EAST ASIA INSIGHTSTOWARD COMMUNITY BUILDING
Japan Center for International ExchangeVol. 1 No. 2 | March 2006

Japan and China at a Crossroads

Hitoshi Tanaka, Senior Fellow, JCIE
Postwar ties between Japan and China, while distinguished by normalized relations, economic cooperation, and political dialogue, are now at a crossroads.
Although often cited as causes of the impasse, sourcesof disagreement such as visits to Yasukuni Shrine by
Japanese Prime Minister Junichiro Koizumi are, rather,manifestations of structural changes taking place in theregion’s most important bilateral relationship. Regardless of these issues, most East Asian countries believethat an improvement in Japan-China relations is essential for the future stability and prosperity of the region.
Restructuring bilateral relations requires a criticalunderstanding of broad, long-term geopolitical andstructural changes that have been taking place in Japan,
China, and around the world for the past two decades.

Historical Framework of Japan-China Relations
The U.S. détente with China in the early 1970s promptedJapan to rethink its China policy, and the 1972 JapanChina Joint Communiqué was a response to this rapidly changing world. The communiqué contains three
key points. First, it states that Japan “recognizes . . . theGovernment of the People’s Republic of China as thesole legal Government of China.” Second, it afﬁrms that
China considers Taiwan part of its territory and thatJapan “fully understands and respects this stand of theGovernment of the People’s Republic of China.” Although not noted in the communiqué, Japan has since
expressed that it “strongly hopes that the issues surrounding Taiwan will be solved in a peaceful mannerby direct talks between the parties concerned.” Finally,
the communiqué notes that Japan “is keenly consciousof the responsibility for the serious damage that Japancaused in the past to the Chinese people through war,and deeply reproaches itself.” This document is now
recognized as the basic foundation of postwar JapanChina relations.
In 1972, as Japan established relations with China,
it ended ofﬁcial ties with Taiwan, but it has retained
nongovernmental relations through the Taiwan ofﬁcesof the Interchange Association. Taiwan maintains unofﬁcial representation in Japan through the Taipei Economic and Cultural Representative Ofﬁce.
Six years later, in 1978, Japan and China concluded
the Treaty of Peace and Friendship. The treaty afﬁrms
mutual respect for sovereignty and territorial integrity,
mutual nonaggression, noninterference, and further
development of economic and cultural relations. This
document is the second foundation of Japan-China
relations.
Normalized relations brought increased economic
interdependence. Trade grew from US$1.1 billion in1972 to almost US$20 billion in 1988. Japan understoodthe importance of a strong Chinese market: not only
would it beneﬁt Japan, but it would also help stabilize
East Asia. In 1979, it launched an ofﬁcial development
assistance (ODA) program for China to promote economic stability and growth. Several rounds of loans,grant aid, and technical cooperation totaling more than
US$30 billion have been disbursed to China since thestart of the program. More than three-fourths of theseloans have been used to fund large-scale economic infrastructure projects to develop roads, rail, airports, andpower stations.
Japan also promoted international political engagement with China—even in the aftermath of Tiananmen
Square in 1989. The G7 Summit Communiqué releasedin July of that year urged China to “create conditions

