Government-to-government relations were cordial over the summer, with the public expression of differences minimized to emphasize their common opposition to US protectionist trade policies.  Bilateral trade and tourism posted impressive gains. Both leaders seemed likely to continue in office, though China’s annual Beidaihe meeting of power brokers allegedly criticized the disappointing results of President Xi Jinping’s economic restructuring program, his aggressive foreign policies, and the excesses of his cult of personality. Unimpressive popularity polls notwithstanding, Prime Minister Abe Shinzō had solid support for re-election as president of the Liberal Democratic Party and is therefore likely to win a third consecutive term as prime minister. Abe remained optimistic about receiving an invitation for a state visit to Beijing. However, Japan continued to complain about China’s military expansion and to strengthen its defenses. Summing up China-Japan relations 40 years after normalization, the Yomiuri Shimbun noted that coolness persisted despite bilateral exchanges of people and money.

Politics

Chinese Premier Li Keqiang’s visit to Japan, the first by a Chinese premier in eight years, was characterized by an exchange of cautiously phrased pleasantries. Li and Japanese Prime Minister Abe Shinzō signed several agreements, including a memorandum of understanding (MOU) on setting up a maritime and air liaison mechanism.   Conservative Japanese expressed doubt that the MOU, reached after more than a decade of negotiations, would bring any actual changes, with Self-Defense Forces (SDF) personnel questioning whether it would reduce the risk of collisions.

Li also spoke at a low-key commemoration of the 40^th anniversary of the signing of the Sino-Japanese Treaty of Peace and Friendship.  Japanese media were generally positive, focusing on the agreements signed, while China’s Xinhua made clear that better relations were contingent on Japan’s continued acknowledgement of its behavior during World War II and its adherence to Beijing’s understanding of the one-China policy. Li’s visit was interpreted by some as an effort by Beijing to soothe ties with Tokyo as a counterweight to a looming trade war between Beijing and Washington.  The Japanese side had hoped that the visit would pave the way for President Xi Jinping to invite Abe for a formal state visit to Beijing and a reciprocal visit to Tokyo by Xi.  However, Li did not confirm a date, probably because the Chinese government wants to see whether Abe, facing domestic criticism for his alleged role in a financial scandal, is re-elected president of the ruling Liberal Democratic Party (LDP).

Japan Times May 6, 2018

Any goodwill generated by the visit quickly disappeared, with Chinese media continuing to snipe at Abe and several Japanese newspapers expressing skepticism that the agreements would add to the peace and security of the region. Yomiuri took China to task for pushing its territorial claims and censorship on foreign firms, specifically referencing instances when those companies were charged with violating China’s cybersecurity law.  The law bans the use of the internet for instigating people to split the nation, in this case by implying that Taiwan was not part of the PRC.  (The section on Taiwan below has details)  When China sent a drilling ship near the median line between the exclusive economic zones of the two countries, Japan lodged a protest, saying that Beijing’s exploration contravenes the spirit of a 2008 agreement that Abe and Li said would be maintained.

An opinion piece in Global Times heaped scorn on Abe’s “rush” for a summit with Kim Jung Un, noting that, in a May 4 telephone call with Xi Jinping,  Abe had sought China’s help in arranging the meeting and his “complicated” situation in seeking the summit. The Chinese government has been wary of North Korea reaching an agreement with any state that might weaken its ties with China.

In an unusual ruling for such cases, a Hangzhou intermediate court sentenced a Japanese man to 12 years in prison on spying and other unspecified charges.  The man, in his mid-50s, was detained in May 2015 for allegedly taking photos on an island believed to have been developed as a military stronghold. Chief Cabinet Secretary Suga Yoshihide expressed hope that the case would not harm bilateral ties.  Business weekly Shukan Diamond ran a 34-page special expressing concern over the threefold increase in the number of Chinese nationals in Japan since 2000, though conceding that the newcomers are helping to invigorate local economics and might help to dispel friction between the two nations.

Notwithstanding a recent improvement in bilateral ties and their agreement on free trade, Japan and China remain at odds over China’s military activities in the East China and South China seas. Citing a recent joint Sino-Japanese opinion poll, Yomiuri stated that coolness between the two persists despite increases in the exchange of people and money over the past 40 years: 88.3 percent of Japanese have a bad impression of China whereas only 11.5 percent of Chinese have a negative view of Japan. The Japanese press corps agreed to call off its attendance at a meeting between Vice Foreign Minister Akiba Takeo and State Councilor Wang Yi in response to the Chinese Foreign Ministry’s decision to exclude a reporter from the conservative daily Sankei Shimbun, which has published articles critical of the PRC.

