A New Phase for Japanese Policy towards China—2011 edition—
November 2011

On April 23, 2008, in the run-up to President Hu Jintao’s visit to Japan the following
month, the Institute for International Policy Studies published a document entitled, “A
New Chapter in Japan-China Relations—towards co-existence and co-development that
overcomes history—”. This document offered eight basic principles, based on therecognition that Japan-China relations were entering a new phase.
Since 2008, however, Japanese popular sentiment towards China has deteriorated,and events such as the Senkaku Islands incident in 2010 have thrown the fragility of theJapan-China relationship into stark relief. The backdrop to the Japan-China relationshiphas also changed, as China’s rapid progress has enabled it to surpass Japan in terms of
GDP to become the second largest economy in the world, and the role of China—bothglobally and in East Asia—has grown more significant. In the aftermath of the Great
East Japan Earthquake, Japan faces a significant future burden, and the domestic
problems facing China that accompany its economic growth are considerable. In
addition, Chinese naval activity in coastal waters is stirring up surrounding countries.
In the wake of these changes in their respective domestic and international
environments, the Japan-China relationship is entering a new phase. With 2012 marking
the fortieth anniversary of the normalization of diplomatic relations between the twonations, the current challenge is to strengthen the Japan-China relationship, under the
rubric of a strategic reciprocal relationship. A changeover in the Chinese leadership is
also due in 2012. There is, however, a sense of uncertainty over the future of theJapan-China relationship, and there does not, as yet, seem to be any fundamental
conviction in Japan regarding Japanese policy towards China.
Accordingly, following previous recommendations, taking into consideration thecurrent situation in China, and looking toward the coming five to ten years, in thisdocument IIPS will offer proposals regarding a China that would be desirable in the
global and regional orders, the ideal Japan-China relationship, and what needs to bedone to bring these about.
The essence of the proposals

Japan ought to welcome the fact that China is maintaining its current stability andgrowth and will continue to prosper in the future, while at the same time it puts apremium on peace and cooperation.
The Japan-China relationship, which in 2012 celebrates the fortieth anniversary of
the normalization of diplomatic relations, is one of the most important bilateralrelationships—not only for the two nations themselves, but also for the East Asian
regional community and the international community as a whole. In the spirit of four
foundational documents, the two nations should thus reinforce their strategic reciprocal
relationship, while responding appropriately to both domestic and external
circumstances.
Now that China has become the world’s second largest economy, it represents agrowing presence both in East Asia and on the world stage. Meanwhile, it faces
numerous problems on the domestic front and is also provoking resentment fromsurrounding nations for its foreign policy. On the foreign-policy front, Japan should-1-encourage China to work in harmony with regional and global orders, and to contributeto their preservation, while, on the domestic front, it should encourage China tomaintain the social order in an appropriate manner, consistent with the rule of law.
Within the context of a cooperative bilateral relationship, Japan and China ought tocomplement one other, as Japan is already experiencing the various problems that arise
in modern society, while social harmony in the context of economic growth is an
important issue for China. At the same time, as two nations facing common problems in
the twenty-first century, it would be desirable for Japan and China to find common
ground and to be able to work together to resolve the situation. In particular, as the twonations establish closer relations in the economic sphere, Japan should (while
acknowledging the attendant problems in this area) encourage China via the politicaland business communities to expand its economic activities under common global rules,
bearing in mind China’s importance as a market and as a base of production.
The pending issues between Japan and China are crystallized in the issue of theSouth China Sea. Japan should quietly strive to preserve its sovereignty, while adheringto the Japan-US Security Treaty; at the same time, however, it must spare no effort inworking for peace. In cooperation with surrounding nations, Japan and China should
implement a framework for dealing with sudden accidents and enforce the sharing ofrules relating to the sea. Regarding issues of historical perception, it will be necessary tobuild on the past talks between leaders and continue the dialogue. Since improving
popular sentiment is also an important issue, the two nations should take measures toenhance mutual understanding, as well as to promote extensive exchanges at the level ofordinary citizens.
In the future, the Japan-China relationship will likely run into various sudden,
unexpected incidents in the wake of changes in domestic and external circumstances. In
order to avoid repeating past history, the two nations should deal with the various issues
flexibly and appropriately, and build a Japan-China relationship that is based on mutual
complementarity and in which top priority is given to peace and development.
Proposal 1

At all costs, Japan and China must avoid a course that leads to destruction of the peace,
once again, because of their failure to learn from the teachings of history. The two sides
must pool their wisdom and strive to ensure that they never repeat their unfortunate
history.
Proposal 2

