DECEMBER
2021

The China Challenge and US-Japan
Relations under Fumio Kishida
Hitoshi Tanaka, Senior Fellow, JCIEJ

apan’s new Prime Minister, Fumio Kishida,
passed his first test and guided the ruling Liberal
Democratic Party (LDP) to victory in the Lower
House election on October 31, less than one month after he assumed office. As he looks ahead to 2022, however, he now must grapple with the complex foreignand security policy challenges that he has inherited.
As the Kishida government consolidates its foreign
policy posture, it will need to keep two key elements inmind. First, it must consider how to navigate the domestic constraints on its foreign policy program, deriving both from public sentiment and from the factional
power balance within the LDP. And second, it will needto consider how best to define a proactive role for Japanand to work together with the United States to navigate the increasingly complex US-China rivalry while
also maintaining regional stability and prosperity. This
necessitates that the Kishida government formulate acomprehensive and balanced regionwide strategy that
promotes strong US-Japan alliance cooperation while
also maintaining, managing, and maximizing the benefits of interdependence with China.

Navigating Japan’s domestic constraints

Although Kishida’s foreign policy positions arestill being developed, given that he hails from the
LDP’s most liberal faction, the Kochikai, he may be

expected to take a more internationalist approach­toward Japan’s foreign and security policy than his
predecessors. This would include emphasizing theneed to substantially improve relations with Japan’s
neighbors, especially China and South Korea, while
also continuing to bolster US-Japan alliance cooperation. Such a balanced approach would recognize theimportance of stable relations between Japan and its
neighbors, not just for Japan’s sake, but for the USJapan alliance and the region as a whole. The recent
selection of Yoshimasa Hayashi to serve as foreign
minister lends support to the possibility that the
Kishida government will seek to take such a balanced
and comprehensive approach. Hayashi is a senior
member of Kishida’s Kochikai faction, the former
head of the Japan-China Parliamentary Friendship
League, and a Harvard graduate with extensive connections in the United States.
But as Kishida seeks to put his own stamp on Japan’s
foreign policy, he will have to take into consideration
Japanese public opinion. This will be especially important in the lead-up to Japan’s Upper House election in July 2022. A poll by Genron NPO in October
2021 found that over 90 percent of the Japanese public holds either “unfavorable” or “somewhat unfavorable” views toward China, making it unlikely that hewill be able to make any substantial overtures toward

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China before the July election. (Although some­behind-the-scenes work may need to proceed before
then if the two countries hope to mark the 50th anniversary of the normalization of Japan-China relationsin September 2022.)
Adding to this pressure is the fact that the centerof gravity within the LDP has shifted over the lasttwo decades in favor of the nationalist conservative
factions led by former Prime Minister Shinzo Abe
and former Deputy Prime Minister Taro Aso. Thesefactions favor Japan adopting a more assertive foreign
policy vis-à-vis China and South Korea while emphasizing the development of Japanese indigenous andautonomous defense capabilities. The continued influence of the nationalist conservatives in the party
was seen in the LDP’s election campaign manifesto
pledge to double defense spending to 2 percent ofGDP, as championed by LDP policy chief and Abe
protégé Sanae Takaichi, and in Kishida’s own rhetoricon enemy base strike capability as part of his efforts
to win broader support across the party. Already, thefar-right has complained that Kishida’s new foreign
minister is too soft on China, thus the extent to which
the conservative factions will influence the Kishida
government’s foreign policy bears watching.

The “Four C’s” of the China Challenge

Against this backdrop, the biggest foreign and security policy challenge facing the Kishida government
is how to work together through the US-Japan alliance to cope with China. We are living in the era ofglobalization, and the intensifying rivalry between
the United States and China—the two biggest economies in the world—means that Japan and other
US allies and partners across the region increasingly
fear getting caught in the middle. In contrast to theoutright US-USSR confrontation during the Cold
War, the US-China relationship is complex and canbe better understood within the framework of the“four C’s”: military confrontation, political competition, economic coexistence, and cooperation on sharedglobal challenges.
First, China’s rapid growth to become the world’s
second largest economy and the second biggest
spender on defense after the United States means thatmilitary and security confrontation is structurally
baked into the US-China rivalry. At the same time, theChinese Communist Party (CCP) and President Xi
Jinping say they cannot compromise on the country’s

