neighbors construe its actions, thus an unexpected event can always create a new wave of nationalism. Now that an understanding of the existing literature involving nationalism in China and Japan has been reached, it is important to understand what existing literature has to say on the “cold politics, hot economics” characterization of Sino-Japanese relations. In his essay, Li Mingjiang focuses on how “hot economics” has prevented “cold politics” from turning into “freezing politics”. This is a traditional way to look at the “cold politics, hot economics” relationship and a fairly traditional view held by many political realists. Good economic relations prevent poor political relations. This thesis will look at this relationship from the opposite angle: how “cold politics” affects “hot economics,” or more simply, “how does the political affect the economic?” Li states that there is a fear the political might affect the economic, but it is not the focus of the essay. The strength of Li’s essay comes in the form of explaining why “cold politics” exists between China and Japan and explaining how political events build off each other in each country. For instance, an increase in military spending in China may lead to Japan strengthening its defense agreement with the United States, or a visit of the Japanese prime minister to Yasukuni Shrine may be construed as a nationalist action by China. The problem with Li’s essay is that he accepts the general truth of “cold politics, hot economics” as a characterization of Sino-Japanese relations. This problem fundamentally stems from the fact that Li views economics as the factor that prevents bad political relationships, instead of looking at how politics affects economics. As a matter of fact, Li believes that a scenario of “cold politics, cold economics” is unlikely, but in describing this scenario, he describes what Sino-Japanese relations began to look like during the
infrastructure growth and technology sharing. According to the Japanese Ministry of Foreign Affairs, over 3.3 trillion yen was given in ODA loans to China during this time. While this aid is not technically considered “investment”, it laid the groundwork for future Japanese investment in China. In his 2005 study, Severine Blaise explained the link between Japanese ODA and FDI in China by saying, “one could expect ODA to contribute substantially to the economic growth of a recipient country not only through its direct impact, but also indirectly by promoting the inflows of FDI.” In fact, Blaise’s finding seems to be true: Japanese ODA in China bolstered Japanese investment in China, especially in areas where ODA was directed, which included much of China’s coastal regions. Between 1989 and 2013 China held the position of “most promising destination of Japanese FDI”. Between the Japanese External Trade Organization’s first year of counting Japanese FDI in China, 1987, and 2015, Japanese FDI has increased from millions to billions of US Dollars annually. These same statistics show that Japanese FDI in China has been fairly steady since 2000, until 2013 (see: “Figure 5”). There is no denying that Japan has a long history of investment in China. There is also no denying that Japanese investors have put a lot of money into their Chinese investments, but something changed the status of Japanese investment in China in 2013. Figure 5: Japanese FDI in China: 2000-2015
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