Japan needs to be aware of the possibility that the map of East Asia may be redrawn
over the next 50 years. It is possible that, in that time, the line dividing North Korea andSouth Korea and the dividing line represented by the Taiwan Strait may be subject tochange. Such changes may alter the role of the Japan-US security arrangements. Japan
must consider how, in light of such changes, the new map could be most favorable to it,
bearing in mind the fact that it is China that will wield the greatest influence afterwards.
Japan must work tirelessly to influence China so as to achieve the best possible
outcome.
Proposal 3

The stability of Chinese society and the sound development of the Chinese economy
both serve Japan’s national interests. Bearing in mind the various possibilities for the
future of China, Japan should engage in exchanges at many different levels of Chinese-2-society, and build a stable relationship in the economic sphere without irresponsibly
tying economic affairs to nationalism or issues of sovereignty. Japan should also
encourage China to engage in economic activities under shared rules. Japan must also
be aware of issues inherent in the Chinese economy and must be prepared for
unforeseen eventualities.
Proposal 4

Japan and China have not fully succeeded in building trust between them, and sudden,
unexpected incidents could easily sway popular sentiment. Situations that generate
outpourings of nationalism and similar sentiment inhibit ordinary interaction between
Japan and China. This vulnerability cannot be remedied overnight; however, the twonations should suppress the incitement of popular sentiment against one another andconstruct a framework for preventing the escalation of sudden, unexpected incidents. Asa first step, Japan and China must spare no effort to improve matters by means such asbuilding trust between political and business leaders, handling issues of historicalperception in an appropriate fashion, ensuring reciprocal exchanges across a wide
spectrum of activities, and facilitating the exchange of information.
Proposal 5

Given that China is already a leading global power in the political, military, andeconomic spheres, and that it wields enormous influence, Japan must work to persuade
China to uphold the existing global order rather than destroy it. To this end, it should
encourage China to share universal values, such as the “rule of law,” and to make acontribution to the global and regional orders.
Proposal 6

Japan should quietly deal with the military threat from China and the various maritime
issues on the basis of the Japan-US security arrangements and with the cooperation ofsurrounding countries. However, it should, at the same time, actively develop militaryexchanges with China and pursue dialogue with the nation.
Proposal 7

Japan and China must envision a close and durable relationship between them andpursue dialogue. However, they should probably be aware that, to this end, they mustbuild a relationship of mutual complementarity that makes best use of their respective
characteristics—namely, the fact that China has, until now, enjoyed a high rate of
economic growth and is now encountering the various problems of a modern society,and the fact that Japan has already experienced the various problems of a modern
society and is growing stably.
I. An assessment of the current situation in China(1) Government••

The most significant problems faced by China include preserving the legitimacy of
the rule of the Chinese Communist Party, dealing with the transformation in its
economic structure as wages rise, and dealing with the rapid shift to an aging
society. These problems are wide-ranging and serious, and cut across government,
the economy, and society.
Social disaffection is directed towards the lack of opportunity for politicalparticipation and the corruption of officials, such as regional leaders. However,people direct this disaffection against the inequality and irrationality within theirown spheres of life, and it does not, at present, necessarily lead to direct criticism of
-3-

•

•

•

•

•

•

the central government. The possibility that, over the long term, this will develop
into a problem that will shake the very foundations of the regime cannot be ruled
out, however.
Under the socialist system in China, the core of the middle class is made up of thatstratum of society that can enjoy the rewards bestowed by the Communist Party andcan cooperate with the Party. Hence, it is far from certain that the growth of the
middle class will lead to democratization or to a change of regime. However, withthe spread of the Internet and the newly emerging possibilities for non-hierarchicalcommunications using new types of media, democratization is probable in thelonger term.
Chinese nationalism ebbs and flows to a certain extent, in accordance with policy,social transformation, and international relations; even so, it is hard to imagine that
it will subside in the long term. Japan is an easy target for such nationalism.
The influence of public opinion in China is on the rise. As long as the government
fails to ensure its legitimacy by means of elections, this trend looks set to continue
for the time being.
Although China emphasizes peaceful development and cooperation with theinternational community, and is trying to step up its activities in all areas of global
governance, it still continues to place a higher priority on domestic order and stable
rule than on adhering to the basic principles of the international community orcomplying with the norms of international law.
Within the central government, the power of the president and prime minister as
leaders is somewhat limited, and executive power resides collectively in the handsof the members of the Communist Party Central Committee’s Politburo Standing
Committee. It is unknown how much influence this collective leadership exerts
over the People’s Liberation Army (PLA).
The dominance of the central government over regional governments is likely tocontinue so as to facilitate personnel management. However, the picture continues
to be more complicated in the area of public finances.

