During this quarter, China observed a number of anniversaries in Sino-Japanese relations related to the Japanese military action in Asia. China’s leadership took care that the anniversaries, aimed at strengthening Chinese patriotism and the legitimacy of the Chinese Communist Party (CCP), would not replicate the anti-Japanese sentiment loosed in April. And they were successful.

At the same time in Japan, domestic politics were center stage.  Prime Minister Koizumi Junichiro was absorbed in the passage of his postal reform legislation.  Failure to secure passage led Koizumi to dissolve the Diet in early August and to go to the polls Sept. 11.  The prime minister focused his campaign on the reform issue and avoided discussion of Aug. 15 and his visits to the Yasukuni Shrine. Meanwhile, Japanese diplomacy is absorbed by the Six-Party Talks.

One issue did disturb the political and diplomatic calm – the East China Sea territorial dispute. In July, the Japanese government granted exploration rights to Teikoku Oil Company in the area east of the mid-line boundary, which China has refused to acknowledge. The government later committed to protect Teikoku exploration activities in the event of Chinese challenges.  In mid-September, reports reached Tokyo that China had initiated natural gas production in the Tianwaitian field – on the western Chinese side of the mid-line. Diplomats are scheduled to meet in Tokyo at the end of September to discuss East China Sea issues.

History: anniversaries

During this quarter, China observed a number of anniversaries in Sino-Japanese relations, including July 7, the Marco Polo Bridge incident, which triggered Japan’s invasion of China in 1937; Aug. 15, Japan’s acceptance of unconditional surrender; Sept. 2, Japan’s formal surrender; and Sept. 18, the Manchurian Incident. To foster Chinese patriotism, the government on July 7 opened a renovated museum built on the site of the Marco Polo Bridge incident, with a special exhibit commemorating the 60^th anniversary of “The Great Victory in the Struggle Against Japan.” The museum features exhibits on the Manchurian Incident as well as the activities of the Unit 731 of the Imperial Japanese Army, notorious for biological experiments in China. At the same time, the museum took care to emphasize the postwar friendship between China and Japan.

On the evening of July 6, China’s national media reported in detail on the museum and its reopening. Also as part of the patriotic campaign, television programming reintroduced China’s heroes in the struggle against Japan and carried films and dramas on the war.  Throughout the July-September quarter, Beijing, sensitive to the anti-Japanese demonstrations that erupted during the spring, assiduously worked to prevent a recurrence, shutting down internet websites calling for anti-Japanese demonstrations and making clear that such actions would not be tolerated.

On Aug. 2, the Diet adopted a resolution commemorating the 60^th anniversary of the conclusion of the war. The resolution in part reads: “Remembering the resolution adopted 10 years ago renewing Japan’s resolve for peace based on historical lessons, and deeply reflecting on the fact that Japan’s conduct in the past inflicted enormous damage and pain on other countries in Asia and other areas, we hereby offer sincere condolences to all the victims.”

Commenting on the resolution, Foreign Ministry Spokesperson Kong Quan said that Japan “reasonably should express deep remorse on its history of aggression and correctly deal with the issue of history.”  However, he found it “regrettable” that “some political forces in Japan are doing their utmost to deny and glorify the history of aggression.” “Such backward looking ways,” he observed, “have no future.”

Sovereignty issues: East China Sea

On May 30-31, Japanese and Chinese diplomats and officials met in Beijing to discuss issues related to the East China Sea. Both sides agreed to resolve issues through continuing talks on joint development of resources and to establish working groups on issues related to the maritime boundaries.

That’s where the agreement ended. Pending demarcation of the East China Sea boundary, China proposed joint development of resources on the eastern (Japan side) of the mid-line, which Japan refused.  Instead, Japan called for joint development on both sides of the mid-line, and again requested that China both provide data from its exploration and suspend all unilateral development activities. China rejected the Japanese proposals as without foundation.  The Japanese delegation left Beijing with the statement that, given the circumstances, Japan would continue to process applications for private sector exploration rights.

In a speech delivered July 8 in Kitakyushu, METI Minister Nakagawa Shoichi made clear that the government shortly would grant Japan’s Teikoku Oil Company exploration rights in the East China Sea. On July 5 and 7, Kagoshima and Okinawa prefectural governments respectively signed off on the granting of exploration rights, and July 14, the Japanese government approved Teikoku’s request to begin test-drilling exploration. Nakagawa told reporters that the granting of exploration rights was in Japan’s “national interest.”  As for anticipating China’s reaction, the minister dismissed the matter as being “not for me to say.” Japan’s Foreign Ministry Spokesperson Takashima Hatsuhisa told a press conference that he “did not expect the decision to have any particular effect on Japan’s relations with China.”