changes in recent years. These developments havechanged the way that Japan and China view each other,and they have altered the nature of the relationship.
The end of the Cold War and China’s pursuit of economic growth have played key roles in transforming regional geopolitics. First, the fall of the Soviet Union enabled China to vastly improve relations with its neighbor. The two countries signed an agreement that resolved all border demarcation issues. Second, relations
between China and the United States have signiﬁcantly
improved over the past ﬁve years. Third, Chinese relations with other Asian countries have also improved.
For example, long-standing disputes over the SpratleyIslands, and the China-Vietnam and China-India borders have been addressed. Fourth, China has actively
pursued multilateral diplomacy in the region throughforums such as the six-party talks on North Korea and
ASEAN+3.
China has developed much stronger relations withmost of its regional partners, and it has become a majorinternational player. Its adoption of a more accommodating foreign policy stems in large part from a needfor stable relations with its partners to ensure economic
growth. Perhaps ironically, Japan’s policy of engaging
China with the international community has helped
contribute to a situation in which Japan’s importancehas decreased somewhat in the eyes of China.
The growing strength of the Chinese economy
coupled with the continued stagnation of the Japanese
economy over the past 15 years have started to change
the way Japan views its neighbor. While Japan used
to consider China as a still-developing entity, recently
there has been a growing feeling that China is rapidly“catching up” with Japan. It is becoming a formidable
economic competitor and a possible geopolitical rival.
The relative strengths of the two countries are changing, and Japan is watching its neighbor’s growth with afeeling of uncertainty about its own future.
Major structural changes inside China, most signiﬁcantly a proliferation of new venues for public expression in Chinese society, have also played a major rolein changing relations. Although the Communist Party
used to have widespread control over independent political expression in China, recent market expansion
and the resulting inﬂux of inexpensive cellular phone
and Internet technologies have created new spaces for
public discussion and action in China that never existed
before. The anti-Japan movement of 2005, for example,
was catalyzed and coordinated by ordinary citizens who
had access to this technology. Deliberate disseminationof key information helped galvanize what became an
adhoc, popular anti-Japan movement.
A second structural change in China is the rise topower of the current “fourth generation” of Communist
Party leaders. This group has the potential to positively

which enable them to avoid isolation.” This was a resultof Japan’s efforts during negotiations on the communiqué. Two years later, Prime Minister Toshiki Kaifu was theﬁrst G7 leader to visit China after Tiananmen Square.
Political relations in the 1990s were marked by threehistoric milestones. In 1992, Emperor Akihito and Empress Michiko of Japan made the ﬁrst Imperial visit toChina since World War II. The emperor expressed his
sorrow about the war and deep remorse about past aggressions. On the 50th anniversary of the end of WorldWar II in 1995, Japanese Prime Minister Tomiichi
Murayama issued a public statement of “heartfelt apology” to the people who suffered from colonial ruleand aggression. Then in 1998, Chinese President Jiang
Zemin made a historic visit to Japan as the ﬁrst Chinese
head of state to do so since the end of the war. There
are differing views as to the success of this signiﬁcantvisit, but regardless, the Joint Declaration on “Buildinga Partnership of Friendship and Cooperation for Peaceand Development,” in which Japan expresses “deep remorse” for the war, was adopted, becoming the thirdfoundation of Japan-China relations. These events are
manifestations of the recognition of past history on
both sides.
Economic ties expanded throughout the 1990s as
well. Japan continued to cooperate with China throughits ODA programs, investment, and its strong support
for China’s accession to the World Trade Organizationin 2001. But toward the end of the 1990s, the Japanese
media and National Diet members began to question
the rationale of an economically stagnant Japan providing ODA to a booming China. An ofﬁcial review was
conducted, and in 2001 Japan signiﬁcantly scaled backits assistance.
Since that time, numerous irritants in the relationship have risen to the fore. On the Japanese side, theseinclude the North Korean refugee incident at the Japanese consulate in Shenyang in 2002; heckling of theJapanese national soccer team by Chinese fans at the
Asian Cup in China in 2004; the intrusion of a Chinese
nuclear attack submarine into Japanese waters in 2004;
China’s move to block Japan’s candidacy for the UN
Security Council in 2005; and violent anti-Japan demonstrations across China in 2005. On the Chinese side,irritants include Prime Minister Junichiro Koizumi’s
repeated visits to Yasukuni Shrine, and in 2003, a leakof mustard gas from chemical weapons barrels left by
the Japanese Imperial Army, injuring dozens. Theseand other incidents have exacerbated what has becomea tense relationship.

