China marked the first anniversary of Japan’s nationalization of the Senkaku Islands by reasserting its sovereignty claims to the islands and conducting Coast Guard patrols in the area, which continued on a regular basis through December. Tokyo called for dialogue with China without preconditions, while Beijing insisted that dialogue required Japan to admit the existence of a dispute over the islands.  Meanwhile, business leaders continued to develop economic ties and Japanese companies in China began to recover from the profit doldrums that followed initial Chinese reaction to the nationalization.  In late November, Beijing announced the establishment of its East China Sea ADIZ, which Tokyo found to be unacceptable and refused to recognize. Prime Minister Abe added more tension to the relationship when he visited Yasukuni Shrine.

China marked the first anniversary of Japan’s nationalization of the Senkaku Islands on Sept. 11 by reasserting its sovereignty claims to the islands and conducting Coast Guard patrols in the area, which continued on a regular basis through December. Tokyo called for dialogue with China without preconditions, while Beijing insisted that dialogue required Japan to admit the existence of a dispute over the islands.  Meanwhile, business leaders continued to develop economic ties and Japanese companies in China began to recover from the profit doldrums that followed initial Chinese reaction to the nationalization.  In late November, Beijing announced the establishment of its East China Sea Air Defense Identification Zone, which Tokyo found to be unacceptable and refused to recognize.  On Dec. 26, Prime Minister Abe added more tension to the relationship when he visited Yasukuni Shrine.

Senkaku nationalization plus one

There was significant activity in the East China Sea in early September surrounding Sept. 11, the first anniversary of Japan’s decision to nationalize three of the Senkaku Islands that had previously been held by a private owner.  On Sept. 8-9, People’s Liberation Army Navy (PLAN) warships and two H6J2 bombers transited international waters and airspace between Okinawa and Miyako-jima toward the Pacific Ocean.  Japan’s Ministry of Defense noted this was the first transit by H6J2 bombers. Also, on Sept. 9, a Chinese drone aircraft entered Japan’s Air Defense Identification Zone near Okinawa and the Senkakus; the Japan Air Self-Defense Force (JASDF) scrambled in response. Later, eight Chinese ships entered Japan’s territorial waters near the Senkakus on Sept. 10; four withdrew later that day and four entered Japan’s contiguous zone on Sept. 11.  A full accounting of incursions that occurred during this reporting period is provided in the chronology.

In response to the activity in early September, Vice Foreign Minister Saiki Akitaka called in China’s Ambassador to Japan Cheng Yonghua to protest.  According to Japanese government figures, as of Sept. 9, a total of 208 Chinese government ships had entered Japan’s territorial waters on 62 separate days in the year since nationalization. Japanese Coast Guard figures put days spent in Japan’s sovereign waters and contiguous zone at 260 since nationalization.  Chinese Coast Guard figures set the number at 59 days spent in the area of the Senkakus/Diaoyus. China’s State Oceanic Administration, commenting on the patrols, issued a statement that said “China is building a strong maritime nation.  All actions undermining China’s interests in sovereignty, security and development will face strong opposition and firm resistance….”

On Sept. 11, Chief Cabinet Secretary Suga Yoshihide, speaking in Sapporo, reiterated the government’s position that “a territorial problem that requires resolution does not exist.”  At the same time, noting the importance of the bilateral relationship, he announced that the window for a strategic dialogue is always open for Japan.  The previous day Suga had raised the possibility of deploying government personnel to the Senkakus but went on to say that the matter had to be studied from a strategic perspective. In Beijing, Foreign Ministry spokesperson Hong Lei expressed his government’s “serious concern” about Suga’s remarks, adding that “if the Japanese side recklessly makes provocative moves, it will have to accept the consequences.” Meanwhile, Deputy Chief Cabinet Secretary Kato Katsunobu told a press conference that Japan would resolutely but calmly resist China’s efforts to use force to change the status quo with respect to Japan’s sovereign land, air, and sea space.  Japan had no intention to escalate, would tenaciously pursue dialogue, and wanted to work to calm matters. An Asahi Shimbun public opinion poll on the issue of nationalization put support for the decision at 56 percent, with opposition at 24 percent. The figures tracked closely with a 2012 poll conducted after nationalization in which 57 percent supported the decision and 23 percent opposed.