China’s response came from the Foreign Ministry’s director general for Asian affairs, Cui Tiankai, who called in the minister at the Japanese Embassy, Atsumi Chihiro, and protested the decision as a “grave provocation and violation of China’s sovereign rights.” The Chinese Embassy in Tokyo filed a similar protest note with the Foreign Ministry July 15.  A Chinese Foreign Ministry statement accused Japan of violating the Law of the Sea Convention.

In Beijing, the Japanese Embassy rejected the Chinese charge and insisted that Japan was acting in accordance with the Law of the Sea Convention. The day after granting exploration rights, Nakagawa told a news conference that he wanted “to sincerely discuss the matter” with China and that the time had come to turn the East China Sea into a “sea of friendship.”

Director general-level talks on the East China Sea, scheduled for mid-July, were postponed at Beijing’s request to allow China to focus on preparations for the Six-Party Talks on North Korea.  In mid-August, reacting to reports that China had laid a pipeline in the Chunxiao gas field in advance of full-scale production, the Japanese Foreign Ministry on Aug. 9 lodged a protest with the Chinese Embassy, again asking that operations cease and that China provide exploration data.

On Aug. 10, Minister Nakagawa again expressed Japan’s intention of resolving the matter through consultations premised on the assumption that both parties are able to reach agreement through discussion. At the same time, it was reported that on Aug. 3, Teikoku Oil had completed the license registration process and had paid an estimated ¥10 million in licensing taxes as of Aug. 3. The next step for Teikoku was to file a business plan for government approval.

On Aug. 26, Teikoku President Sugioka Masatoshi announced that his company was prepared to explore for gas in the East China Sea but wanted assurances from Tokyo that his workers would be protected against reaction by China. A month later on Sept. 21, Nakagawa assured Teikoku that, if it decides to explore, “Japan will do its duty.”

At the end of the month, in response to a report from Hong Kong that China’s National Offshore Oil Corporation would begin gas production in September in the Chunxiao field Japan’s director general for Asia and oceanic affairs, Sasae Kenichiro, telephoned the minister at the Chinese Embassy, Cheng Yonghua, to protest the announcement.  Sasae called the action “regrettable” and asked that China act responsibly with restraint.  Cheng reportedly replied that the area of activity was not in dispute between the two countries and that China’s position of resolving issues related to East China Sea exploration through consultation remained unchanged.

A slightly different approach to the issue drew media attention, when, on Sept. 9, two days before Japan’s parliamentary election, five Chinese warships were sighted in waters on the Chinese side of mid-line boundary.

On Sept. 20, Kyodo and the AP, judging from flames emanating from a drilling platform, reported that China apparently had begun to extract natural gas from the Tianwaitian field.  Nakagawa told reporters that Japan had “confirmed” the appearance of the flames. (The Tianwaitian field is farther west (the Chinese side) of the mid-line boundary than the Chunxiao field.) The report caused the Foreign Ministry to telephone the Chinese Embassy and protest China’s unilateral actions.  Beijing, of course, pointed out that the activity was taking place “in Chinese waters not disputed by Japan” and reiterated its position of resolving the dispute through “dialogue and consultation” with Japan.  The next day, Foreign Minister Machimura Nobutaka announced that director general-level talks would resume in Tokyo at the end of September. He went on to say that it was “regrettable” that even as consultations had needlessly dragged on, China was continuing to advance its exploration activities.

Following a Sept. 27 Cabinet meeting, Nakagawa used the Japanese name “Kashi” in referring to developments in the Tianwaitian field. Earlier, the Asahi Shimbun had reported that in April METI and Teikoku Oil had agreed to give Japanese names to the test sites with the objective of underscoring Japan’s sovereignty claims.

Sovereignty issues: the Senkakus

During the quarter, Japan continued efforts to establish Okinotori, the southernmost site in the Senkaku island chain, as an island and thus support Japanese claims to an expanded exclusive economic zone (EEZ).  (China asserts that Okinotori is not an island, which can support EEZ claims, but simply a pile of rocks.)