self-declared core interests, such as the South China
Sea, Hong Kong, and Taiwan, lest it undercut theirlegitimacy and Xi’s “China Dream” concept to “rejuvenate” the nation by 2049. As such, there is a need for
the United States to work with Japan and other allies
and partners to continue to increase their deterrence
power against unilateral changes to the status quo. At
the same time, it is crucial that diplomacy surrounding potential regional flashpoints be carefully managed to ensure that tensions and miscommunications
do not undermine regional stability or spill over into
violent conflict.
Second, the political competition between the
United States and China is a systemic battle between
democracy and authoritarianism. This competition
requires the United States, along with Japan and other
US allies and partners in the Indo-Pacific, to cooperate in promoting democracy and calling out humanrights violations both by China (such as in Xinjiangand Hong Kong) and by other states around the region. For those efforts to be effective, however, theUnited States must get its own house in order. China’s
tremendous economic growth, its ability to lift over
800 million of its own people out of poverty since1978, its rhetoric about “common prosperity” to curb
the excesses of capitalism, and its apparent successin controlling COVID-19 offer an appealing image. By
contrast, extreme income inequality, racial discrimination and violence, and political polarization have
dulled the shine of the American democratic ideal. It is
critical that the United States understand the implications of these images in the international context andaddress the underlying issues if it wants its politicalsystem be seen as a beacon of hope for the world.
Third, recognition is needed of the fact that economic coexistence and interdependence is essential
to the prosperity of the United States, China, and theglobal economy. For the United States, the Chinese
market is critical both as a provider of imports thatcan ease the bottlenecks and supply shortages causing
inflationary pressures and as an export destination for
US agricultural goods and other products and services. And for China, continued economic growthis imperative for the CCP’s political legitimacy. It istherefore in the interest of both countries to ensure
free and open trade, particularly as the world seeks
to recover from the COVID-19 induced downturn. To
maintain and strengthen the integrity of the current
multilateral trade systems, the world needs to pull

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back on the use of protectionist tariffs. The imposition of tariffs on China, such as through Section 232
of the US Trade Expansion Act, which enables the
US President to impose tariffs on national security
grounds, has proven to be a blunt, counterproductive,
and growth-dampening instrument. While certain
exceptions to free trade may be necessary for national
security, they must be founded on well-thoughtout rules with a precise scope. At the same time, inorder to address US concerns over unfair Chinese
trade practices, greater efforts are needed between
the United States, China, and Japan on multilateralrulemaking, including the reform out-of-date World
Trade Organization rules.
Fourth, US-China cooperation is essential in orderto address some of today’s key global challenges, which
also represent important shared interests for bothcountries and for Japan. Mitigating climate change isan urgent and shared threat to all of humanity. The
US-China Joint Glasgow Declaration on Enhancing
Climate Action in the 2020s was a positive step forward, showing that US-China cooperation is possible despite intensifying rivalry. Continued f­ollow-up
is now needed to ensure that the declaration is rigorously implemented. Denuclearizing North Korea
is another shared interest between the United States
and China given the need to maintain the integrity of
the global nuclear nonproliferation regime and to promote regional stability in East Asia. A restart of USDPRK dialogue is needed as soon as possible as a firststep in the process. Chinese cooperation will be especially important in supporting any agreement reached
between the United States and North Korea, given its
position as North Korea’s only significant trading partner, a trend that has been intensified by COVID-19.

Establishing a Balanced Strategy for
US-Japan Cooperation

Given the complex nature of the US-China rivalry
represented by the “four C’s,” the Kishida government
needs a comprehensive and balanced regional strategy to work together with the United States to maintain and bolster regional stability.
Looking at the first C, in order to best manage military confrontation with China, US-Japan coopera­tion should focus on increasing deterrence power.
This should entail deepening US-Japan defense cooperation, including planning for the management ofcontingency scenarios regarding Taiwan and North

Korea and deepening cooperation through joint military exercises. The United States and Japan should
also deepen their cooperation though the Quad with
Australia and India, and through the Free and Open
Indo-Pacific vision. Yet this does not obviate the necessity of Asia Pacific–based institutional cooperation,
which is firmly established under APEC, the East Asia
Summit, and the ASEAN Plus process. ASEAN in particular is reticent to be seen as choosing between the
United States and China, making Asia-Pacific cooperation a vital vehicle for easing regional confrontation.
In order to bolster its proactive security, Japan
should continue to gradually increase its defense
spending. A rapid doubling of the defense budget,
as proposed by some corners of the LDP, is not realistic given Japan’s fiscal situation and aging population. But the expected increase in Japan’s host-nation
support for the United States, which is likely to reach¥250–¥299 billion ($2.17–$2.6 billion) in fiscal year
2022, is a positive step forward.
At the same time, Japan and the United States mustalso bolster their proactive diplomacy with the overarching objective of ensuring that potential regional
flashpoints, such as Taiwan, are not allowed to boil
over into violent conflict, which could fatally undermine regional stability. If China were to seek unification with Taiwan forcefully through military action,
the United States would have to intervene or suffera loss of credibility and perhaps forfeit its status asa Pacific power. Such a scenario would also compel
Japan to provide support to the US military action orrisk the credibility of the US-Japan alliance. Yet continued economic growth and recovery from COVID-19
is critical for the CCP’s political legitimacy, so China
cannot afford to endlessly sow enmity in the international community. As such, it is critical that the situation be managed carefully on all sides with a baseline
assumption of maintaining the status quo throughstrategic ambiguity.
On the second C, the competition between politicalsystems, while in the past Japan has often kept a low
profile on promoting democratic values and humanrights, there is room now to be more proactive. The
Kishida government established a new post of special
adviser to the prime minister on human rights, filled
by former Defense Minister Gen Nakatani, which represents a positive step forward. At the same time, Japan
should aim to coordinate with the United States on human rights cooperation in regional multilateral forums,