Abe: the door is always open

Throughout the final months of 2013, both sides spent time staking out positions on the breakdown in relations.  Speaking in New York on Sept. 24, Abe emphasized the importance of the Japan-China relationship and reiterated that “my door is always open for dialogue, and I hope for the same stance from China.” This point served as leitmotif for Tokyo policy statements – it was repeated on Oct. 9 at the East Asian Summit in Brunei.  Earlier, on Sept. 21, China’s Foreign Minister Wang Yi told a Brookings Institution audience in Washington that China is “ready to sit down and have a dialogue … to work out jointly a way to manage the current situation.” But, as a first step, “Japan needs to recognize that there is such a dispute.  The whole world knows that there is a dispute.” Wang was confident that ultimately Japan would return to dialogue.

Meanwhile, Prime Minister Abe repeatedly called attention to China’s ongoing military modernization that included 10 percent increases in the defense budget for over 22 years, its intrusions into Japan’s air and sea space, and its attempts to change the status quo by force in the Senkakus as well as the South China Sea.  On Oct. 23, during a meeting of the Upper House Budget Committee when asked about “proactive pacifism,” Abe cited challenges involving the use of force to change the status quo in the East China Sea and South China Sea and said that “the Sea must be open. Freedom of navigation must be defended.”  In an Oct. 25  Wall Street Journal interview, he returned to his concerns over China’s attempts to use force, rather than the rule of law, to change the status quo in Asia and reiterated that Japan’s door to dialogue with China remained open.  Speaking at a Ground Self-Defense Force ceremony on Oct. 27, Abe said that Japan will “demonstrate our intention not to allow a change in the status quo.”

Asked to comment Abe’s remarks, Chinese Foreign Ministry spokesperson Hua Chunying charged the prime minster with repeatedly making “provocative” remarks, showing “once again that the Japanese politicians are deceiving themselves with arrogance and a guilty conscience.”  On the Diaoyu Islands, she added “everyone can tell that it is Japan that has changed the status quo…” From the start its unilateral action has been “illegal and void.  China will never accept it and will firmly oppose it.”  Japan should “desist from all provocative words and deeds, show sincerity and take concrete steps to properly manage and solve problems and safeguard regional peace and stability.” In mid-November, spokesperson Qin Gang noted Japan’s continuing references to international law as a dispute settlement mechanism and asked “we wonder whether the outcomes of the victory of the world anti-fascist war and the post-war international order should be observed” and “whether the Cairo Declaration and the Potsdam Declaration still count or not.” As for Abe’s charge that China is engaged in a military build-up, Qin expressed “dissatisfaction with Japanese leaders’ flagrant hype of the so-called China threat theory,” observing that “Japan’s move in the military and security sector calls for our close attention.”

Business and economics

At the end of August, four of Japan’s major travel agencies, including the Japan Travel Bureau released figures noting a 75.2 percent plunge in package tours to China booked by Japanese travelers in April-September 2013 over the same period in 2012. Figures released by China’s General Administration of Customs indicated a 13 percent year-on-year drop in Japan’s exports to China from September 2012-August 2013.  China’s total trade volume with Japan in January-August 2013 was off 8.5 percent over the same period in 2012.

Meanwhile, Japanese companies were finding it hard going in China in the year after the Senkaku nationalization.  Japanese auto makers reported sales were down 10 percent from January-September over 2012.  In August, while China’s automobile market expanded at a 10.3 percent clip, Nissan’s sales increased only 1 percent, while Toyota and Honda experienced 4.2 percent and 2.5 percent declines, respectively. However, sales skyrocketed in September: Honda was up 50 percent, Nissan was up 83.4 percent, and Toyota was up 63.5 percent.  The upward trend continued in October with Toyota, Nissan, and Honda all reporting sales increases, with Toyota leading the way with an 80 percent increase.