In a highly unusual development, the Japanese press did not mention whether Abe had sent an offering to Yasukuni Shrine on the anniversary of the bombing of Hiroshima, nor which of his Cabinet ministers or Diet members attended the ceremony. Abe did, however, have a proxy deliver the ritual offering on Aug. 15, the anniversary of Japan’s surrender in World War II, carefully specifying that it had been made in his capacity as LDP president, i.e. not as prime minister, and paid for at his own expense. Xinhua’s condemnation was relatively mild.

Premier Li Keqiang speaks at 40th anniversary of signing of Sino-Japanese Treaty of Peace and Friendship. Photo: Xinhua

Abe and Li Keqiang exchanged cordial messages marking the 40^th anniversary of the Sino-Japanese Treaty of Peace and Friendship, with Abe stating that he was “very pleased to have Japan-China relations return to a normal path” with Li adding the standard mantra that Japan must “take the past as a mirror and look toward the future. High-level exchanges aside, the Chinese press remained critical of Japan. Global Times commented, for example, that Shoplifters, winner of the recent Cannes Film Festival’s Palme d’Or, exposes Japan’s child abuse, widened wealth gap, and the harsh realities facing women and the elderly. Though these problems aren’t new, the paper continued, they have worsened in the six years since Abe became prime minister.  In the first of a series of articles on the challenges and possibilities of bilateral ties, Yomiuri noted that although leaders on both sides praised warming of relations, the relationship remained “peculiar.” The Chinese government had tried to restrict group travel to Japan, was critical of those deemed “jingri” (Japanese at heart) and had criminalized acts deemed to have glorified militarist-era Japan.

Economics

Statistics released in mid-May revealed that the Japanese economy shrank at an annualized rate of 0.6 percent in January-March quarter, with consumer spending flat and analysts predicting that it was unlikely to be followed by a continuing slowdown.  April brought better news, with Japan posting an overall surplus of ¥626.0 billion.

The trade deficit with China narrowed to ¥145.8 billion, down from ¥244.0 billion a year before. Exports to the PRC rose 10.9 percent, led by shipments of chip-making equipment, while imports were up 2.2 percent due to stronger purchases of steel and personal computers. The Chinese stock market lost its number-two ranking to Japan. Trade issues with the US, Beijing’s efforts to cut debt, and a slowing economy were major factors.

At the triannual meeting of 18 South Pacific states plus Japan, Abe pledged fine-tuned assistance in both soft and hard terms, including port development and promoting renewable energy. Center-right Yomiuri noted that China was rapidly increasing its presence in the region, and that the opaqueness of its aid and its disregard for the environment were causing problems. Tonga, for example, is now burdened with a sizeable debt to China. It urged the Japanese government to implement assistance measures that contribute to the growth of the island nations while paying attention to Chinese moves.

Conservative Japanese-language magazine Sentaku expressed concern at the increased rate of Chinese investment in Hokkaido, particularly in Pacific coast areas with nearby port facilities.  The land, ostensibly purchased for agricultural use, has been allowed to lie fallow, raising questions about motives for the purchases.  Li Keqiang’s visit to Hokkaido, during which he discussed willingness to invest in the island with eager officials there, heightened these concerns. Japan has no equivalent of the Committee on Foreign Investment in the United States (CFIUS), though there have been discussions within the LDP about the need for an institution to monitor the security implications of foreign investment into Japan.  The same magazine later reported that Chinese capital was acquiring land in and around Miyakojima City, far south of Hokkaido, allegedly for solar power generation and unspecified other purposes.  A Ground Self-Defense Force unit is scheduled to be deployed there shortly. According to Sentaku, a Chinese woman has opened a hostess bar in the city and is apparently gathering information from patrons by providing inexpensive drinks. A particular focus of Chinese attention is Irabu Island, across the water from Shimoji, with its 3,000-m runway, a scant 180 km from the disputed Senkaku islands.

China and Japan signed an agreement standardizing quick chargers for electric vehicles, for which they control over 95 percent of the market. Asahi reported that the first meeting of a committee to discuss Japanese participation in China’s Belt and Road Initiative (BRI) project will be held in Beijing in September.  On the agenda are private-sector work on extending the Bangkok mass transit system and construction of a high-speed railway between its airport and a city in central Thailand.