DECEMBER 2021 | 4
while also looking inward to address its own treatmentof minorities and foreign residents.
On the third C, coexistence, Japan and the UnitedStates should also work together to develop precise
rulemaking on economic security to enable the region to manage interdependence with China without
needing to resort to sweeping, growth-dampening
restrictions. A key mechanism to this end will be
the Comprehensive and Progressive Agreement forTrans-Pacific Partnership (CPTPP). While it would
be politically difficult for the United States to join an
unaltered CPTPP, applications by China, Taiwan, andthe United Kingdom to join the pact mean the timing is fortuitous for the Biden administration to finda strategic way forward to join an upgraded CPTPP.
This will provide an opportunity to set out conditions
for Chinese entry into the CPTPP, engage China ineconomic rulemaking, resolve issues surrounding
the use of economic coercion, and shape China into
a constructive regional economic actor. Given Japan’s
leadership role in salvaging the CPTPP after the
Trump administration’s withdrawal, it is well positioned to work with the United States on this process.
Finally, as noted in the fourth C, more substantive
cooperation on various international issues can help
to ease the intensity of the US-China rivalry given thecomplex nature of their relations, and here Japan canplay a facilitating role. The United States and Japan
should work together on energy strategy to accelerate
the global transition away from fossil fuels. Japan has
been relatively slow to act on climate change, especiallyafter the Fukushima nuclear disaster. While Japan willneed to maintain some nuclear energy capacity in the
short term, public sentiment surrounding nuclear energy means it should also invest more heavily in developing its own non-nuclear renewable energy industry
over the long term. The US-Japan Climate Partnershipon Ambition, Decarbonization, and Clean Energythat was agreed to by President Joe Biden and former
Prime Minster Yoshihide Suga in April 2021 was a positive step forward in the two countries’ cooperation.
Efforts are now needed to leverage this partnershipand to work together to help developing countries
in Asia meet their climate change commitments bymoving away from coal. A key agenda here must be cooperation on ending coal financing—which has been
dominated by the United States, China, and Japan—
and bolstering financing for green energy.
And last, in order for Japan to support US, Chinese,and other international efforts toward denuclearizing North Korea for the long-term stability of East
Asia, the Kishida government must promote a proactive diplomatic posture and comprehensive strategy
to deal with both the nuclear and abduction issues.
This should include Japan establishing a joint investigation commission on abductees with North Korea
and returning to the 2002 Japan-DPRK Pyongyang
Declaration. Such an approach is necessary because
North Korea appears to see the abduction issue as abargaining chip for its survival, meaning that it may
only be resolved within the overall framework of denuclearization and peace treaty negotiations.

■■■
Bolstering US-Japan cooperation to cope with China’s
growing economic and military power is the most important foreign policy challenge facing Prime Minister
Kishida. But the increasingly complex nature of USChina relations under the “four C’s” means that Japan’slong-term security and prosperity depends not just on
militarily deterring China from making any unilateralchanges to the status quo, but also on building a stablepeace in the region that allows Japan to manage andmaximize the benefits of interdependence with China.
To this end, the Kishida administration must formulate a comprehensive and balanced regional strategy
to deepen and fine-tune Japan’s cooperation with theUnited States in a way that is founded on a recognitionof the current complexities. Kishida’s ability to deal
with these issues while staving off domestic pressures
will determine the longevity of his tenure and his ability to build a legacy.
Hitoshi Tanaka is a senior fellow at JCIE and chairmanof the Institute for International Strategy at the Japan
Research Institute, Ltd. He previously served as Japan’s
deputy minister for foreign affairs.
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East Asia regional issues from a Japanese perspective.
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