Meanwhile, Uniqlo, Takashimaya, Daimaru Matsuzakaya, and Mitsui Real Estate Development were targeting the Shanghai market. In a July-August survey conducted by Nikkei Shimbun of Japanese companies operating in China, 80 percent of the respondents placed emphasis on the China market.  The results stood in contrast to an August survey conducted by the Japan External Trade Organization in which 8 percent of the 50 companies surveyed were considering reducing presence or pulling out of China. In early December, a Japan Bank for International Cooperation survey revealed that China, after over two decades as the top destination for Japanese foreign investment, had fallen to fourth place; the drop was attributed to rising labor costs and bilateral tensions.

Commercial diplomacy continued to expand even as political differences over the Senkakus continued.  On Sept. 4, Keidanren Chairman Yonekura Hiromasa arrived in Beijing and met Tang Jiaxuan, chairman of the China-Japan Friendship Association. Yonekura also spoke in Jilin at the opening of the China-Northeast Asia Exposition.  From Sept. 16-19, a Chinese business delegation, including CTTIC Group Board Chairman Chang Zhenming, China Investment Corporation President Gao Xiqing, and Sany Heavy Industry Chairman Liang Wengen visited Tokyo and met high-level political and business executives from Mizuho Financial Group, Nomura Securities, and Toyota Motor.

In mid-November, a Japanese delegation from the Japan-China Economic Association visited Beijing.   The delegation, chaired by Toyota’s Honorary Chairman Cho Fujio, met Vice Premier Wang Yang on Nov. 19.  Keidanren Chairman Yonekura told Wang that “we would like to establish a future-oriented new cooperative relationship” and spoke to the importance of promoting exchanges “including among political leaders….”  Yang, however, replied that China wanted “the Japanese government to face historical issues squarely.”

High-level contacts

On Sept. 5, Prime Minister Abe and President Xi Jinping shook hands and exchanged greetings at the G20 Summit in St. Petersburg.  Commenting on the “unscheduled” meeting, China’s Foreign Ministry acknowledged that the bilateral relationship is experiencing difficult times but emphasized that China is not responsible and that tensions should be resolved through dialogue.  Xinhua reported that Xi had urged Japan to correctly view history, devote itself to the future, and correctly deal with sensitive problems, such as the Daioyus and history.  In reply, Abe said that he sincerely wished for an improvement in bilateral relations.

On Sept. 11, Japan’s Minister of State for Science and Technology Policy Yamamoto Ichita and Minister of Education, Sports, Science and Technology Shimomura Hakubun visited China to attend a privately sponsored forum in Dalian.  Their visit was the first by Cabinet-level officials under the Abe government.  On Sept. 12, Ozawa Einin, chairman of Japan’s New Party Diet Policy Committee, met Tang Jiaxuan in Beijing.  Ozawa suggested that China and Japan take the islands issue to the International Court of Justice. Tang, however, maintained that the issue is a bilateral one and should be resolved between the two countries.

On Oct. 22, the Japan-China and China-Japan Friendship Associations held a symposium in Beijing to mark the 35^th anniversary of the Friendship Treaty.  The Chinese contingent was led by Tang Jiaxuan and the Japanese delegation by Kato Koichi, chairmen of the respective associations.  Chinese representatives were reported to have called for increasing private-level exchanges, while the Japanese delegation emphasized the importance of a leadership meeting.  The following day, Wang Zhen, vice chairman of the National People’s Congress met the Japanese delegation in the Great Hall of the People.  Wang underscored China’s determination to safeguard its territory.

On Oct. 26, a symposium on China-Japan relations, jointly sponsored by Japan’s Genron NPO and China Daily, convened in Beijing.  Addressing the islands issue, Tang Jiaxuan called on Japan to recognize the existence of a dispute and remove the impediment in the bilateral relationship.  The idea that China was trying to change the status quo by force was at odds with reality. Miyamoto Yuji, a former Japanese ambassador to China, replied that Asia should be marked, not by forceful opinions, but by proper and impartial attitudes.  Former Prime Minister Fukuda Yasuo spoke at the symposium and also met Foreign Minister Wang.