Following a survey conducted earlier in the year by the private Nippon Foundation, the Sankei Shimbun on Aug. 24 reported that the Japanese Coast Guard had decided to build a lighthouse on Okinotori and had initiated feasibility studies of the project.  On Sept. 5, the Coast Guard requested ¥33.7 million for construction in its budget request for 2006, setting a target date of 2007 for completion. The Fisheries Agency in its budget requested ¥400 million to study coral growth and to determine how its growth could be encouraged on Okinotori.

Yasukuni Shrine

To counter a study group organized by Acting Liberal Democratic Party (LDP) Secretary General Abe Shinzo in support of Koizumi’s visits to the Yasukuni Shrine, pro-China elements within the LDP, led by former Home Affairs Minister Noda Takeshi, former LDP Secretary General Kato Koichi, and former Foreign Minister Komura Masahiko formed their own study group.  The study group met for the first time July 12.  Gotoda Masaharu, chief Cabinet secretary to former Prime Minister Nakasone, told the group that he thought it undesirable for Koizumi to visit the shrine. (Gotoda was instrumental in Nakasone’s decision to cancel a visit to Yasukuni in 1986.)

The LDP’s pro-Yasukuni study group met the following day for the third time.  At the invitation of the study group, journalist Sakurai Yoshiko, a critic of the international legitimacy of the Tokyo War Crimes Tribunal, was the featured speaker. Sakurai made clear that the prime minister should continue to visit the shrine.

With the Aug. 15 anniversary of Japan’s acceptance of unconditional surrender approaching, reporters continued to press the prime minister as to whether he would visit the shrine.  Asked at his official residence on the evening of July 13 whether he had determined a date for a visit to the shrine, Koizumi replied that “you can ask me as many times as you want, but my answer is that I’ll handle the issue in an appropriate manner.”

A week later Kanzaki Tankenori, leader of the LDP’s coalition partner, the New Komeito Party, told reporters that he did not think that the prime minister would visit the shrine Aug. 15; to do so would “worsen Japan’s relations with China and South Korea.”

While visiting China, Kakegawa City Mayor Totsuka Shinya, met on July 25 with Li Jun, head of the Second Bureau of the Internal Department of the CCP.  Li told Totsuka that should Koizumi visit the shrine, “the political situation in China may change greatly.” Koizumi had a slightly different take on the issue.  On July 19, speaking at a meeting of the Japan-China 21^st Century Friendship Committee, Koizumi told the dinner audience that Yasukuni is “not the only problem” in the bilateral relationship and asked the group to communicate that message to China.

A July 20 Mainchi Shimbun poll on whether the prime minister should visit Yasukuni found 39 percent in support and 51 percent opposed.  The results marked a slight shift away from support toward opposition.  A previous June poll found 41 percent in support and 50 percent in opposition. An Aug. 12 Nihon Keizai Shimbun poll found 46 percent supporting the prime minister’s visit to the shrine – an increase of 8 percent since the last survey in June; 38 percent were opposed – a drop of 4 percent since June.

On Aug. 8, after failing to secure passage of his postal reform legislation, Koizumi dissolved the Diet and set Sept. 11 as the date for the national election. Pre-empting an election debate over Yasukuni, the prime minister told reporters that evening “I have no intention to make Yasukuni a campaign issue.” However, he avoided answering questions as to whether he would visit the shrine.  The closest he came to answering that question came during a candidates’ debate on Aug. 29, when he replied that “If you look at my past behavior, you will understand what actions I will take.” On the weekend before the election, appearing in a series of television appearances, Koizumi made clear his commitment to making yearly visits to the shrine. On Sept. 25, Yamasaki Taku, political confidant of the prime minister, told a Sunday Fuji TV audience that he thought Koizumi would visit Yasukuni before the end of the year.

The courts: history and Yasukuni

The Japanese legal system addressed a number of cases during the quarter involving wartime legacy issues.

• On July 6, the Osaka District Court dismissed a lawsuit filed by Japanese nationals left in China at the end of the war. The suit sought compensation for hardships suffered in China and subsequently in Japan after re-settlement. The court acknowledged their hardships; recognized that government policy was responsible in part for their suffering; but rejected legal responsibility on the part of the government; and argued that compensation policy should be decided by the Diet.

