Japan

Relations with China

The priority that policy toward China has commanded in Japanese foreign affairs has varied over time. During the period of United States-backed "containment" of China, there was a sharp divergence between official policy and popular attitudes in Japan. As a loyal ally of the United States, the Japanese government was committed to nonrecognition, whereas popular sentiments favored diplomatic relations and expanded trade. The Japan Communist Party and the Japan Socialist Party sought to capitalize on this situation in their propaganda efforts to promote closer relations with Beijing. Pro-Chinese sentiment found support not only in the desire of the business community for a new source of raw materials and a profitable market but also in the popular feeling of cultural affinity with the Chinese. Japanese leaders spent considerable effort trying to manage this tension.

The unanticipated United States opening to China in 1971 undermined the administration of Prime Minister Sato , but the subsequent government of Prime Minister Tanaka Kakuei quickly adjusted policy by normalizing diplomatic relations in 1972. Throughout the next decade, policy toward China continued to receive high priority as Japanese officials dealt with competing pressures from the Chinese and Soviet governments. Beijing and Moscow pressed Tokyo to side with their respective positions in the intense Sino-Soviet competition for influence in Asia following the substantial United States military withdrawal and the fall of United States-backed regimes in Indochina.

China's economic importance to Japanese policymakers rose in tandem with the market-oriented reforms and increased foreign interaction associated with the post-Mao Zedong policies of Chinese leader Deng Xiaoping. Unrealistic Japanese expectations of economic benefit in China were ended by the zigzag course of Chinese development in the 1980s. Japanese decision makers by the end of the decade were able to settle on a balanced policy toward China that required less attention from Japanese leaders and received lower priority than in the past. The massacre of prodemocracy demonstrators in Beijing's Tiananmen Incident and the collapse of communist regimes in Eastern Europe and parts of Asia in 1989 discredited China's communist leaders in the minds of Japanese people and made it more difficult for Chinese officials or opposition Japanese politicians to raise China-related issues in Japanese domestic politics. The effect was to reduce further the need to make special government concessions on China-related issues. As the memory of the Tiananmen Incident faded, closer Japan-China economic and political relations were rekindled in the early 1990s.

The early post-World War II political differences between the two countries related especially to China's insistence that Japan end its official relations with the Kuomintang (Chinese Nationalist Party) government on Taiwan and abrogate its security treaty with the United States. Initially, neither country allowed its political differences to stand in the way of broadening unofficial contacts, and in the mid-1950s they exchanged an increasing number of cultural, labor, and business delegations.

In 1958, however, China suspended its trade with Japan-- apparently convinced that trade concessions were ineffective in achieving political goals. Thereafter, in a plan for improving political relations, China requested that the Japanese government not be hostile toward it, not obstruct any effort to restore normal relations between itself and Japan, and not join in any conspiracy to create two Chinas.

Coincident with its dispute with the Soviet Union, China resumed its trade with Japan in late 1960. Important provisions were attached to the arrangement, however, stipulating that trade was to be based on formal government-to-government agreements and the private trade was to be sanctioned indirectly by the Japanese government. Only Japanese firms that pledged to support the three political principles of 1958 were to be allowed to participate.

In November 1962, Sino-Japanese relations were elevated to semiofficial status--still far short of diplomatic recognition-- with the signing in Beijing of a five-year trade memorandum (1963-67), better known as the Liao-Takasaki Agreement. Under its terms, Chinese purchases of industrial plants were to be financed partly through medium-term credits from the Japan Export-Import Bank. The accord also permitted China to open a trade mission in Tokyo and in 1963 paved the way for Japanese government approval of the export to China of a synthetic textile manufacturing plant valued at around US$20 million, guaranteed by the bank. Subsequent protest from Taiwan caused Japan to shelve further deferred-payment plant exports. China reacted to this change by downgrading its Japan trade and intensified propaganda attacks against Japan as a "lackey" of the United States.

Relations cooled noticeably during the massive political and economic chaos that prevailed during the radical phases of the Cultural Revolution in China, from 1966 to 1969. As the turmoil subsided, however, the Japanese government--already under pressure both from the pro-China factions in the LDP and from opposition elements--sought to adopt a more forward posture. Japan's efforts to set its own China policy became particularly evident after July 1971 when Nixon, according to Japanese sources, "shocked" the Japanese by announcing his forthcoming visit to Beijing. Relations remained complicated, however, because of Japan's diplomatic and substantial economic ties with Taiwan and the presence of a powerful pro-Kuomintang faction in the LDP.

The September 1972 visit to Beijing of Japan's newly elected prime minister, Tanaka Kakuei, culminated in the signing of a historic joint statement that ended nearly eighty years of enmity and friction between the two countries. In this statement, Tokyo recognized the Beijing regime as the sole legal government of China, stating at the same time that it understood and respected China's position that Taiwan was "an inalienable part of the territory of the People's Republic of China." For its part, China waived its demand for war indemnities from Japan. (This demand was first made in the mid-1950s; the war reparations claims totaled as much as the equivalent of US$50 billion.) Diplomatic relations were to be established as of September 29, 1972. Japan and China also agreed to hold negotiations aimed at the conclusion not only of a treaty of peace and friendship but also at agreements on trade, shipping, air transportation, and fisheries. Sino-Japanese trade grew rapidly after 1972. In January 1974, a three-year trade agreement--the first of several working agreements covering civil air transportation, shipping, fisheries, and trademarks--was signed. Arrangements for technical cooperation, cultural exchange, and consular matters were also undertaken.

