Reactions to the Sept. 7 Senkaku fishing boat incident continued to buffet the relationship.  Both the East China Sea and the Senkaku Islands remain flashpoints in both countries. Anti-Japanese protests spread through China in mid-October and were followed by smaller-scale anti-Chinese protests in Japan. Efforts by diplomats to restart the mutually beneficial strategic relationship ran into strong political headwinds, which hit gale force with the public uploading of the Japan Coast Guard’s video of the September collisions on YouTube.  Prime Minister Kan did meet China’s political leadership, but the Kan-Wen and the Kan-Hu meetings were hotel lobby or corridor meet-and-greets, with the Chinese taking care to emphasize their informal nature. In Japan, public opinion on relations with China went from bad in October to worse in December.

The year ended with heightened tensions resulting from Pyongyang’s shelling of South Korea’s Yeonpyeong Island on Nov. 23 and the subsequent show of force by South Korea, the US, and Japan. Yet, despite dueling artillery barrages and the sinking of a warship, pledges of “enormous retaliation,” in-your-face joint military exercises and urgent calls for talks, the risk of all-out war on the Korean Peninsula is less than it has been at anytime in the past four decades. North Korea didn’t blink because it had no intention of actually starting a major war. Rather than signifying a new round of escalating tension between North and South Korea, the events of the past year point to something else – a potential new cold war. The most notable response to the attack on Yeonpyeong was that a Seoul-Washington-Tokyo coalition came to the fore, standing united to condemn North Korea’s military provocations, while Beijing called for restraint and shrugged away calls to put pressure on North Korea. Within this loose but clear division, Japan-North Korea relations moved backward with Prime Minister Kan Naoto blaming the North for an “impermissible, atrocious act.” On the other hand, Japan-South Korea relations have grown closer through security cooperation in their reaction to North Korea. Tokyo’s new defense strategy places a great emphasis on defense cooperation and perhaps even a military alliance with South Korea and Australia in addition to the US to deal with China’s rising military power and the threat from Pyongyang.

Tensions on the Korean Peninsula preoccupied both Russia and China as the two Koreas edged toward war at the end of 2010. Unlike 60 years ago when both Beijing and Moscow backed Pyongyang in the bloody three-year war, their efforts focused on keeping the delicate peace. The worsening security situation in Northeast Asia, however, was not China’s only concern as Russia was dancing closer with NATO while its “reset” with the US appeared to have yielded some substance. Against this backdrop, Chinese Premier Wen Jiaobao traveled to Moscow in late November for the 15^th Prime Ministers Meeting with his counterpart Vladimir Putin. This was followed by the ninth SCO Prime Ministers Meeting in Dushanbe Tajikistan. By yearend, Russia’s oil finally started flowing to China through the 900-km Daqing-Skovorodino branch pipeline, 15 years after President Yeltsin first raised the idea.

High-profile visits and meetings characterized Indian relations with both the United States and East Asia in 2010. While there were no major “breakthroughs” or departures as a result, the ongoing evolution of both US-India and India-East Asia relations suggests that they are now a fixed part of the US-Asia dynamic. It is worth noting that while Secretary of State Hillary Clinton neither visited India during her first trip to Asia in February 2009 (she did visit India in July 2009) nor made mention of India in her pre-departure address on US Asia policy, in November 2010 President Obama opened his speech to the joint session of India’s Parliament by declaring that “[i]t’s no coincidence that India is my first stop on a visit to Asia…” And the joint statement between the two countries issued during that visit specifically noted a “shared vision for peace, stability and prosperity in Asia, the Indian Ocean region and the Pacific region…[and] agreed “to deepen existing regular strategic consultations on developments in East Asia…” Indeed, including India at all in an Asia itinerary is a recent innovation in US foreign policy and one that speaks to a larger US policy debate about the evolving Asia-Pacific.  Whether such an innovation sticks remains to be seen, although many indications suggest that it will; especially as the need to coordinate increases on matters such as the East Asian Summit, maritime cooperation across the “Indo-Pacific,” and wider global issues.

The US profile in Asia appears to be on the rise following Secretary of State Clinton’s highly publicized presentation at the ASEAN Regional Forum (ARF) ministerial in Hanoi in July and President Obama’s New York meeting with ASEAN leaders at quarter’s end. Meanwhile Beijing’s image took a few hits as it tried to bully Japan (successfully), the US and ROK (unsuccessfully), and ASEAN (TBD) on maritime-related issues, while seemingly having nothing but kind thoughts and gestures for the DPRK, essentially serving as its defense attorney during UN Security Council deliberations regarding the attack on the Cheonan. Prospects for a resumption of Six-Party Talks remained low, despite a professed willingness by Pyongyang to return to the table (albeit as a recognized nuclear weapon state).  New faces appeared in the North’s general officer ranks but the (seemingly nonexistent) prospects for Korean Peninsula denuclearization remained unchanged.

Meanwhile, democracy marches on, one step forward in Japan and two backward in Burma/Myanmar, while Washington seeks greater economic integration in Asia, not just through traditional vehicles such as the Asia Pacific Economic Cooperation (APEC) “gathering of economies,” but through the “gold standard” Trans-Pacific Partnership (TPP). The US profile is expected to grow further next quarter with President Obama and Secretary Clinton both scheduled for high-profile visits to the region. We’ll see what Beijing does to improve its image; we expect little progress when it comes to Pyongyang.