Framing the New Relationship: Geopoliticaland Structural Changes
Thinking anew about Japan-China relations requires
looking back at important geopolitical and structural
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genuine remorse for its past and believes that it is nota responsible member of the international community.
Despite its past 60 years of peaceful development anddemocracy, Japan is not qualiﬁed, in the eyes of China,
to assume international leadership positions in East
Asia or the United Nations, and it is not to be trusted.
Another interpretation is intertwined with geopolitical and structural changes. When the Communist
Party consolidated power in China in 1949, it recognized that responsibility for atrocities against China
should not lie with the Japanese people, but with thedefunct Japanese military. China thus renounced demands for war reparations from Japan and no longer
has a history card to play. Popular consciousness about
Japan’s past militarism began to rise, however, after the
introduction of a patriotic education curriculum in the
1990s. Part of the new curriculum, although not specifically designed to be anti-Japanese, included education
about wartime atrocities. The content of the curriculum had the long-term effect of creating conditions foranti-Japanese sentiment, and Koizumi’s visits to Yasukuni triggered its growth.
Today, China faces serious problems brought on by
rapid industrialization, including serious discontent
among rural populations and the threat of social upheaval. In addition, the introduction of new communications technologies brought on by development has
fostered the spread of information and popular opinion to previously unknown levels. These two developments have put the Chinese government in a precarious
position: it has a diminished ability to shape public discourse on Japan, and it must maintain a strong position
on Yasukuni visits lest a conciliatory approach becomea cause for further unrest. In this way, anti-Japanesesentiment in China has the real potential to become aplatform for broader discontent with the government.

inﬂuence the bilateral relationship: its members cameof age two decades after the war, and they have a more
ﬂexible approach toward Japan than their predecessors.
The rise of the anti-Japan movement, however, has limited the fourth generation’s ability to engage Japan.
Meanwhile, Japan has been undergoing major structural changes of its own, starting with its domestic politics. Historically, there had been strong ties between the
Chinese political elite and the “Tanaka faction,” named
after former Prime Minister Kakuei Tanaka, Japan’s
most powerful faction in the ruling Liberal Democratic
Party. In recent years, however, faction politics has lostits inﬂuence under Prime Minister Koizumi’s political
reform initiatives, and there has been a decrease in thenumber of political links between Japan and China.
Japan has also been revisiting its security policy. Until the mid-1990s, the scope of Japanese security policy
was conﬁned to pure self-defense, and it was based upon
the constitution and the Treaty of Mutual Cooperationand Security with the United States. Numerous developments in recent years, however, indicate that Japanis slowly fortifying its security policy. These include thesigning of the Guidelines for Japan-U.S. Defense Cooperation in 1997, which gives Japan more responsibility in the event of a regional contingency; the enactmentof wartime legislation; and the creation and annual extension of the Anti-Terrorism Special Measures Lawof 2001, which permits the Japan Self-Defense Forces(JSDF) to engage in logistical support activities with theUnited States and other countries that are conducting
antiterrorism activities in the Indian Ocean. Other developments include the participation of the JSDF in Iraq
and recent public debate about revision of the Japaneseconstitution. While China has generally maintained silence over these recent developments (with the exception of the 2005 U.S.-Japan 2+2 Ministerial Statement,
which recognized the peaceful resolution of Taiwan
Strait issues as a common strategic objective), it remains
quietly wary of Japan’s intentions.
These momentous geopolitical and structuralchanges have fundamentally changed the frameworkof Japan-China relations. They have decreased China’s
expectations for closer relations with Japan. They havebred suspicion and uncertainty. They have created anenvironment ripe for diplomatic scufﬂes and accusations of lack of remorse over history.
Views on history as seen through visits to Yasukuni
Shrine have become a symbolic and bitter representation of the present state of relations. In Japan, there
are perhaps two interpretations concerning China’s intentions in opposing Koizumi’s visits. One interpretation is as follows: China is using the visits to play the“history card” as part of a bid for regional leadership.
China argues that Koizumi’s trips to Yasukuni honor
war criminals. It accuses Japan of being unable to show
EAST ASIA INSIGHTS