(2) Military affairs and defense

•

•

•

China’s defense spending is believed to amount to 2–3 percent of its GDP, and its
arms build-up (including the development of nuclear weapons and missiles, and themodernization of its navy) has been remarkable. Of particular significance is
China’s deployment of submarines and fourth-generation fighter aircraft. By 2020,
China will have reached the point at which it will be capable of fighting a land war
against Taiwan—and not simply of launching a missile attack against it. This maylead to inevitable changes in the existing security situation in Northeast Asia. In
addition, China’s disclosure of information regarding its increasing military power
is inadequate.
In the medium and long term, China is aiming to conduct military operations atgreat distances from its own territory. In keeping with its growing military might, it
is stepping up activities in the Pacific Ocean and Indian Ocean, as well as in the
East China Sea and South China Sea, which is leading to increasing friction
between China and surrounding nations.
China’s possession of an aircraft carrier does not immediately guarantee change inthe military balance in East Asia. However, the effect of the symbolic value of thepossession of an aircraft carrier on the Chinese public’s perception of their
homeland and on Chinese nationalism must not be underestimated.
-4-

•
•

•

•

•

China possesses a large number of long-range missiles capable of carrying nuclear
weapons and is also proceeding with space development.
On the diplomatic front, China has been stressing a path of peace and cooperation
with its neighbors. Meanwhile, however, it is engaging in vigorous military action
in surrounding waters. China will first proclaim that the area concerned is within its
own territory, and then characterize its military actions as protection of its territory.
In recent years, China has been expanding the extent of its territory.
China has not been slow to participate in United Nations peacekeeping operations(PKO) and peacekeeping forces (PKF). In terms of certain aspects of the NPT(Nuclear Non-Proliferation Treaty) regime, of anti-terror defense, and of
non-conventional defense, it also shares interests with the international communityand neighboring nations.
In line with this modernization, the PLA has been streamlined organizationally. In
addition, both the relationship between the Communist Party and the military andthe relationship between the civilian government and the military are undergoing atransformation in their nature, and there are fears regarding the army’s increasing
influence on foreign policy and the government, as well as on the free speech of
ex-service personnel.
China has a history of defeat in war in modern times and harbors recollections of anarrow victory in the Second Sino-Japanese War. In light of China’s strong sense of
victimhood, there exists a keen latent desire in China to demonstrate military
superiority.

(3) Society and the economy••

It is hard to imagine China’s economy continuing to grow at a rate of 8 percent for
the next 10 years. Although the rate of increase in GDP is tied to the performanceof senior officials in regional government, it will probably decline gradually overthe next five years and settle down to approximately 5 percent by around 2020.
However, speculation on the movement of real estate prices and the rise in the
inflation rate driven by increasing wages have been remarkable. Above and beyond
the story of reduced growth told by the numbers, it is possible that the Chinese
economy will reach impasse or that there will be widespread economic stagnation
with the bursting of the real estate bubble. The disparities between coastal areas andinland areas, between the coastal regions and the inland regions of the coastal
provinces, and between the cities and rural areas of the inland provinces will, in the
future, become even greater and grow entrenched. These represent a factor that
could easily result in demonstrations and social unrest. In the long term, it is also
possible that the number of people working in primary industries will stabilize at
approximately 40 percent of the working population, and it will be essential toresolve the problem of family registration in cities versus registration in rural areas.
Job shortages are already occurring in China. Due in part to the family registration
system, university graduates (principally those whose home towns are in provincial
regions) are now struggling to find employment, and the so-called “stepping-stones
to success” are crumbling. This has been driven by the slowdown in economic
growth, and it seems that economic development is becoming a less effective
source of legitimacy for the Communist Party. Although the Communist Party
regime is unlikely to collapse within the next five to ten years, the possibility
cannot be ruled out that it will gradually substitute nationalism for economic
development as a source of legitimacy.
-5-•

Despite having the second largest economy in the world, China perceives itself as adeveloping country, and, in the name of economic stability, it has refrained fromliberalizing currency trading. This is undesirable in terms of the global economy.