Security

Japan took several steps to increase defense funding and strengthen defense planning. On Aug. 30, the Ministry of Defense announced a budget request for FY 2014 of ¥4.819 billion, a 3 percent increase over 2013.  The budget request placed particular emphasis on capabilities to strengthen defense of Japan’s remote islands. In late November, the Foreign Ministry in its budget requested ¥1 billion to support public relations efforts to strengthen Japan’s claim to the Senkakus, Takeshima, and the Northern Territories. These funding increases suggest a growing interest in addressing the issue of Japan’s right to collective self-defense. Interestingly, an Asahi Shimbun poll conducted in August showed only 27 percent of respondents favored the exercise of the right of collective self-defense, while 59 percent were opposed. However, in an opinion poll published in the Nov. 3 Nikkei Shimbun 49 percent favored a constitutional amendment to allow Japan to exercise the right of collective self-defense, 33 percent favored reinterpretation of the constitution, while 18 percent opposed exercise of the right.

There were also several steps taken to rationalize Japan’s right to collective self-defense. On Sept. 17, the Prime Minister’s Advisory Panel on the Reconstruction of the Legal Basis for Security held its first meeting.  Addressing the panel on the right of collective self-defense, Abe asserted that “the constitutional interpretation must not sacrifice the people’s survival and the nation’s existence.”  On Sept. 22, Abe told the Lower House Budget Committee that there is a large gap between having the right of collective self-defense, being able to exercise it, and exercising it.  To secure the exercise, legislation is necessary. Speaking at the Hudson Institute on Sept. 25, Abe announced that Japan would become “a more proactive contributor to world peace and stability” but acknowledged that his efforts with regard to collective self-defense might “widen the gap with China and the ROK.” Earlier in New York, he told reporters that he did not “intend to set a deadline” for a decision on the exercise of the right of collective self-defense. New Komeito leader Yamaguchi Natsuo welcomed Abe’s remarks, noting the importance of developing public understanding of the issue and the time needed to achieve this.

On Dec. 11, the Abe government completed work on Japan’s new National Defense Program Guidelines and five-year Mid-Term Defense Plan.  The documents focused on enhancing Japan’s capabilities to deal with growing threats in Japan’s air and sea space, in particular in Japan’s southwest region.   The Guidelines and Mid-Term Defense Plan along with Japan’s new National Security Strategy received Cabinet approval on Dec. 17.

The Chinese response to Japan’s actions was predictably critical. On Sept. 18, the anniversary of the 1931 Manchurian Incident, Foreign Ministry spokesperson Hong Lei told a press conference that “Japan is creating and exaggerating conflicts deliberately as an excuse to arms expansion and modification of its military strategy.” Commenting on Japan’s defense plans, Hong noted that China and Japan’s Asian neighbors are “following closely” developments in Japan’s security policy.  He accused Japan of hyping the “China threat”… to find an excuse to amend its constitution, build up its military strength and adjust its military policies.” Hong urged Japan “to stop making irresponsible accusations against China.”  Following Cabinet approval of the defense plans, Hong observed that “given all the negative moves taken by Japan on historical issues, Asian countries and the international community, including China, cannot but pay high attention and stay on high alert.”

China’s Air Defense Identification Zone

On Nov. 23, China announced the creation of its East China Sea Air Defense Identification Zone (ADIZ), extending over much of the East China Sea including the Senkaku/Diaoyu Islands.  Japan’s response was immediate.  Director General for Asian and Oceanic Affairs Ihara Junichi called in Han Zhigiang, minister of the Chinese embassy, to protest.  Ihara underscored that the Senkakus, including the airspace above are Japan’s sovereign territory and that China’s actions “were completely unacceptable … and extremely dangerous, inviting unforeseen incidents in Japan’s airspace that could escalate.” Minister of Defense Onodera told reporters that China’s unilateral action represented “extremely dangerous conduct.”  Foreign Minister Kishida Fumio criticized China’s declaration as “unilateral conduct which Japan cannot recognize.” Former Foreign Minister Komura Masahiko told a television audience that China’s action must be rigorously protested.  The government urged Japan’s airlines not to comply with China’s ADIZ regulations.

China’s Foreign Ministry spokesperson Qin Gang responded to Japan’s criticism at a Nov. 25 press conference saying that the measures to create the ADIZ were “totally in line with the UN Charter and other international laws and practices and thus are fully justified” and that “it is unreasonable and completely wrong for Japan to make irresponsible accusation against China’s establishment of the Air Defense Identification Zone in the East China Sea.”

