer economic interdependence can reduce major powers has continued to reach new the possibility of military conflict. On the heights in the context of the accelerated contrary, realist scholars believe that economic globalization. Scholars have economic interdependence exacerbates the provided numerous studies to prove the possibility of military conflict. In a new important role of economic interdependence in theoretical development, Dale international relations. However, they have Copland(Copeland, 2015) [1] proposed a still not been able to determine whether theory that would draw an intermediate route between these contradictory assumptions. He 74 ICCS Journal of Modern Chinese Studies Vol.11 (1) 2018 proposed the Trade Expectations Theory and political tensions also exacerbated repeatedly argued that states’ expectation of future trade in multiple issues, such as the controversy and investment environment determines concerning history textbooks, Japanese prime whether economic interdependence can lead to ministers’ visit to the Yasukuni Shrine, peace or war. political speeches by politicians, and drilling This paper re-visits the theory of oil and gas fields in the disputed area. More economic interdependence by searching for a seriously, due to the escalating tensions in suitable theoretical explanation for the current maritime and security issues, the political Sino-Japanese relationship. China and Japan opposition between China and Japan has are the world’s second and third largest become increasingly serious in recent years. economies and this bilateral relationship The frequent confrontations of the official evidences considerable economic vessels in the disputed waters and of the China interdependence. However, tensions between Air Force and the Japan Air Self-Defense these two countries have further escalated in Force [JASDF] on the high seas, amidst the recent years. The Sino-Japanese relationship is absence of a maritime security liaison a good case to reconsider the limitations of mechanism. In 2016, the number of previous theories and further contribute to the emergency takeoffs of JASDF reached a new development of the existing theoretical record, and more than 70% were considered to discussion. be against the China Air Force (JASDF, 2017) Since China and Japan achieved the [4]. The highly-intensive interception greatly normalization of diplomatic relations in 1972, increases the likelihood of incidents. For the two countries have carried out fruitful example the JASDF fighters once launched cooperation in the economic field. They have chaff(interference countermeasure) to the established one of the world’s biggest bilateral Chinese air fighters on the high seas in 2016 trade relationships. The size of bilateral trade (Ministry of National Defense of the People's reached a record of US $34.494 billion in Republic of China, 2016) [5]. 2011. Until 2014, this bilateral trade was Thus, China and Japan have the so-called ranked the third-largest in the world (Drysdale, close economic interdependence on the one 2015) [2]. The relationship between China and hand, yet they also have the increasing Japan has long been described as tensions of the security situation with the economically interdependent. Not only possibility of military conflict on the other. scholars but also the official website of the Why economic interdependence cannot Ministry of Foreign Affairs of Japan described prevent the escalating tensions between China the economic relationship between China and and Japan? In order to answer this question, Japan as closely interdependent(Ministry of this work will demonstrate the dynamic of this Foreign Affairs of Japan [MOFA], 2016) [3]. relationship, and reconsider the theory of Meanwhile, the Sino-Japanese economic interdependence and conflict. By relationship has entailed historical problems of re-examining the economic interdependence the war and colonialism as well as realistic between China and Japan, I will argue that the territorial disputes. In the 2000s, even when huge amount of profit in the economic the economic and trade relationship between interdependence between China and Japan is China and Japan was developing rapidly, the insufficient to provide positive expectation for 75 ICCS Journal of Modern Chinese Studies Vol.11 (1) 2018 the two governments in this relationship. Two and the international economies. This is the other factors, the increasingly obvious flaws ‘economic interdependence’ relationship. In and the changing coordination mechanism, the context of economic interdependence, “to play an extremely important role in affecting give up some of the national autonomy in governments’ expectations in the case of order to enjoy the benefits by closer Sino-Japanese relationship. This explanation international economic relations”(Cooper, is proposed as a complement to existing 1968) [6] will form mutual restraint between theories, which is helpful for further interdependent states and also increase the explaining the policy changes in other major space for mutual compromise. power relations in the context of accelerating Edward L. Morse further introduces this globalization. theory into the field of international relations. The argument is supported by personal He believes that under the impetus of interviews and secondary sources. I conducted modernization, economic interdependence interviews with key people, such as diplomats, will have three impacts. First, the borders current and former government officials, between domestic and foreign affairs will managers of Japanese companies in China, as dissolve. Second, the distinction between high well as those who have a long-term politics and low politics will be less important. commitment to nongovernmental cultural Third, the ability of state leaders to have exchanges. political control will decrease with the In the next section, I will reconsider the growing interdependence (Morse, 1973) [7]. previous studies of the relationship between He also believes that under the wave of economic interdependence and conflict and modernization, international relations will propose my hypothesis. In the third section, I further accelerate the transformation. Under will re-examine the economic interdependence economic interdependence, the competition between China and Japan, and illustrate the among countries will change from a zero-sum dynamics of this relationship. In particular, I game to a win-win game, and the separation of will show that the increasingly obvious flaws a country's commercial and national security of this economic interdependence and the policies will no longer be realistic(Morse, frustration concerning the coordination 1976) [8]. mechanism. The last section will summarize Both Cooper and Morse believe that the the main findings. new changes in the international relations will weaken sovereignty and reduce the possibility II. Previous studies and theoretical of conflict between states. However, after modifications their proposal, the debate over the relationship between economic interdependence and the When it comes to the concept of major power conflicts continues. The debate economic interdependence, we have to go can be mainly divided into two main camps: back to the origin of this concept. Regarding the liberal and realist theories. to the changing trends in the 1960’s among The existing theories both have their own the industrialized European countries, Richard characteristics and disadvantages in N. Cooper proposed