(4) Foreign policy

•

•

•

•

•

•

•

•

Perceiving itself to be a developing socialist country, China has been conducting
foreign policy under the rubric of “hiding its talents and biding its time,” whichputs a premium on peaceful development with a low profile. In 2006, however,China switched its foreign-policy course, and its diplomatic policy began to take ona more unyielding cast. Recently, it has been trying to revert to a diplomatic-policy
course of peaceful development; however, the outcome of this is unknown.
Chinese foreign policy is founded on the three basic principles of sovereignty,
security, and development, and is aimed at protecting and extending China’s
national interests. China is also extremely conscious of its international standing, asrepresented by its status as a permanent member of the United Nations Security
Council.
China is not open to any compromise on matters relating to its core interests, suchas the issues of Taiwan, Tibet, and Uighur independence. China has not been
consistent on the question of whether it also ranks issues such as the Senkaku
Islands and the Spratly Islands as core interests, alongside the three listed above,
expressing different positions at different times. For example, China’s behavior hasin the past been as follows: after originally ranking its national interests in theSouth China Sea as core interests, it will then designate its interests in the East
China Sea as core interests as soon as an issue arises in the East China Sea;
meanwhile, it will no longer place special emphasis on the core nature of its
interests in the South China Sea.
China often forcefully asserts the principle of non-intervention in internal affairs.
Recently, however, it has been exploring the possibility of limited “constructive”
intervention, as it increases its international clout.
China is attempting to play an active role in various areas of global governance, forexample, by dispatching Chinese (or rather, ethnic Chinese) staff to fill top posts atinternational institutions and by investing funds.
Although, as a so-called emerging nation, China is apt to be considered a presence
that will shake up the existing global order, its position is consistent with that of adeveloping nation under that same order. In this regard, China is sometimes anupholder of the existing order and sometimes a challenger to the existing order,
depending on the particular field of activity.
Although China has not been active in the G2 debate, it recognizes that the global
order is shifting from a unipolar structure, in which the USA is the superpower, to a
multipolar configuration that includes the emerging nations. Enormous importanceis attached to the US-China relationship, in acknowledgment of the fact that therelationship between China—as representative of the emerging nations—and the
USA has far-reaching global implications.
Within the international community, China has been a latecomer in various spheresof activity. As a result of this, it has been strengthening its relations with countries
criticized by Western nations and Japan. Although this entails risks for China, insome sense relations with these countries strengthen China’s influence within theinternational community.
-6-

•

•

Having essentially resolved its border issues with fellow member nations of the
Shanghai Cooperation Organisation (SCO), China is trying to develop thisorganization into a cooperative framework that also handles issues such as
economic affairs. China has also been strengthening its relations with the ASEAN
nations, primarily on the economic front. At the same time, it has been engaging ina certain level of cooperation and compromise with them in the security sphere.
Having essentially resolved onshore border issues with its ASEAN neighbors,
China is proceeding with development projects that straddle borders, such as the
Mekong development project. This is leading to economic development for thebordering provinces and autonomous regions within China.
As well as so-called government foreign policy, China’s diplomatic policy also
consists of policies carried out by the PLA and the Communist Party. There is alsoa “private” face to foreign policy, in the form of government-run agencies andcompanies run by the military.

II The China that the world and the East Asian region would like to see(1) The rise of China and the global order

The global order is entering a period of transformation due to the rise of China and therise of the so-called emerging nations, and attention is now focused on the G20, which
includes emerging nations, rather than on the G7 or the G8. At present, it is unclear
whether the new global order that will be formed in the future will be based on theexisting order or be completely different. It would help in the construction of a stableglobal order in the twenty-first century if the emerging nations—including China—were
to regard themselves as beneficiaries of the existing order, and were to contribute to theformation of the new order by means of peaceful dialogue and negotiation with thedeveloped nations. The developed nations ought to tolerate a certain degree of change
and adjustment to the existing order in the process.
China’s role in the face of the various disputes arising around the world and theemergence of challengers to the existing order will likely increase in the future. Theinternational community expects China to play a role in the Six-Party Talks, on Iran, on
Myanmar, and in Africa. It should be conveyed to China that, simply by endeavoring topreserve and develop this global order and contributing to it, China will enhance its
global standing.
(2) The global significance of China’s economy

It would be impossible to overstate the importance of the world’s second largest
economy to the global economy. While the economies of the developed nations havefloundered, the Chinese economy has continued to exhibit a high rate of growth.
Despite facing numerous domestic problems, China remains important as a market andas a base of production. For this reason alone, trends in the Chinese economy feed
directly into the global economy. As a result, it is vital that the Chinese economy
continue to grow stably and that economic activities in China and trade with the nation
be conducted on the basis of global rules. The nations of the world should wage anactive and continuous campaign to encourage China in the direction of shared common
rules. This should include issues where China displays protectionist tendencies, as
exemplified by its currency policies.
(3) The Chinese economy as a presence in East Asia

A remarkable transformation is taking place in the regional order in East Asia, of which
China is a part, and the growth of China’s influence in the region is striking. Particularly-7-noteworthy is the number of countries and territories within the region whose
economies are becoming increasingly reliant on the Chinese economy. Likewise, China
is proceeding with an FTA with ASEAN and is actively strengthening its relations withneighboring nations. China is also enthusiastic about regional cooperation built aroundeconomic affairs and has recently been beefing up its presence within institutions suchas the Asian Development Bank. China’s emphasis on cooperative relations withneighboring countries based on economic relations is conducive to the stability andpeaceful development of the region. However, as vital as the stable development of theChinese economy is to the economy of the region as a whole, it is, at the same time,even more important that economic and trade activity with China be conductedsmoothly—under shared rules and with common understanding—and that economic
activity in China be based on fixed rules.
(4) The importance of a stable Chinese society

