Recent JEF Activity • 2

CJK Cooperation Dialogue – Thinking
About Responses to New US Policies
Author Naoyuki Haraoka

By Naoyuki Haraoka
Introduction

CIRD – an Independent Chinese Think Tank

Foreign policy issues among neighboring nations are particularly
important with regard to their security and economy, since relations
among neighbors tend to be deeper than with other countries andthe impact of such policies more immediate. Trilateral dialogue
among China, Japan and South Korea is particularly crucial, given
the increases in political tensions and conflicts among them, in
reminding leading thinkers from the three nations of the benefits ofin-depth mutual learning in the face of the economic challenges
confronting them and their policies to tackle them. The Japan
Economic Foundation (JEF), which initiated the CJK Cooperation
Dialogue to set up such a mutually beneficial learning process, held
the 5th Dialogue on Dec. 8 in 2018 in Haikou, China, in partnershipwith the host, the China Institute for Reform and Development(CIRD).
Under the title “CJK Cooperation in a New Context”, this dialogue
was set in completely different international circumstances from anyof the previous meetings. A rise in protectionism signaled by theadministration of President Donald Trump in the United States
under the slogan of “America First” has collided with China’s “Madein China 2025” industrial policy. The US-China trade war that beganwith the US raising tariffs on Chinese aluminum and steel products
has turned into a hegemonic war for technology security. Though
Trump’s meeting with Chinese leader Xi Jinping on Dec. 1, 2018 in
Buenos Aires succeeded in providing a 90-day truce in the tradewar, on the same day Meng Wanzhou, CFO of Huawei, a Chinese
high-tech telecommunications giant, was arrested in Canada at the
US government’s request on suspicion of having violated economic
sanctions against Iran. Some media have reported that this arrest isa warning to China, aimed at preventing the leakage of criticaltechnology-related information from US high-tech products that
could be caused by purchasing and using Huawei products incompleting US or any other nation’s high-tech goods.
It was in this new context that our trilateral cooperation dialogue
was held.

Last year was the 40th anniversary of the introduction of an open
economy and structural reform in China, initiated by Deng Xiaopingin 1978. The CIRD was established in 1991, based on Deng’s policy
of attempting to introduce market mechanisms into the socialist
economy of China to enrich the nation. The CIRD has dedicateditself to independent and forward-looking research on reform policy
issues.
In his opening remarks at the dialogue, Professor Chi Fulin,president of the CIRD, after having explained about the CIRD’s
mission, stressed the importance of CJK trilateral cooperation
against the background of a rise in protectionism started by the US.
His assessment of the current global economy was that themultilateral free trade system was exposed to a rising risk of US
unilateralism under the “America First” policy and that would
threaten the stable growth of the world economy and Asian
economy. The risk would not be a major immediate risk limited toChina only, exposed directly to American protectionism. Since theChinese market is a major market for both South Korea and Japan, apossible decline of growth in this market would lead to the twonations’ economic slowdown. To avoid this, he thinks the three
countries should cooperate in ensuring free trade. In particular, hepointed out that trade liberalization among CJK has beensignificantly delayed, compared with ASEAN countries, and shouldbe accelerated.
He also mentioned the importance of services in trade, as theweight of services in the Chinese economy is increasing, though still
lower than in South Korea and Japan, reflecting a lower urbanization
rate than those two. Promoting services in trade would be crucial totake full advantage of the growing service economy among the three
countries and the merits of economic globalization. China’s policy topromote an open economy would be encouraging for the service
industry as well. He believes the three nations could conclude ahigh-standard free trade agreement among certain sectors related toIT, including software services, assuming that there would be few
differences in views on trade in those sectors.
With this encouraging sign of China’s strong commitment to an
open economy and free trade system, discussions began. In my