There are plenty of signs to suggest growing economic engagement. According to the Japan National Tourism Organization, tourists from China jumped 29.3 percent in May, to 668,600, vis-à-vis 16.6 percent growth overall. With Chinese visitors accounting for 25 percent of total foreign visitors to Japan, the two countries are considering the establishment of a new third flight path between the two countries: regular round-trip flights between China and Japan exceed 1,000 each week, nearly double those between Japan and North America.  Japanese convenience stores in China expanded by 1.6 times the number two years ago, with three major chains now claiming 5 percent of the market.   And Nissan announced plans to invest about $900 million to boost vehicle-making capacity in China by 40 percent, to 2.1 million cars annually, by 2021. Also by 2021, Toyota expects to have a 35 percent increase at its Guangzhou and Tianjin plants to 1.7 vehicles per year, close to its North American total of 2 million.

Defense

Each side continued to express discomfort over the activities of the other. Japanese media described the news that China’s second aircraft carrier had begun sea trials as leading to heightened security  tensions, noting that at least two more carriers were planned and that at least one will be nuclear-powered.  On the same day, Sankei, citing a government source, reported that a ship registered to a state-owned Chinese company had been undertaking trial digging that could be preparatory to building new offshore platforms.  Though the digging is on the Chinese side of the median line, concern is that, once completed, the structures could be used for military purposes such as building helipads or installing small radars. China has consistently denied the validity of the median line.  In 2008, negotiators reached a preliminary agreement to jointly develop the area until a demarcation line had been finalized, but talks were suspended before completion, and China has unilaterally proceeded with development of the waters. A retired Japanese admiral, writing in an Indian military publication, accused China of taking advantage of the world’s preoccupation with North Korea to expand its salami-slicing tactics against Japan around the Senkaku Islands and against Taiwan on the offshore islands of Quemoy (Jimmen) and Matsu (Mazu).  He advised Japan to revise its constitution and give up its defensive policy. In contrast, a Foreign Affairs article by two US analysts argued that Japan should abandon is current forward defense policy against Chinese aggression in favor of an active denial strategy that would hold off the invaders until US reinforcements arrive.

In early August, the Japanese Coast Guard reported that four Chinese Coast Guard ships had sailed for about two hours in Japanese territorial waters off the Senkakus. The Defense of Japan Annual White Paper, published shortly thereafter, stated that China’s escalating military activities posed a strong security concern both for Japan and for the international security.

The Japanese Coast Guard held its first fleet review in six years, though ironically its resumption was the result of warming Sino-Japanese relations, since the suspension occurred because the JCG was busy dealing with intrusions of Chinese ships into what Japan views as its territorial waters.  The center-left Asahi commented that the JCG’s ability to monitor waters in the disputed areas had been strengthened in the interim.

Japanese Coast Guard vessels carrying newly developed shallow-water sounder equipment have been dispatched to disprove the PRC’s claim to extend the country’s exclusive economic zone 150 nm (278 km) west of the median line between the two countries because there is a prolongation of the continental shelf in the East China Sea.  An examination of the data Beijing previously submitted to the International Committee on the Law of the Sea had been halted after Japanese protests; Japanese government officials fear that Beijing intends to seek re-opening of the investigation or take other actions.

Japan also continued to make statements that reinforce its stated wariness of China’s growing military capability. The government stated its intention to go ahead with deployment of the Aegis ashore system despite North Korean promises to denuclearize, citing uncertainty about negotiations and the increasing missile threat from China. Responding to a Chinese white paper on Arctic policy that called the ocean “the silk road on ice,” as well as to Russian restrictions in the area, the Japanese government has begun working on a plan to secure the country’s interests in the area.  An unnamed official expressed concern that Beijing would soon deploy submarines in the Arctic.

As the reporting period closed, the Defense of Japan Annual White Paper 2018 was published, stating that the unilateral escalation of China’s military activities poses a strong security concern for the region including Japan and international community. The Japanese Air Self-Defense Force (ASDF) scrambled planes against Chinese fighter jets 173 times during the past fiscal year, an increase of 72 over the previous year, vis-à-vis 95 against Russian planes, a decrease of 30 in the same time period.  The Chinese Foreign Ministry responded by accusing Japan of making irresponsible statements about China’s normal marine activities and seeking excuses for expanding its armaments. And plans were finalized for the ASDF and the Australian Air Force to hold their first joint drills in Japan “amid China’s Pacific push.”