The stability of Chinese society is important both to the world and to the East Asian
region, both of which are closely invested in the Chinese economy. Although Chinesepolitics and society are currently undergoing major transformation, China’s neighbors
and nations around the world should make a flexible and wide-ranging commitment toplace top priority on the stability of Chinese society. To this end, both sides should
restrain themselves from using extreme words and actions that might incite nationalism,
and they must make specific efforts to construct a framework for preventing theescalation of sudden, unexpected incidents. Bearing in mind the various possibilities forthe future of China, nations should also promote exchanges at many different levels ofChinese society—not simply with the Chinese government or the Communist Party, butalso within the business and academic spheres and with a diverse range of organizations.
The developed nations should also proceed to cooperate with China regarding the natureof the various problems likely to arise in a modern society and the ways in which thesecan be addressed.
(5) China’s international standing

China is attempting to acquire the standing—both in East Asia and globally—that befits
the might of a nation that possesses the world’s second largest economy. Since modern
times, China has harbored a strong desire to recapture its former glories and still retains
recollections of being the victim of invasion. China must, however, beware thepossibility of this bubbling over into conflict with neighboring nations that also recall
being victims of invasion in modern times, and must guard against becoming overly
aggressive. China’s neighbors and the nations of the world should cooperate in letting
China know how it can best represent itself as a major power of international standing,and they should urge it to assume proper responsibility for global problems such as
global warming. At the same time, they should express their appreciation when China
makes a peaceful contribution to the global or regional order. In this regard, they should
watch for Chinese contributions to building peace via the UN and its contributions invarious areas of global governance.
(6) Resources and energy

It is believed that behind China’s forceful global advance and maritime forays into
nearby waters lies its desire to acquire resources. This effort is driven by China’s
government-run financial institutions and government-run corporations, and China is
integrating it into its national policy by combining it with government foreign aid. As
exemplified by South Sudan and Angola, China’s influence is also increasing in regard
to the distribution of resources, which has traditionally been the province of major-8-

Western corporations. However, this is also a result of China’s propensity for making
advances into states and territories that the developed nations regard as problematical.
China’s neighbors should probably work together to persuade China that this resource
acquisition policy should ideally be carried out as an economic activity under fixedrules and should not be accompanied by military action.
(7) Security and military affairs

In terms of security, China is in a relatively isolated position. It is rapidly increasing its
military power in the awareness that it ought to possess a military capability befitting its
keen sense of danger and its power as a nation. Although to some degree this represents
a threat to neighboring countries and the world in general, it is difficult to curb this aslong as China confines its military build-up to within its own sovereign territory.
Neighboring countries and nations around the world should encourage China to use its
military forces to contribute peacefully to the region and the world, and should continue
to engage in military exchanges with China, while requesting the nation be moreforthright in disclosing information. Neighboring countries must also remain aware of
the possibility that China’s military build-up could spark a military confrontation orconflict (most likely in the seas surrounding China) and address this issue. Since there isa strong possibility that activities such as China’s acquisition of resources, which isunderpinned by its military might, will provoke nationalism (both in China and abroad)and will undermine regional and global stability, the nations involved need to cooperateand deal with these activities.
China is currently trying to avoid linking issues of sovereignty and security witheconomic issues. Neither neighboring countries whose economies are closely linked to
the Chinese economy nor the rest of the world have any wish for China to tie
sovereignty and security issues to economic affairs, either. For the sake of thedevelopment and prosperity of the region, China’s neighbors should request that it not
tie issues of sovereignty and security to economic issues.
(8) Maritime issues

The most significant points of contention between China and its neighbors are
crystallized in the maritime issues. This came to particular prominence in 2010. Even as
it touts peaceful development and cooperation with its neighbors on the one hand, China
is taking a hard-line stance over territorial issues in the South China Sea and East China
Sea. Neighboring nations must unite in protest against China’s expansion of its sphereof influence through military force, must exchange and share information on China’s
maritime forays, and must take measures to counteract them. These nations—as well as
China—must also enhance maritime governance and establish mechanisms for curbing
the escalation of sudden, unexpected incidents. With regard to maritime rules, they mustspare no effort in working towards shared concepts, for example, by means of dialogue
regarding interpretation of the United Nations Convention on the Law of the Sea.
III Getting along with China—what attitude should Japan adopt towards its
neighbor?