64 Japan SPOTLIGHT • March / April 2019https://www.jef.or.jp/journal/

Recent JEF Activity • 2

AgendaThe 5th CJK Cooperation Dialogue“CJK Cooperation in the New Context”
Date: Dec. 8 (Saturday), 2018
Venue: Multifunctional Hall, 1st Floor, CIRD Conference Building
Session 1: CJK Economic Cooperation in the New Context: Opportunities& Prospects
Moderator: Haraoka Naoyuki, Executive Managing Director, Japan
Economic Foundation (JEF)
1. Keynote Speeches (10 minutes each)- Zhang Yunling, Director-General, Department of International Studies,
Chinese Academy of Social Sciences- Urata Shujiro, Dean and Professor, Graduate School of Asia-PacificStudies, Waseda University, Japan- Ahn Choong Yong, Distinguished Professor, Graduate School ofInternational Studies, Chung-Ang University; former Chairman, Korea
Commission for Corporate Partnership (KCCP)
2. High-end Talks (70 minutess)- Song Xiaowu, former Chairman, China Society of Economic Reform- Fukagawa Yukiko, Professor, School of Political Science and Economics,
Waseda University, Japan- Wei Wei, Vice President, Chinese People’s Institute of Foreign Affairs- Chae Wook, Honorary Distinguished Professor at the Graduate School of
Pan-Pacific International Studies of Kyung Hee University, Korea- Iida Hirobumi, Counsellor, Embassy of Japan in China
Session 2: Potentials & Breakthroughs of CJK Industrial Cooperation
Moderator: Ahn Choong Yong, Distinguished Professor, Graduate Schoolof International Studies, Chung-Ang University; former Chairman, Korea
Commission for Corporate Partnership (KCCP)
1. Keynote Speeches (10 minutes each)- Zheng Xinli, Vice President, China Center for International Economic
Exchanges- Kim DoHoon, Honorary Distinguished Professor, Kyung Hee University;
former President, Korea Institute for Industrial Economics and Trade(KIET)

personal view, it was an historical moment that we had such an
encouraging opening speech confirming commitment to trilateral
cooperation and free trade.
The dialogue consisted of three sessions (Agenda).

Opportunities & Prospects
for CJK Economic Cooperation
Session 1 was a kind of overview session looking at the main
issues emerging in this new context. It was encouraging to see all
agreed that the three countries will need to consolidate their efforts
for economic cooperation to mitigate the impact of US
protectionism, assuming that their economic growth would be
hampered by it. All agreed that the best growth strategy in this newcontext would be to pursue free trade among themselves as well aswith the other Asian nations or globally. The total of the three- Song Xiaowu, former Chairman, China Society of Economic Reform- Yoshino Naoyuki, Dean, Asian Development Bank Institute, Japan
2. High-end Talks (70 minutes)- Tchoe Byongho, Professor and Dean, Graduate School of Urban Public
Health, University of Seoul, Korea; former President, Korea Institute for
Health & Social Affairs (KIHASA)- Fukagawa Yukiko, Professor, School of Political Science and Economics,
Waseda University, Japan- Gu Shuzhong, Vice Director, Institute of Resources and Environmental
Policy, Development Research Center of the State Council- Kim Sang-Hyup, Director, Center for Sustainable Development; Visiting
Professor, Graduate School of Green Growth, KAIST- Matsushita Kazuo, Professor Emeritus, Kyoto University; Senior Fellow,
Institute for Global Environmental Strategies (IGES), Japan
Session 3: Cooperation on the Local Level in the Framework of CJK
Cooperation
Moderator: Zhang Yunling, Director-General, Department of International
Studies, Chinese Academy of Social Sciences
1. Keynote Speeches (10 minutes each)- Hirai Akira, Managing Director, Chief Secretary, Kyushu Economic
Federation (Kyukeiren), Japan- Zhao Jinping, former Director-general, Research Department of Foreign
Economic Relations, Development Research Center of the State Council- Kim Seok-Hwan, Visiting Professor, Hankuk University of Foreign
Studies
2. High-level Talks (70 minutes)- Jiang Ruiping, Vice President, China Foreign Affairs University- Kusaka Kazumasa, Chairman, Japan Economic Foundation (JEF)- Du Benwei, former Secretary of the Party Committee, Dongbei Universityof Finance & Economics- Lim Kang-Taeg, Senior Research Fellow, Korea Institute for National
Unification(KINU)- Li Kai, Vice President, China Academy of Northeast Revitalization

nations’ GDPs is 96% of US GDP and thus their firm commitment tofree trade would work well as a warning to the US.
Another issue was the impact of a digital economy. It was pointed
out that smart networks brought about by the digital revolution
would have a significant positive impact on the economy and thiswould increase the weight of trade in services, in particular software
services. To encourage this trend, new trade rules for a digital
economy would be necessary. A possible trade deal among thethree nations for zero tariffs on digital products such as
telecommunication equipment or other IT products could be one
way to achieve it. Such sectoral trade liberalization could be easierto achieve and also have an immediate promotional impact on thedigital economy, a new engine of growth among the three nations.
The third issue discussed in this session was how to attract the
US back into a multilateral free trade system by reminding it of the
demerits of protectionism or of ignoring multilateral trade rules

