China, Japan pivot to new markets to counter trade-war headwinds

China, Japan pivot to new markets to counter trade-war headwinds

News:

1. Japanese Prime Minister Shinzo Abe paid his first official visit to China, the first formal visit by a Japanese leader to China in seven years.

Important Facts:

2. The last Japanese prime minister to make an official visit to Beijing was Yoshihiko Noda in 2011.
3. 2018 marks the 40th anniversary of the 1978 bilateral Treaty of Peace and Friendship, between China and Japan which followed the normalization of diplomatic ties in 1972.
4. Significance of the visit:

• Faced with the threat of a trade war with the United States, China and Japan have decided to work together to develop new overseas markets, by focusing on collaboration instead of competing with each other.
• An agreement was signed to establish a discussion platform on hi-end technology and intellectual property which Chinese side hopes would help make-up possible shortages of U.S. components, in case the Beijing-Washington trade and technology war escalates.
• The two sides also signed an agreement on joint development of gas fields in the East China Sea—an initiative that was stalled in 2008, when tensions over islands, called Diaoyu by China and Senkaku by Japan, spiraled.
• Both sides stressed that East China Sea should become a “sea of peace, cooperation and friendship.”
• A decision has also been taken to launch joint search and rescue missions in these waters.
• The two countries also signed a bilateral currency swap dealt of $ 26.7 billion.
• With respect to North Korea, both sides reiterated to “fulfill responsibilities” for peace and stability in East Asia.

5. Why rapprochement between Tokyo and Beijing now?

• The decline in U.S. influence in the Asia-Pacific, is a major factor persuading Japan to re-define its role in the region.
• The two countries see third-country infrastructure as a cornerstone of their growing economic cooperation.
• Tagged with politically benefiting from “debt traps” through its loans to developing countries, China is particularly keen to work together with reputed Japanese financial firms in third countries.
• China wants to befriend Japan as it faces an increasingly bitter confrontation with the United States, and Japan, which aims to stabilize its relationship with China by promoting cooperation with the economic powerhouse that possesses growing international clout.

6. Concerns:

• Concern remains deep in Japan that China, with its rapid military buildup and aggressive maritime postures, is seeking to build hegemony in Asia.
• Beijing is apprehensive that Japan is teaming up with the U.S. to contain China’s rise.