Negotiations for a Sino-Japanese peace and friendship treaty also began in 1974 but soon encountered a political problem Japan wished to avoid. China insisted on including in the treaty an antihegemony clause, clearly directed at the Soviet Union. Japan, wishing to adhere to its "equidistant" or neutral stance in the Sino-Soviet confrontation, objected. The Soviet Union made clear that a Sino-Japanese treaty would prejudice Soviet-Japanese relations. Japanese efforts to reach a compromise with China over this issue failed, and the talks were broken off in September 1975.

Matters remained at a standstill until political changes in China after the death of Mao Zedong in 1976 brought to the fore a leadership dedicated to economic modernization and interested in accommodation with Japan, whose aid was essential. A changing climate of opinion in Japan that was more willing to ignore Soviet warnings and protests and accept the idea of "antihegemonism" as an international principle also helped lay the groundwork for new efforts to conclude the treaty.

In February 1978, a long-term private trade agreement led to an arrangement by which trade between Japan and China would increase to a level of US$20 billion by 1985, through exports from Japan of plants and equipment, technology, construction materials, and machine parts in return for coal and crude oil. This long-term plan, which gave rise to inflated expectations, proved overly ambitious and was drastically cut back the following year as China was forced to reorder its development priorities and scale down its commitments. However, the signing of the agreement reflected the wish on both sides to improve relations. In April 1978, a dispute involving the intrusion of armed Chinese fishing boats into the waters off the Senkaku Islands (called Diaoyutai in Chinese), a cluster of barren islets north of Taiwan and south of the Ryukyu Islands, flared up and threatened to disrupt the developing momentum toward a resumption of peace treaty talks. Restraint on both sides led to an amicable resolution. (The Senkakus are claimed by Japan, China, and Taiwan, but the question of territorial rights was finessed in this case.) Talks on the peace treaty were resumed in July, and agreement was reached in August on a compromise version of the antihegemony clause. The Treaty of Peace and Friendship was signed on August 12 and came into effect October 23, 1978.

Chinese domestic political problems and uneven progress in China's reform programs at times dampened Japanese enthusiasm for economic relations with China. Yet Sino-Japanese relations made considerable progress in the 1980s. In 1982 there was a serious political controversy over revision of Japanese textbooks dealing with the history of imperial Japan's war against China in the 1930s and 1940s. Beijing also registered concern in 1983 about the reported shift in United States strategic emphasis in Asia, away from China and in favor of greater reliance on Japan, under the leadership of the more "hawkish" Prime Minister Nakasone Yasuhiro, warning anew against possible revival of Japanese militarism. By mid-1983, however, Beijing had decided--coincidentally with its decision to improve relations with the Reagan administration--to solidify ties with Japan. Chinese Communist Party general secretary Hu Yaobang visited Japan in November 1983, and Prime Minister Nakasone reciprocated by visiting China in March 1984.

The Chinese had long looked on Japan--by then a major trading partner--as a leading source of assistance in promoting economic development in China. The growth of Soviet military power in East Asia in the early 1980s prompted them to consult with Japan more frequently on security issues and to pursue parallel foreign policies designed to check Soviet influence and promote regional stability. While Japanese enthusiasm for the Chinese market waxed and waned, broad strategic considerations in the 1980s steadied Tokyo's policy toward Beijing. In fact, Japan's heavy involvement in China's economic modernization reflected in part a determination to encourage peaceful domestic development in China, to draw China into gradually expanding links with Japan and the West, to reduce China's interest in returning to its more provocative foreign policies of the past, and to obstruct any Sino-Soviet realignment against Japan.

Thus, common strategic concerns, as well as economic interests, held the two nations together. Until the late 1970s, China appeared more alarmed than Japan about the Soviet military buildup in Asia. But as the Soviet Union increasingly sought to impede strategic cooperation among Japan, the United States, and possibly China, in part by stepped-up intimidation of Japan, the Nakasone government became more concerned about the Soviet military buildup.

Many of Japan's concerns about the Soviet Union duplicated China worries. They included the increased deployment in East Asia of Soviet SS-20 missiles, Tu-22M Backfire bombers, and ballistic missile submarines; the growth of the Soviet Pacific fleet; the Soviet invasion of Afghanistan and the potential threat it posed to Persian Gulf oil supply routes; and an increased Soviet military presence in Vietnam.