Since the normalization of diplomatic relations between Japan and China in 1972, thebilateral relationship has essentially grown stronger, and this has been realized in theform of the four foundational documents. The two nations are aiming to make thecurrent relationship more diverse and global in nature, under the rubric of a strategic
reciprocal relationship. As Japan’s largest trading partner, China is also important as amarket and a production base. However, the environment in which the bilateralrelationship exists is changing rapidly, with China’s recent rise and Japan’s decline in-9-power as a nation, exacerbated, in part, by the Great East Japan Earthquake. Serious
problems also exist, such as issues relating to the East China Sea, as shown by the
Senkaku Islands issue; issues regarding the trade rules that reflect the close traderelationship between the two nations; resource issues, such as the rare-earths issue;
issues of food regulation; and historical issues. As a result, in each country, popularsentiment towards the other is deteriorating enormously.
Japan needs to be aware of the possibility that the map of East Asia may be redrawn
over the next 50 years. This may entail change to the line dividing North Korea andSouth Korea and the dividing line represented by the Taiwan Strait, and may also affectthe role of the Japan-US security arrangements, which is related to these two boundaries.
The presence of China will greatly influence this new map. Bearing in mind the kind of
map that would be most favorable to it, Japan must continue to strive to avoid the worst
possible outcome and steer towards the best possible outcome.
At all costs, Japan and China must avoid a course that leads to destruction of thepeace, once again, because of their failure to learn from the teachings of history. The
two sides must combine their wisdom and strive to ensure that they never repeat theirunfortunate history.
Japan should thus clarify its view of its own national interests and maintain a firm
conviction, based on this view, regarding the way in which it should face up to China in
the region. Japan should not panic as events unfold before it but should deal soberly
with China on the basis of this conviction. First, this conviction should encompass thefact that the stability of Chinese society and the sound development of the Chinese
economy both serve Japan’s national interests. With regard to Chinese society, Japan
should bear in mind the various possibilities for the future of China and engage inexchanges at many and diverse levels of Chinese society. Regarding the Chinese
economy, Japan should encourage China to conduct activities on the basis of shared
rules and to refrain from tying issues of sovereignty and security to economic affairs.
Japan should also be aware of issues such as vulnerabilities in the Chinese economy andshould prepare for unforeseen eventualities.
Second, since situations that generate the eruption of problems involving nationalism
and similar sentiments inhibit ordinary interaction between Japan and China, the twonations should suppress activities that would incite popular sentiment against one
another and construct a framework for preventing the escalation of sudden, unexpected
incidents.
Third, given that China is already a leading global power in the political, military,and economic spheres, and given that it wields enormous influence, Japan should
encourage China to uphold the existing global order rather than destroy it. To this end, itshould encourage China to share rules, for example, by adhering to the “rule of law,”and to make a contribution to the global and regional orders.
Fourth, Japan should quietly deal with the military threat from China and the various
maritime issues on the basis of the Japan-US security arrangements and with thecooperation of surrounding countries. However, it should, at the same time, actively
develop military exchanges with China and seek dialogue with the nation.
Based on these various points, Japan and China should calmly and unemotionallyconsider a new relationship between them that corresponds to the recent transformationsin their respective domestic and external environments, and should pursue dialogue with- 10 -

one another. To this end, they should consciously build a relationship of mutual
complementarity that makes the best use of their respective characteristics—namely, thefact that China is still enjoying a high rate of economic growth and is now encountering
the various problems of a modern society, and the fact that Japan has alreadyexperienced the various problems of a modern society and is growing stably.
In addition, Japan and China have not fully succeeded in building trust between them,and sudden, unexpected incidents can easily sway popular sentiment. This kind ofdelicate situation cannot be rectified overnight. As a first step, however, Japan and
China should strive to improve matters by means such as building trust between
political and business leaders, handling issues of historical perception in an appropriate
fashion, ensuring exchanges across a wide spectrum of activities, and facilitating thereciprocal exchange of information.
(1) The basis of the Japan-China relationship
Proposal 1

At all costs, Japan and China must avoid a course that leads to destruction of the peace,
once again, because of their failure to learn from the lessons of history. The two sides
must pool their wisdom and strive to ensure that they never repeat their unfortunate
history.
• Japan and China have essentially been intensifying their bilateral relationship along
the lines set out in four fundamental documents. Currently, the two nations areintending to further intensify the relationship under the rubric of a strategic
reciprocal relationship. Serious issues exist, however, such as sovereignty andsecurity issues and issues of popular sentiment. Issues relating to the East China
Sea are particularly serious, and the possibility of military confrontation cannot be
ruled out.
• A single, small-scale military confrontation or sudden, unexpected incident would
have a catastrophic effect on popular sentiment in both Japan and China (whoselevel of mutual trust is low), and it is difficult to rule out the possibility that—evenin the twenty-first century—the two nations will once again repeat the history of theprevious century.
• The two sides should proclaim peace itself to be the bottom line for theJapan-China relationship in the twenty-first century. Japan’s convictions regarding
China should rest on this fundamental premise, and Japan should shape theJapan-China relationship on this basis.
(2) Northeast Asia and the Japan-China relationship in the twenty-first century
Proposal 2