Flight paths of 8 PLAAF planes NW of Senkakus, near Okinawa and through Miyako Strait. Source: Japanese Ministry of Defense May 11, 2018

China reacted sharply to a report that Japan would send the helicopter-carrying destroyer Kaga to the South China Sea.  PRC military sources speculated that, under the pretense of asserting the right to freedom of navigation, motives included currying favor with Washington, containing China, increasing its influence in regional security, and creating a bargaining chip in bilateral negotiations. No matter what the excuse, dispatching the ship would undermine the recent improvement in Sino-Japanese relations and constitute a provocation to China with “the possibility that China may take some kind of countermeasures that would be completely of Japan’s own making.  As a state from outside the region, Japan has no place in the area.”

A professor of international relations at the China Foreign Affairs University characterized Japan’s plans to sail MSDF ships though the South China Sea and Indian Ocean as part of a long-term strategy to keep a presence in the area “or muddy the waters so as to contain China” and a betrayal of Abe’s positive gestures during Li Keqiang’s visit. Instead of seeking better relations with China, Japan was reacting to the US-China trade war by drawing closer to Washington.  He warned that both Abe’s visit to China and the “newfound momentum” in Sino-Japanese relations were at stake.

China announced it had changed its Coast Guard’s status. As of 1 July, it became part of the People’s Armed Force Police, which is under the direct control of the Central Military Commission headed by Xi Jinping.  Given China’s tradition of using the Coast Guard to patrol areas to which it lays territorial claims, Japanese Defense Minister Onodera expressed concern while vowing to maintain “a level-headed response.”  An unnamed senior Defense Ministry official expressed doubts that, in its new role, the Coast Guard would be covered by the June 9 air-maritime communication mechanism between Tokyo and Beijing, since the Coast Guard is not considered a military force. China has said that “for the time being” the Coast Guard’s role would remain unchanged.

Even before the launch of Japan’s Maya-class destroyer, Chinese naval expert Zhang Junshe described it as, while ostensibly aimed at North Korea, “potentially targeting China and threatening other countries.” He continued that “once absolute security is realized by Japan and the United States, they could attack other countries without scruples.” The vessel’s Cooperative Engagement Capability (CEC) system will allow data sharing with the U.S. which, Zhang added, will enable Washington to better control Japan.

On a more positive note, following agreement reached during Li’s visit to Japan in May, a bilateral maritime and aerial communication mechanism began official operation. Although the new mechanism will not change how communication is conducted, Japan’s Defense Ministry hopes that, because it is now part of a formal agreement, the Chinese military will take it more seriously and abide by it. There have been confirmed reports of Chinese military aircraft not responding to SDF radio messages during encounters in and around Japan’s territorial waters. A centerpiece of the agreement is the hotline, first agreed at a 2007 summit but postponed over disagreements on the Senkaku/Diaoyu Islands and whether the waters and airspace around them would be included.  China and Japan have agreed that the mechanism would not include specific geographic references.  The two sides will alternate hosting annual meetings at the director general or deputy director general levels as well as at section chief levels. Which senior officials will speak on the hotline will be determined after a discussion of the situation rather than being specified in the agreement. Japanese defense officials also expressed misgivings about Chinese insistence on a 48-hour moratorium before responding to a hotline call in the event of military clashes.

Taiwan

Taiwan was again an issue. Admiral Takei Tomohisa, former MSDF chief of staff, stated at a forum in Washington that military ties between Japan and Taiwan should be increased in the face of Chinese aggression in the region. After the Taiwan government protested the decision of Japan Airlines and All Nippon Airways to comply with Chinese government orders to list Taiwan as a part of China, Chief Cabinet Secretary Suga expressed concern over China’s call to require foreign airlines to label Taiwan a part of China, saying that “generally speaking, it’s not favorable that the government require (private companies) to take steps in line with a certain political position.” Former Taiwan President Lee Teng-hui, visiting Japan at a dinner hosted by the Japan-Taiwan Peace Foundation, called for the two counties to promote exchanges and cooperation for their common defense. He advised the Japanese government to rely more on its own strength and less on the United States to resist Chinese hegemony.  Following Sankei’s interview with Taiwan Foreign Minister Joseph Jaushieh Wu, the Chinese embassy in Japan lodged a protest condemning the report for “advocating Taiwan independence.”  Wu had called for a Japan-Taiwan security dialogue in light of the threat that increased activity by the Chinese armed forces in the area poses to their mutual interests.  A spokesman for the Taiwan Foreign Ministry condemned the protest as interference with freedom of the press in Japan and Taiwan.  An article in the conservative Japan Forward recommended that the Japanese government enact its own version of the Taiwan Relations Act, not shying away from its security aspects.