Japan SPOTLIGHT • March / April 201965

Recent JEF Activity • 2under the spread of globalization. One way might be to wait and see
the worsening impact of protectionism on the US economy itself. It
may take longer to see the impact of a shrinking global economy
resulting from retaliatory measures by China or other nations.
Another way would be for the rest of the world to collaborate inachieving comprehensive and high-quality regional free trade
agreements, such as the Regional Comprehensive Economic
Partnership (RCEP) or a CJK FTA. The Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP), theformal name for the TPP11, will be put into effect on Dec. 30, 2018.
There would be room, however, for potential members like South
Korea or China to join it and thus it could be expanded, or in the
future both the CPTPP and RCEP could be merged as an APEC FTA.
The conclusion or implementation of such regional FTAs would put
US industries at a competitive disadvantage, since the US would be
excluded from them. US industries would then pressure
Washington to go back to multilateral FTAs. In particular, China’s
joining the CPTPP could work most effectively to attract the US tocome back. The key to success with this strategy would be how
quickly these nations could conclude negotiations for such FTAs.
The third point discussed in this regard was reform of the WTO to
make it more efficient. Apart from institutional aspects such asreform of the voting system from unanimity to majority rule to savetime in decision making, the discussion was focused on how toreflect recent economic developments such as the digital economy
in WTO rules so that the WTO would be a more attractive venue fortrade negotiations. International harmonization of domestic policies
or rules could be further examined in the WTO, such as competition
policy, Intellectual Property Rights, and e-commerce.
The last point on this issue was how quickly we could prompt the
US to return to multilateral free trade deals. China, Japan and South
Korea would not have much time to survive a trade war resulting
from US protectionism. The three countries industries are closely
connected through supply value chains expanding in East Asia andIn addition to trade policy, the three nations could benefit fromother microscopic policy cooperation. Cooperation in the domain ofenvironment policy remains important. Development of green
industries or the green economy, such as electric vehicles, recycled
agriculture, and clean energy like power generated by incinerators,
could be accelerated in China in particular by such cooperation. The
utilization of market mechanisms could be promoted to raise theseindustries. In the context of the digital economy today, we could
take advantage of the Fourth Industrial Revolution to achieve thegoals defined by the Paris Agreement for mitigation of global
warming. Digital technology could be used for investment inrenewable energy sources such as in smart cities where the efficientuse of energy is maximized. Knowledge of technology to achieve
such environmental goals could be shared by the three nations.
Healthcare is another potential area for trilateral cooperation inlight of the rapid aging of societies in the three nations. The
Japanese healthcare service and caregiving service would have highKazumasa Kusaka, Chairman and CEO, Japan Economic Foundation (JEF)

Chi Fuling, President, China Institute for Reform and Development (CIRD)

66 Japan SPOTLIGHT • March / April 2019

Southeast Asia and export their goods completed by these supply
chains to the US. A US-China trade war could destroy or at least
seriously damage these supply chains and thus the decline inexports of these nations would put their economies into stagnancy.
Time is precious. How can we shorten the process of building up a
free trade area on our own to attract the US to come back?
There would be two ways. One is to try to conclude the RCEP orCJK FTA, which are not concluded yet, with more flexibility – giving
up a more ambitious FTA and instead being satisfied with accords
on the fundamental issues to save time. The other would be to startnegotiations by sectors or on issues that are much less sensitive
than others, and try to get early harvest conclusions. Another five to
10 years should be spent on concluding more comprehensive
agreements.