Japan needs to be aware of the possibility that the map of East Asia may be redrawn
over the next 50 years. It is possible that, in that time, the line dividing North Korea andSouth Korea and the dividing line represented by the Taiwan Strait may be subject tochange. Such changes may alter the role of the Japan-US security arrangements. Japan
must consider how, in light of such changes, the new map could be most favorable to it,
bearing in mind the fact that it is China that will wield the greatest influence afterwards.
Japan must work tirelessly to influence China so as to achieve the best possible
outcome.
• At present, it appears that preservation of the status quo is the order of the day inNorth Korea and the Taiwan Strait. Taking the longer view, however, various
changes could well occur over the coming 50 years.
- 11 -

•

If the line dividing North Korea and South Korea and the dividing line represented
by the Taiwan Strait change, the role of the Japan-US security arrangements may bealtered. Adherence to the Japan-US security arrangements is the dominant principleof Japan’s foreign policy. However, in regard to what might constitute a favorable
outcome for Japan after changes in these dividing lines in Northeast Asia, Japan
would be required to deal with the new situation with clear conviction, based on thespirit of the Japan-China Joint Communiqué and the Treaty on Basic Relations
between Japan and the Republic of Korea.

(3) The stability of Chinese society and the Chinese economy
Proposal 3

The stability of Chinese society and the sound development of the Chinese economy
both serve Japan’s national interests. Bearing in mind the various possibilities for the
future of China, Japan should engage in exchanges at many different levels of Chinesesociety, and build a stable relationship in the economic sphere without tying economic
affairs to nationalism or issues of sovereignty. Japan should also encourage China toengage in economic activities under shared rules. Japan must also be aware of issues
inherent in the Chinese economy and must be prepared for unforeseen eventualities.
• As China’s neighbor, and with an economy closely linked with the Chinese
economy, Japan should first affirm that it would welcome a stable society andsound economic growth in China.
• However, China’s prosperity should not threaten or harm the surrounding region,
and, ideally for Japan, the economic order should be preserved under shared rules.
• It would also be highly undesirable for Japan and China’s other neighbors if theeconomic affairs that are important to them were to be tied to the sovereignty issues
that are important to China. Ideally, issues of sovereignty would not arise in thefirst place; however, when they do, China should be encouraged not to link them toeconomic issues.
• The stable growth of Chinese society will allow China to mature as a market and a
production base. Thus, with regard to the ideal nature of the order and governanceneeded by Chinese society, Japan should bear in mind the various possibilities for
China’s future and engage more actively in exchanges at various levels of Chinesesociety—not simply with the Chinese government and the Communist Party.
• In light of history, mutual economic dependence does not immediately lead tostable relationships. As it builds its relationship with China, Japan should actively
evaluate the benefits it can derive—all the while remaining aware of the “China
risk.” It should also pin down the attractive and problematic aspects of Chinese
markets, and hedge against the risks involved.
• Specifically, Japan should consider Vietnam and Indonesia (both prospects for
future growth) as possible bases of production in addition to China; should makeuse of the Economic Cooperation Framework Agreement or ECFA (the FTA
between China and Taiwan) through joint ventures with Taiwanese companies, inorder to make inroads into Chinese markets; and should cooperate with neighboring
countries whose values and outlooks are the same as those of Japan, for example,
by engaging in joint investments with Singaporean companies.
• Regarding the excessive outflow to China of technological know-how built up by
Japanese small- and medium-sized companies, and the purchase of Japanese realestate with Chinese capital, Japan must grasp the extent of these phenomena and- 12 -

•check to see whether any issues of illegality or national security are arising (whilestill maintaining the principles of a free economy).
Japan must remain aware of the possibility that the Chinese real estate bubble will
burst or that the Chinese economy will suddenly stagnate, and must prepare to deal
with unforeseen situations.