In response, Japan and China adopted strikingly complementary foreign policies, designed to isolate the Soviet Union and its allies politically and to promote regional stability. In Southeast Asia, both countries provided strong diplomatic backing for the efforts of the Association of Southeast Asian Nations (ASEAN--see Glossary) to bring about a Vietnamese withdrawal from Cambodia. Japan cut off all economic aid to Vietnam and provided substantial economic assistance to Thailand to help with resettling Indochinese refugees. China was a key supporter of Thailand and of the Cambodian resistance groups. In Southwest Asia, both nations backed the condemnation of the Soviet occupation of Afghanistan, refused to recognize the Soviet-backed Kabul regime, and sought through diplomatic and economic means to bolster Pakistan. In Northeast Asia, Japan and China sought to moderate the behavior of their Korean partners--South Korea and North Korea, respectively--to reduce tensions. In 1983 both China and Japan strongly criticized the Soviet proposal to redeploy some of their European-based SS-20 missiles to Asia.

Complementary economic interests also strengthens Sino-Japanese relations. Japan is a major source of capital, technology, and equipment for China's modernization drive. In fact, Japan has been China's largest trading partner since the mid-1960s, accounting for more than 20 percent of China's total trade. Bilateral trade exploded in the 1970s and early 1980s, from US$1 billion in the early 1970s to more than US$8 billion in 1982. Japan became China's largest creditor, accounting for nearly half of the estimated US$30 billion in credit China lined up from 1979 to 1983.

Although its share of Japan's global trade was still small (3 percent in 1982), China became Japan's sixth largest trading partner. Japan regarded China as a significant source of coal, oil, and strategic minerals, such as tungsten and chromium, and as an important market for Japanese steel, machinery plant equipment, chemical products, and synthetic textile fibers.

The optimism that marked the economic relationship in the late 1970s had given way to a greater degree of realism on both sides by the early 1980s. China's decision to curtail imports of heavy industrial goods in 1981 and 1982 had a sobering effect on the Japanese. Businesspeople in Japan came to appreciate the problems China faced and revised their expections of the growth of economic ties as the Chinese experimented with various economic policies. The Japanese continued to hope that they would profit from China's potentially huge domestic market, whenever its modernization began to pick up speed.

Japanese economic interests in China focused on developing energy resources and infrastructure and on promoting commercial trade. As of 1983, the Overseas Economic Cooperation Fund, Japan's official aid organization, had agreed to grant US$3.5 billion in loans to China for basic infrastructure projects, such as port and rail modernization. In addition, the Japan Export-Import Bank extended US$2 billion for oil exploration and coal mining at a 6.25 percent annual interest rate, the lowest rate China had gained from any country at that time. The Japanese were heavily involved in China's oil industry, and Japanese drilling in the Bohai Gulf appeared promising.

Japan encountered a number of episodes of friction with China during the rest of the 1980s. In late 1985, Chinese officials complained harshly about Prime Minister Nakasone's visit to the Yasukuni Shrine, which commemorates Japan's war dead, and in mid- 1986 they complained about the latest revision of Japan's history textbooks to soften accounts of World War II atrocities. Economic issues centered on Chinese complaints that the influx of Japanese products into China had produced a serious trade deficit for China. Nakasone and other Japanese leaders were able to reduce these official concerns during visits to Beijing and in other talks with Chinese officials. Notably, they assured the Chinese of Japan's continued large-scale development and commercial assistance. At the popular level in China, it was not easy to allay concerns. Student- led demonstrations against Japan, on the one hand, helped reinforce Chinese officials' warnings to their Japanese counterparts. On the other hand, it was more difficult to change popular opinion in China than it was to change the opinions of the Chinese officials. Meanwhile, the removal of party chief Hu Yaobang in 1987 was detrimental to smooth Sino-Japanese relations because Hu had built personal relationships with Nakasone and other Japanese leaders.

The Chinese government's harsh crackdown on prodemocracy demonstrations in the spring of 1989 caused Japanese policymakers to realize that the new situation in China was extremely delicate and required careful handling to avoid Japanese actions that would push China further away from reform. At the same time, these policymakers were loath to break ranks with the United States and other Western countries, where popular opinion and domestic pressures to varying degrees required that officials condemn the crackdown and take action to restrict economic or other interaction of benefit to the Chinese regime. Beijing leaders reportedly judged at first that the industrialized countries would relatively quickly resume normal business with China after a brief period of complaint over the Tiananmen Incident. When that did not happen, the Chinese officials made strong suggestions to Japanese officials that they break from most industrialized nations by pursuing normal economic intercourse with China, consistent with Tokyo's long-term interests in China. Japanese leaders--like West European and United States leaders--were careful not to isolate China and continued trade and other relations generally consistent with the policies of other industrialized democracies. But they also followed the United States lead in limiting economic relations notably advantageous to China. In particular, they held back for one year the disbursement of ¥810 billion in aid, which Japan had promised in 1988 to give China in the 1990-95 period.

Japan is in the forefront among leading industrialized nations in restoring closer economic and political relations with China. Resumption of Japan's multibillion dollar aid to China and increased visits to China by Japanese officials, culminating in the October 1992 visit of Emperor Akihito, gave a clear indication that Japan considered closer ties with China in its economic and strategic interest.

Data as of January 1994

Japan - TABLE OF CONTENTS