The ruling Democratic Party of Japan (DPJ) suffered an embarrassing defeat in the July Upper House election less than a year after assuming power.  Prime Minister Kan Naoto subsequently took a beating in the polls but managed to withstand a challenge from former DPJ Secretary General Ozawa Ichiro in a party presidential election marked by heated debate over economic policy.  Political turmoil did not preclude active diplomacy on the part of Kan’s government, nor coordination between Washington and Tokyo on a range of bilateral, regional, and global issues including the relocation of Marine Corps Air Station (MCAS) Futenma on Okinawa; a collision between a Chinese fishing boat and Japanese Coast Guard vessels near the Senkaku Islands; and sanctions on Iran to condemn its nuclear activities.  The quarter came to a close with President Obama and Prime Minister Kan taking stock of a rapidly developing bilateral agenda during a brief yet productive meeting on the margins of the United Nations General Assembly (UNGA) in New York, setting the stage for the president’s trip to Japan in November.

Diplomatic confrontations over the Yellow Sea and the South China Sea were the source of new bilateral tensions this quarter.  Beijing vigorously objected to the dispatch of the aircraft carrier USS George Washington to waters near where the South Korean corvette Cheonan sunk after being attacked in March, even before Washington had made a decision to deploy it.  Worried about Chinese diplomatic posturing and destabilizing activities in the South China Sea, Secretary of State Clinton delivered a clear statement of US interests at the ASEAN Regional Forum meeting in Hanoi that irritated Beijing.  With the US mid-term elections approaching, US frustration mounted over China’s unwillingness to allow its currency to appreciate against the dollar at a faster pace. The House of Representatives passed legislation that would allow the US to impose import duties on countries that have undervalued currencies. After more than five months of delay, the Pentagon submitted to Congress its annual report assessing Chinese military capabilities.  Finally, two US presidential envoys traveled to Beijing to smooth over relations and President Obama met Premier Wen Jiabao on the margins on the UN General Assembly.

The sinking of the Cheonan remained the predominant issue in the US-ROK relationship as both countries spent the quarter coordinating and undertaking punitive measures against North Korea for its alleged attack on the ship.  The UN Security Council adopted a Presidential Statement condemning the attack but did not directly blame North Korea.  The US and the ROK held their first “Two-plus-Two” meeting in Seoul where Secretary of State Hillary Clinton and Secretary of Defense Robert Gates met Foreign Minster Yu Myung-hwan and Minister of National Defense Kim Tae-young. While countries reopened their dialogue channels in the hope of resuming the Six-Party Talks, there remain many challenges and uncertainties that make the future direction of the Talks unclear.  Several issues remain to be resolved on the KORUS FTA while negotiators are expected to hold a ministerial meeting soon to strike a deal.  The Chicago Council on Global Affairs released a report on US attitudes toward South Korea that highlighted public support for trade agreements, including the KORUS FTA, is lukewarm.  Among those who viewed fair trade as critical for US interests, support for KORUS was much stronger.

The United States significantly raised its political profile in Southeast Asia this quarter, inserting itself in South China Sea disputes, announcing its plan to join the East Asia Summit, convening the second US-ASEAN summit, and creating an ambitious agenda for participation in a variety of Southeast Asia programs.  On the South China Sea issue, Secretary of State Clinton proposed multilateral discussions under ASEAN auspices – an idea that did not appear, however, in the ASEAN-US summit communiqué in late September.  The US inaugurated naval exercises with Vietnam in early August, coinciding with the visit of the aircraft carrier USS George Washington.  Washington is considering new financial sanctions against Burma, recognizing that more engagement with the military regime has not yielded the expected results. The presence of US military trainers in the southern Philippines continues to rile leftist and nationalist legislators.  As a sign of growing warmth in US-Malaysian relations, Kuala Lumpur is sending a small contingent of medical personnel to Afghanistan.  The Indonesian-US Comprehensive Partnership was launched in Washington in September, signifying Jakarta’s special importance to the US.  Washington also restored military-to-military relations with Kopassus, the Indonesian Special Forces unit that has been accused of egregious human rights violations in Timor, Papua, and Aceh.

China was on the defensive this quarter, reacting to interventions by the US, including a notable statement by Secretary of State Hillary Clinton at the annual ASEAN Regional Forum (ARF) meeting in Hanoi regarding the South China Sea. The ARF meeting also saw a new US commitment, backed by ASEAN, to participate actively in the East Asian Summit, raising the profile of that regional body over China’s preference for Asian-only regional groups. Further complicating China’s regional calculus were prominent advances in US relations with Vietnam shown during celebrations of a US-Vietnam anniversary in August that involved exercises with a US aircraft carrier deployed near disputed regions of the South China Sea.  Chinese officials and commentary in Chinese media at first countered that the US actions were self-serving and destabilizing. Those attacks meshed with public Chinese attacks on concurrent US military exercises with South Korean forces in reaction to North Korea’s sinking of a South Korean warship. Later, some Chinese commentary dissented from the harsh public approach, and by the end of the quarter, the criticism of the US and others over the South China Sea disputes and other issues subsided. For the time being at least, it appeared that China will remain focused on publicly stressing trade and reassuring diplomacy in Southeast Asia, while defending its territorial claims and continuing to build military capabilities.