China’s Impact on Japan and the World
A new approach to Japan-China relations is needed. For
Japan, this means recognizing that the relationship is nolonger that of a developing country reliant upon a developed neighbor, but that it is evolving into a big-power relationship with much potential for the future. For
China, this means adopting a more objective and ﬂexible policy toward Japan. This would include evaluating
wartime history in relative, not absolute, terms—in other words not using history as the sole element for determining foreign policy on Japan. It would also emphasize
a forward-looking, positive approach to relations.
China and Japan continue to deepen their interdependence, and within two decades, if not sooner, they
will be equals in terms of the size of their economies.
Between 1995 and 2005, China’s gross domestic product(GDP) increased from US$700 billion to almost US$2
trillion. In comparison, Japan’s GDP actually decreased
3Vol. 1 No. 2 | March 2006

in [East Asia’s] interest for Japan and China to havegood relations with each other because a country like
Singapore can only prosper if there is peace, stability
and growth in the region.” Seeing that “both sides arein a bind,” he proposed that Japan and China “strike a
Grand Bargain” and enter a new era of cooperative andforward-looking bilateral relations.
The Grand Bargain would require a broad restructuring of relations based on high-level consultations.
Building on Goh Chok Tong’s vision, the Grand Bargain should have four pillars: joint efforts to addressquestions of history, conﬁdence-building measures inthe ﬁeld of security, cooperation for stable economic
growth in China, and joint efforts to strengthen East
Asian community building.

slightly from US$5.3 trillion to US$4.7 trillion. In 2004,
trade between the two countries totaled almost US$170
billion. In that same year, trade with China constituted
16.5 percent of Japan’s total trade, and trade with Japan
constituted 14.5 percent of China’s total trade.
China’s growth will continue to have a huge impact
on the world. When it began to develop in 1978, China’s
population was 24 times that of the United States when
it began its rapid growth in the 1870s, and almost 12
times the population of Japan when that country began
its development in the 1950s.* China’s material needs
and the global impact of its industrialization over the
next 20 to 30 years potentially will be the largest ever inhuman history.
China’s energy needs and the impact its growth hason the environment are cases in point. In 2004, China
accounted for 8.2 percent of the world’s energy consumption. It is predicted that its share will grow tomore than 14 percent by 2025. In contrast, Japan’s sharein 2004 was 6.3 percent. China produces 12.7 percentof the world’s energy-related carbon dioxide emissions,second in the world, and that share will reach almost 18
percent by 2025. Because of water pollution, 70 percentof the water in ﬁve of China’s seven major river systems is unsuitable for human contact. Contaminationof the Songhua River in Harbin is one recent example
of severe pollution caused by industrial development.
There is a real possibility that if growth stalls due to a
resource shortage or widespread environmental damage, social instability in China could ensue. Any downturn in China will be felt keenly around the world; thus
it is in Japan’s interest to play a role in helping China
meet these growing challenges.
China’s growing social inequity is also of concern for
the region. In Japan, the top ﬁfth of society consumes
35.7 percent of the GDP, while the bottom ﬁfth consumes 15.4 percent. Yet despite its communist history,
in China the top ﬁfth now consumes 50 percent andthe bottom ﬁfth consumes 4.5 percent. The inequity in
China is another rising source of discontent. China’s
economic growth needs to be sustained and managed
in a way that can help slow down this trend.
Finally, increased spending on defense by China
has the potential to impact the world as well. China’s
defense budget has grown by double-digit increases
almost every year for the past sixteen years, but the
Chinese military lacks transparency. These two developments are causing concern across East Asia, and theyneed to be addressed through dialogue.