During a Nov. 25 meeting of the Upper House Budget Committee, Prime Minister Abe said that any action that treated Japan’s airspace over Senkakus as if it were China’s airspace was “completely unacceptable” and would have “no effect.”  Japan would resolutely defend its sovereign territory in the Senkakus.  Vice Foreign Minister Saiki called in Ambassador Cheng to protest and requested that China retract the ADIZ.  Cheng replied that Japan’s request did not accord with reason, rejected Japan’s request, and went on to say that China’s ADIZ was not directed at any country and did not impair freedom of air travel.

On Dec. 6, Japan’s Lower House adopted a resolution requesting China to retract the ADIZ.  In reply, spokesperson Hong said that Japan had no right to make “irresponsible remarks on this issue … and should stop erroneous practices, stop pestering and provoking, and make real efforts to develop the China-Japan relationship and maintain order and security in the related airspace.”

Meanwhile, Japan continued its call for dialogue. Foreign Minister Kishida reiterated that “the door to dialogue is always open remains unchanged” and that it was “all the more important to have a dialogue under these circumstances.” On Dec. 9, Abe proposed the development of a crisis management mechanism to avoid unanticipated incidents in the East China Sea airspace, and, noting the lack of any meeting at the leadership level in the year since his government came to power, again said his door to dialogue remained open.  In Beijing, spokesperson Hong noted that the two countries are in communication but “the point is that Japan does not face up to history and reality and fails to adopt correct approaches on relevant issues.”

The back-and-forth continued through the month of December. On Dec. 14, the joint statement, issued at the conclusion of the Japan-ASEAN meeting in Tokyo announced agreement to “enhance cooperation in ensuring the freedom of overflight and civil aviation safety, in accordance with the universally recognized principles of international law.”  China was not referenced in the joint statement, but reacting to it when spokesperson Hong charged Prime Minister Abe with taking advantage of the meeting “to slander China.” China was “strongly dissatisfied with that.” On Dec. 20, after meeting Foreign Minister Kishida, Ambassador Cheng told reporters that “while problems do exist, he wanted to make every effort through dialogue to return to the path of the Mutually Beneficial Strategic Relationship.” Meanwhile editorials in all of Japan’s major dailies expressed support for the government’s position on China’s ADIZ.  In Dec. 14-15 Sankei Shimbun public opinion poll, 87 percent of the respondents said they viewed China’s ADIZ as “very” or “somewhat” threatening to Japan.

Yasukuni

On Dec. 26, which marked the first anniversary of his government coming to power, Prime Minister Abe visited the Yasukuni Shrine – the first visit to the shrine by a prime minister since the 2006 visit of Koizumi Junichiro.  Afterward, Abe released a statement that read, “Some people criticize the visit to Yasukuni as paying homage to war criminals, but the purpose of my visit today … is to report before the souls of the war dead how my administration has worked … to renew the pledge that Japan must  never wage war again.”  Abe’s statement went on to say “It is not my intention to hurt the feelings of the Chinese and Korean people.”

Ambassador Cheng went to the Foreign Ministry to protest the visit.  In Beijing, the Foreign Ministry issued a statement which read “we strongly protest and seriously condemn the Japanese leader’s acts.”

Public opinion

Public opinion in Japan grew increasingly pessimistic about relations with China. On Nov. 24, the Abe government released the results of the annual Cabinet survey of public opinion.  Asked if they felt friendly toward China, 80.7 percent of respondents answered “no,” an increase of 0.1 over 2012 and the highest negative ranking since the poll began in 1978.  As for the state of Japan-China relations, those who saw relations as “bad” totaled 91.0 percent. In a Yomiuri Shimbun-Gallup poll released on Dec. 16 before China’s declaration of its ADIZ, respondents were asked for the views on the Japan-China relationship.  The percentage of Japanese who considered relations “bad” hit an all-time high of 87 percent.  On the question of trusting China, 88 percent responded “no.”  The negative trust figure has been in the 80-89 percent negative range since the September 2010 fishing boat incident.

Outlook

The door to dialogue may be open, but after China’s declaration of an ADIZ in November and Abe’s visit to the Yasukuni Shrine in December,  the prospects for either Chinese or Japanese leaders walking through it in the January-April period are dim at best.