Potential Areas for CJK Industrial Cooperation

Recent JEF Activity • 2

potential for economic cooperation with China, in particular. In thisarea as well, the three nations would benefit from digital technology
in terms of effective use of big data on medical consultations, or inanalyzing the behavior of elderly persons. Dementia, in particular, isa serious disease for the aged and the number of patients sufferingfrom it is rapidly increasing. Trilateral cooperation in digitaltechnology in this regard would be productive in caring for thosepeople. Biotechnology and pharmaceuticals would be another hightech area of potential cooperation which could enhance productivity
in the healthcare industry.
Agriculture and tourism services are other areas of potential
cooperation. The former could enhance its productivity by the
introduction of digital technology and the latter could be expanded
by a new policy to promote borderless tourism services among thethree nations.
With regard to financial services, how to finance increasing
infrastructure projects in Asia, how to finance small and mediumsized enterprises (SMEs), liberalization of capital and exchange
rates in China, and development of FinTech were issues fordiscussion and reflection. China’s initiative for infrastructurebuilding in Asia and other developing areas called “One Belt, One
Road” would need private money as well, and thus will need Publicand Private Partnerships (PPPs) as a method of financing. With
private money, such infrastructure projects’ profit ratio could beraised and thus tax revenues in the areas surrounding theseinfrastructures would rise and enhance the public sector’s financing
capacity.
This virtuous cycle would be made feasible by the creation of abond market for getting private money in China. The introduction ofmarket mechanisms in capital and exchange rates in China would be
the best policy for enhancing China’s responsibility in the global
economy as well as the Asian economy. It is well known that SMEs
have great employment potential and thus it would be worth
analyzing big data about them for efficient financing, and this could
be another matter for trilateral cooperation.
It was also noted that promoting gender equality in jobs would be
the most effective way of overcoming the shortage of labor due tothe lower birth rate among the three nations, given that they sharethe common weakness of being heavily dependent upon working
middle-aged men.

Cooperation at the Local Level
The 5th CJK Cooperation Dialogue highlighted local-level
cooperation for the first time, as it has been expanding in thecontext of private business cooperation as well as institutional
cooperation. This is partly due to expanded connectivity throughconsolidated infrastructure. Building up a borderless community
based on such local-level cooperation would be instrumental inpromoting friendship among the residents in those areas. In thecase of private business cooperation among different regions,interaction through business matching events is often seen as the
beginning of spontaneous private business cooperation, leading tolocal-level cooperation.
A change in national policy could also trigger local-level
cooperation. For example, the opening up of airports to the rest of
the world would promote local-level cooperation, and if there wascooperation between Special Economic Zones promoting structuralreform among the different nations, that could result in local-level
mutual learning about each other’s structural reforms as well as
enhanced business cooperation. In order to maximize the merits ofsuch a national policy for local areas, it would need to be linked to
the region’s development strategy.
The core of local-level cooperation is human exchange based on aregion’s passion for interaction. We would need to understand ourhistory of more than 1,000 years of human interaction among thethree nations. Kyushu, the main island of southern Japan, has beenat the center of such human exchange since the 5th century. Dazaifu
Tenmangu Shrine in Fukuoka city still attracts a large number oftourists from China and South Korea. The Yellow Sea Rim Economic
and Technological Conference aimed at achieving an open economy
in the Yellow Sea Economic Zone and initiated by the Kyushu
Economic Federation, an association of business people in Kyushu,
has been focusing on agricultural trade, in particular between
Shandong Province in China and Fukuoka in Japan. Weihai in China,
Incheon in South Korea and Fukuoka now engage in local-level
economic cooperation. The labor shortage in Kyushu could be
resolved today by an increase in young workers coming from South
Korea. The Economic Research Institute for North East Asia in
Niigata city, a think tank specializing in regional studies of Northeast
Asia including North Korea, is another example of local-levelknowledge-based cooperation. In addition, Kitakyushu city andDalian in China have been promoting environmental cooperation.
Tourism and caregiving services for the elderly are also potential
sectors for local-level cooperation, and Liaoning Province in China
is now open to importing these services from Japan.
Lastly, it should also be noted that a possible mitigation ofgeopolitical risk in North Korea through meetings between Trump
and North Korean leader Kim Jong Un would enhance the possibilityof further local-level cooperation in the future, providing the threenations with a good growth opportunity.
Overall, I would reiterate that the 5th CJK Cooperation Dialogue
was organized with an unprecedentedly keen interest in closer
cooperation among the three nations, possibly sparked by the“America First” policy. I hope this keen interest continues for our
future meetings.

Naoyuki Haraoka is editor-in-chief of Japan SPOTLIGHT & executive
managing director of the Japan Economic Foundation (JEF).

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