Bilateral trade takes a beating

SINO-JAPANESE TIES: Figures show 5.1pc drop last year to RM1.04 trillion and this year’s outlook remains grim

THE deterioration in Sino-Japanese political relations, which saw bilateral trade drop in 2012 after Tokyo nationalised three tiny islands also claimed by Beijing, resulted in another drop last year, despite an uptick in Japanese auto sales towards the end of the year.

The official China Daily, citing figures from China’s General Administration of Customs, reported that bilateral trade fell 5.1 per cent in 2013, to US$312.55 billion (RM1.04 trillion), Chinese exports to Japan dropped by 0.9 per cent, to US$150.28 billion, while Japanese exports to China declined 8.7 per cent, to US$162.27 billion.

These drops followed a fall in bilateral trade in 2012 of 3.9 per cent, to US$329.45 billion.

The outlook in 2014 for China-Japan trade, the paper said, “remains grim”.

The auto market in China, the world’s largest, performed robustly last year, rising 13.9 per cent, to almost 22 million cars, compared with relatively lacklustre growth rates in 2011 and 2012 of 2.45 per cent and 4.33 per cent, respectively.

Nissan reported that sales increased 17 per cent last year, Toyota reported 9.2 per cent growth and Honda 26.4, but those figures pale in comparison to the almost 50 per cent growth by the Ford Motor Co.

While another strong year is expected for the Chinese auto market, Japanese carmakers are unlikely to benefit like their American competitors.

Without a doubt, Sino-Japanese political tensions are holding back development of economic relations, which would benefit both countries.

These political tensions are now on full view around the world, as China has launched a diplomatic battle, with its ambassadors in global capitals writing articles in leading newspapers denouncing Japanese Prime Minister Shinzo Abe for having visited the Yasukuni Shrine, which honours 2.5 million Japanese who died in various wars from the mid-19th century on, including 14 Class A war criminals executed after World War 2.

Japanese ambassadors are firing back in commentaries published in the same newspapers, with the war of words having spread to about 30 countries.

In many cases, the Chinese diplomats recall that China fought on the allied side against Japan in WW2 but, of course, that was a different Chinese government, not the People’s Republic of China established by the communists in 1949.

The previous Chinese government had retreated to Taiwan after defeat by the communists in the civil war.

Japan and China need to find a way out of their current impasse.

It is unfortunate that the Japanese leader has chosen to visit the controversial Yasukuni Shrine — an action opposed not only by China but by South Korea, the United States and the European Union as well — since it suggests to many that Japan is unrepentant of its wartime actions.

It is important for Abe not to antagonise Japan’s closest neighbours as well as its friends in the West. Visiting Yasukuni may bolster Abe’s right-wing base but Japan cannot afford to be isolated.

If the Shinto shrine continues to be unwilling to remove the war criminals enshrined there, then Japan should defuse the issue by establishing a secular institution to honour its war dead.

While Tokyo doesn’t have to back down on its territorial claims, it should find some way to undo the damage done in September 2012, when the previous Japanese government of Prime Minister Yoshihiko Noda bought the islands from their private Japanese owner in an attempt to prevent them from falling into the hands of Shintaro Ishihara, then governor of Tokyo, and prevent him from provoking China by developing the islands.

However, the move backfired and sparked off widespread protests in China as well as a serious heightening of tensions in the East China Sea.

One possible move, proposed by Kishore Mahbubani, a former Singaporean diplomat who is now dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, is for Abe to “return to the status quo ante” by arranging to “sell” these islands to “a private Japanese foundation or environmental group, ostensibly to preserve their undeveloped natural beauty.”

This is an idea that is worth trying.

After all, the purchase was the decision of a predecessor government, so Abe would not lose face by de-nationalising the islands.

It was the late Chinese leader Deng Xiaoping who, in 1978, proposed to shelve the dispute. Japanese leaders for decades honoured a tacit understanding with China and did not develop these islands or change their status.

If Japan now returns the islands to private hands and makes clear its intention not to change their status, it will show the whole world that it is doing everything possible to de-escalate the dispute.

It will then be up to Beijing to show whether it is truly interested in peace or whether it was simply seizing on the nationalisation as a pretext for a confrontation with Japan.

Only after the territorial issue is resolved can economic relations return to normal.

Japanese Prime Minister Shinzo Abe has been criticised for visiting the Yasukuni Shrine, a move which antagonised Japan’s closest neighbours as well as its friends in the West.

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Bilateral trade takes a beating
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