1. Addressing questions of history
Although Goh conceded that “the details of this Grand
Bargain are for the Chinese and Japanese to settle,” hebelieves that the Yasukuni issue should be addressedas an important part of the bargain. He proposed thatJapanese leaders “give up visits to the Yasukuni Shrine
and ﬁnd some other way to honour the war dead without appearing to endorse the political message of the
Yasukuni Shrine. China must reciprocate in a positive
manner; set aside the history issue once and for all, andmove forward.”
Given its complex background, the Yasukuni issue
must be considered by the prime minister himself;crafting some compromise could depoliticize history
by permitting leaders of both countries to feel thatthey did not cave into pressure from the other side. It
would also serve as a ﬁrst step in a long-term initiative to create transparency on interpretations of history
in both countries. Japan and China should appoint a
joint, independent, and ongoing history commission
composed of scholars from both countries. The commission would objectively study and contexualize thewar within the long history of bilateral relations fromancient times to Japan’s support for China in the postwar period. The commission would also study the increasing interdependence of the two countries from ahistorical perspective. Findings would be made public,
and recommendations would be made to policymakers
in both countries. The Japan–South Korea joint committee for research on history could serve as a model
for such a commission.
2. Security dialogue
Japan and China should initiate an ongoing, two-plustwo security conference featuring the foreign and defense ministers of both countries. Working-level talks
could also be incorporated into the conference. The

The Way Forward
Recently, Senior Minister and former Prime Minister of Singapore Goh Chok Tong afﬁrmed that “it is* Population statistics are drawn from an unpublished paper by Hu Angang presented at the Trilateral Commission Beijing Meeting inNovember 2005.

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conference would aim to promote conﬁdence building
and transparency through dialogue on each country’s
security and defense policies and discussion of security
in East Asia. This forum would build upon the existing
deputy minister–level Japan-China Security Dialogue.

vehicle and the East Asia Summit would be a broader,
supportive vehicle for community building. Second,
Japan and China need to work together on a roadmap
for community building. The roadmap should expressa clear recognition by both sides that neither is seeking
hegemony in the region. It should also express a clear
commitment that both countries will abide by international rules and norms. The Second East Asia Summit,
scheduled for December 2006 in the Philippines, will
provide Japan and China with an opportunity to drafta joint roadmap for inclusion in the summit’s Joint
Communiqué.

3. Managing economic growth and its
consequences
China faces many barriers to successfully managing
important issues stemming from its economic growth.
Japan and other countries in the region with experience in managing these issues have key supporting
roles to play in this regard. Japan should develop cooperation programs on energy efﬁciency and energy
security. These programs would draw on Japan’s own
expertise and its experience with the oil shocks of the
1970s. Japan should also develop cooperative initiatives
that draw on lessons learned from experience with environmental protection during its own development
period in the 1960s. Finally, Japan—as one of the mostsocially equitable nations in the world—should also offer policymaking expertise to help address the growing
social inequity in China.

The Role of the United States
As a key stakeholder in East Asia, the understanding
and support of the United States in many areas will be
indispensable for restructuring relations between Japanand China. The U.S.-Japan Security Alliance should remain a primary pillar for guaranteeing security in theregion. The six-party talks on North Korea may be seen
as part of a regional security architecture in which allentities in Northeast Asia, including the United States,
are able to participate. East Asia community building isa long-term process that will strengthen trust throughout the region, and it will help create a more stable andsecure East Asia built on dialogue and cooperation.
The critical importance of the bilateral relationshipfor Japan, China, and all regional stakeholders makes
it imperative for both sides to seek a new approach. A
Grand Bargain would offer a way forward that allows
the region to move ahead on a path to shared stability
and prosperity.

4. Working together toward an East Asia
community
There is a consensus that the East Asia community
cannot ﬂourish without strong relations between its
two largest members. Japan-China cooperation in thecommunity-building process could be an importantmeans for improving bilateral relations and for constructing a more cohesive East Asia. First, Japan and
China need to agree upon the concept of East Asia. Regional community building should take a two-tiered
approach that recognizes both countries’ conceptsof the region. That is, ASEAN+3 would be a primary

Hitoshi Tanaka was Deputy Minister for Foreign Affairsof Japan until August 2005. He is currently a Senior Fellow at JCIE.

East Asia Insights
East Asia Insights is an occasional newsletter focusing on East Asia community building
from a Japanese perspective.
Published by: Tadashi Yamamoto, President, JCIE
Please direct any comments or questions to eainsights@jcie.or.jp.
Japan Center for International Exchange
www.jcie.or.jp

EAST ASIA INSIGHTS

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5© 2006 Japan Center for International ExchangeVol. 1 No. 2 | March 2006