• On July 23, Chinese plaintiffs appealed at the Supreme Court a decision by the Tokyo High Court rejecting claims for compensation suffered by plaintiffs and relatives of victims as a result of Japan’s germ warfare activities in China during the war. The Tokyo Court’s decision acknowledged the suffering endured as a result of the activities of the Imperial Army’s Unit 731 but, citing international law, rejected the right of individuals to seek compensation directly from governments.

• On July 26, the Osaka High Court rejected an appeal filed by a 338-member class action suit of Japanese and Korean war-bereaved families seeking compensation for the prime minster’s visit to the Yasukuni Shrine on Aug. 13, 2001.  The suit alleged that the prime minister’s visit violated the principle of separation of church and state. The court found that rights and interests asserted by the plaintiffs to be “vague” and not protected under law. The court, however, did not rule on the constitutional issue. On Aug. 8, the plaintiffs filed an appeal at the Supreme Court.

Textbooks and history

On July 13, the Board of Education of the City of Otawara adopted the history textbooks compiled by the conservative Japanese Society for History Textbook Reform and published by Fuso Publishing. Two weeks later, on July 28, the Tokyo Metropolitan Board of Education adopted the controversial history and civics textbooks for use in four junior high schools.  A month later, on Aug. 28, Tamagawagakuen, a private junior high school in a suburb of Tokyo, also adopted the Fuso-published textbooks.

Reacting to the Otawara decision, Chinese Foreign Ministry Spokesperson Liu Jianchao told a press conference that the adopted textbooks “made the utmost efforts to whitewash and evade Japan’s due political and moral responsibility for its war of aggression.”  Liu called on the Japanese government to “educate the young generation with a correct attitude toward history,” making clear that the government of Japan “shoulders an unshirkable responsibility in this regard.”

Japanese government ministers continued to provide Beijing with history-related ammunition.  Education Minister Nakayama Nariaki reportedly told an audience that “the victimized women in Asia should be proud of being comfort women,” remarks which were branded by Spokesperson Liu as “utterly shameless.” Liu then went on to indict the “forced conscription of ‘comfort women’” as “one of the severe crimes committed by Japanese militarism,” “a historical fact that cannot be brazenly denied by anybody.”

To deal with the issues of history, the Japanese Foreign Ministry on Aug. 12 opened a history Q & A site on its homepage. In an attempt to enhance foreign understanding of Japan’s history, the Foreign Ministry on Aug. 23 announced that translations of the eight government-authorized Japanese history textbooks would be posted on its website, beginning the next day, with initial translations in Chinese and Korean.

Meanwhile, China’s leadership continued to emphasize the study of history. During an hour meeting in Beijing with Keidanren Chairman Okuda Hiroshi, Premier Wen Jiabao, speaking with reference to the war and history, said “I want you to study it fully.”  Afterward, Okuda remarked to reporters that compared to his meeting with Wen last year, when the premier denounced Japan as soon as he sat down, the atmosphere this year was “quite different.”

China’s major history lesson came Sept. 3 in a speech delivered by President Hu Jintao at a “Meeting Marking the 60^th Anniversary of the Victory of the Chinese People’s War of Resistance against Japanese Aggression and the World Anti-Fascist War.” Hu’s speech gave a fuller picture of history – of Japanese militarism and aggression against China and of the leading role of the CCP in China’s ultimately successful resistance. Only in two of the concluding three paragraphs, after a speech filled with references to Japanese militarism and aggression, did Hu speak to the reality that “in the long course of China-Japan relations over two milleniums, friendship has been in the mainstream.”

Security

On July 19, the Pentagon issued its annual report to the Congress, China’s Military Power.  The China debate in Washington was echoed across the Pacific in commentary in Japan on the Pentagon report.  Chief Cabinet Secretary Hosoda Hiroyuki told a press conference that, based on the U.S. analysis, China’s reported defense spending is twice that of Japan’s, and that, in contrast to Japan’s defense budget, the People’s Liberation Army (PLA) budget lacks transparency. Hosoda cited spending on missiles and nuclear weapons as “particularly unclear.” The Yomiuri Shimbun reported that a senior Japan Defense Agency had commented that with the 2004 National Defense Program Guidelines focus on “terrorism and other newly emerging threats, Japan is not well prepared to deal with the China threat.”