(4) Popular sentiment and trust-building
Proposal 4

Japan and China have not fully succeeded in building trust between them, and sudden,
unexpected incidents could easily sway popular sentiment. Situations that generate
outpourings of nationalism and similar sentiment inhibit ordinary interaction between
Japan and China. This vulnerability cannot be remedied overnight; however, the twonations should suppress the incitement of popular sentiment against one another andconstruct a framework for preventing the escalation of sudden, unexpected incidents. Asa first step, Japan and China must spare no effort to improve matters by means such asbuilding trust between political and business leaders, handling issues of historicalperception in an appropriate fashion, ensuring reciprocal exchanges across a wide
spectrum of activities, and facilitating the exchange of information.
• One of the most significant problems facing the current Japan-China relationship isthe issue of popular sentiment. The two governments cannot fail to be aware of thedeterioration in popular sentiment and are exercising restraint in their diplomatic
policies as a result. With trust between the two sides still inadequate, sudden,
unexpected events could easily sway popular sentiment. Although the media haverefrained from sensational reporting to some degree, they should be careful to guard
against making tit-for-tat statements that would incite popular sentiment on the
opposite side.
• The deterioration in popular sentiment has not occurred overnight—it is the productof education in schools, media reporting, and domestic upbringing over the courseof a long period of time. In China, there is a tendency to regard Japaneseperceptions of history and Japan’s security policies as problematic, while in Japan,
there is a tendency to see China’s transformation into a military superpower and thenature of Chinese rule as problems.
• The rise of popular sentiment driven by nationalism inhibits ordinary exchanges
between the two nations, such as economic activity. For this reason, Japan and
China should construct a framework enabling them to prevent situations in which asudden, unexpected incident, such as a maritime accident, might adversely affectsentiment on both sides. At the same time, the two nations should engage inbuilding trust—first, at the leadership level, but also in a multi-faceted manner
across a diverse range of arenas, such as government, business, and academia.
• A variety of misunderstandings and suspicions have cropped up between Japan and
China. The two nations should engage in suitable exchanges of information as wellas other reciprocal exchanges, and should work towards better mutual
understanding.
(5) China and the global order
Proposal 5

Given that China is already a leading global power in the political, military, andeconomic spheres, and that it wields enormous influence, Japan must work to persuade
China to uphold the existing global order rather than destroy it. To this end, it should- 13 -

encourage China to share universal values, such as the “rule of law,” and to make acontribution to the global and regional orders.
• The global order is currently undergoing a period of transformation. As a memberof the G7, however, Japan would like to preserve the existing order. In some senses,
China is also a beneficiary of the existing order, and nations—including
Japan—should make China fully aware of this and should encourage it in areas
such as regional cooperation, assistance, and the adoption of rules governing
economic activity.
• The same is applicable to the East Asian region. Japan should engage in exchangesof views with South Korea and the ASEAN nations regarding the kind of China thatthey would like to see, and should work in concert with these countries in dealing
with China.
(6) Security and the issues in the East China Sea
Proposal 6

Japan should quietly deal with the military threat from China and the various maritime
issues on the basis of the Japan-US security arrangements and with the cooperation ofsurrounding countries. However, it should, at the same time, actively develop militaryexchanges with China and pursue dialogue with the nation.
• Japan should calmly keep a watch on China’s military build-up, and should proceed
to deal with it soberly and strategically. However, it would be inadvisable to either
overreact to China or to compromise with it too easily. Japan should quietly
demonstrate its intention to protect its sovereignty and territory, and to defend theJapanese homeland.
• Japan’s own defense efforts and the Japan-US Security Treaty will be important in
the defense of the homeland; however, Japan must also continue to cooperate
closely with the free nations and regions of the Asia-Pacific region (such as South
Korea, Taiwan, and Australia), as well as with NATO.
• In the East Asian region, China’s military build-up—coupled with its failure todisclose information—represents a potential threat and is raising tensions withsurrounding nations.
• There are certain spheres in which the nations of Northeast Asia—including Japanand China—share common regional interests, such as the non-conventional defense
area. It will be necessary to construct frameworks for cooperation in these areas aswell.
• As China’s erstwhile opponent in the Anti-Japanese War, Japan is an easy target for
Chinese nationalism, and there is a tendency for this to lead to irresponsible talk of
confronting and defeating Japan—even by military means. In this regard, direct
exchanges with Chinese military officials will be of great significance.
• Cyber-security represents a new issue for the Japan-China relationship. Japan must
deal with cyber-attacks emanating from China, in cooperation with the USA andother nations that are involved.
(7) A mutually complementary Japan-China relationship
Proposal 7

Japan and China must envision a close and durable relationship between them andpursue dialogue. However, they should probably be aware that, to this end, they mustbuild a relationship of mutual complementarity that makes best use of their respective
characteristics—namely, the fact that China has, until now, enjoyed a high rate of- 14 -

economic growth and is now encountering the various problems of a modern society,and the fact that Japan has already experienced the various problems of a modern
society and is growing stably.
• As well as shared challenges, there are also issues within the Japan-China
relationship where Japan will take the lead, and issues that are peculiar to China. In
meeting the shared challenges, the two nations should exchange views and take thenecessary measures. However, the two nations also need to establish a relationshipof mutual complementarity—for example, Japan, which has already gone throughthe various problems that arise in a modern society, can serve as an example for
China and offer China the benefit of its experiences.
• In the future, China will encounter the problem of a rapidly aging society. Japanesesociety has experience of the various problems that arise in relation to issues suchas social-welfare policy and an aging society. These matters could also present
Japan and China with an opportunity to construct a new cooperative framework.

- 15 © IIPS (Institute for International Policy Studies)