On Aug. 2, the Koizumi Cabinet approved the “Defense of Japan 2005,” the Defense Agency’s annual White Paper.  With regard to China, the report cited the PLA’s ongoing military modernization, noted that defense spending had hit double-digit numbers for the 17^th consecutive year, and called attention to the budget’s lack of transparency. The White Paper observed that “it is necessary…to carefully evaluate whether the modernization of China’s military forces exceeds the level necessary for national defense.” The document also said that Japan is “closely monitoring” the operations of the PLA Navy in waters adjacent to Japan, citing the intrusion of a Chinese nuclear-powered submarine into Japanese territorial waters in November 2004.

Defense Agency Director General Ohno Yoshinori told reporters that “China is not a threat, but there are some points we should note and we’d like to ask for transparency.” Beijing slammed the White Paper as “groundless” and “irresponsible,” playing up “the so-called China threat.” Foreign Ministry Spokesperson Kong Quan said that it “would mislead the public, result in suspicion … and opposition … and harm Sino-Japanese relations.”

At the end of August, China-Russia military exercises conducted near the Vladivostok and Shandong caught Japanese attention. Director General Ohno said that Sino-Russian cooperation could affect security in Asia and suggested that such cooperation could rival the Japan-U.S. alliance. China’s Foreign Ministry Spokesperson Qin Gang dismissed Japanese concerns, asserting that the exercises targeted “the new challenges and threats facing regional security, especially “international terrorists, extremist and splittist threats.”  The exercises represented Sino-Russian confidence building measures.

Business and economics

In mid-August, the Japan External Trade Organization (JETRO) organization released trade figures for the first half of the year. Exports to China totaled $37.2 billion, an increase of 6.3 percent over the first six months of 2004. The increase marked a substantial decline from the 36 percent in the same period last year.  JETRO attributed the fall off to the fact that Japanese companies have increasingly shifted production to China as well as to the fact that Chinese companies had accumulated significant inventories of auto and electronics parts that had been imported previously from Japan.

Taking the business communities temperature on China, Kyodo News in mid-July polled executives from the top 100 Japanese companies; 95 of the companies responded. Fifty-one of those expressed concern that the currently strained political relations could adversely affect business prospects in China.  Nevertheless, 66 percent of the executives were prepared to expand business operations in China. Two companies reported that anti-Japanese demonstrations in April had adversely affected their operations, while 20 said they experienced no negative effects or thought them manageable. Notwithstanding the April anti-Japanese demonstrations, Shanghai authorities in July reported a continuing increase in Japanese businessmen and their families as well as students in the city’s Japanese-language elementary and junior high schools.

METI released its 2005 White Paper July 1.  The report cautioned Japanese business not to put all its eggs in the China basket.  The report noted that Japanese companies could encounter “obstacles to their businesses which cannot be seen in mature markets, such as low levels of compliance and structural problems.” The White Paper singled out problems in income distribution between the booming coastal provinces and the interior; in an overheated investment climate; in the protection of intellectual property, possible energy shortages and anticipated increases in labor costs; as well as continuing problems in the reform of state-owned enterprises. METI suggested balancing risk in China by expanding Japanese business activities in ASEAN.

Polls: looking ahead

At the end of August, the results of a joint Japanese-Chinese poll on the bilateral relationship hit the streets.  Conducted in July by the Japanese think tank Genron NPO, China Daily, and Beijing University, the poll showed a growing pessimism in both countries with regard to both the present state and the direction of the relationship. In Japan, 74 percent of the general public and 84.9 percent of the intellectual and business elites thought relations were “not very good” or “not good at all.”  In China, 54.9 percent of the general public and 79 percent of China’s students held similar opinions.

Looking ahead, 73 percent of Japan’s general respondents and 73.6 percent of the intellectual and business communities thought relations would experience further deterioration or were uncertain as to how they would develop. Of the Chinese respondents, 56.1 percent of the general public and 81 percent of university students shared similar feelings with regard to future.

Approximately 90 percent of both China’s general public and students thought Japan responsible for the present state of affairs, while in Japan approximately 50 percent of the general public and the intellectual and business elite found neither Japan nor China to be solely responsible.

Outlook

With the exception of the East China Sea dispute, the summer passed quietly.  But clouds may be building again on the horizon. The end of September meeting in Tokyo on the East China Sea will go along way in determining whether the waters will become the “sea of friendship” both sides profess to want.  Also looming is a Koizumi visit to the Yasukuni Shrine – and Chinese reaction.