08.01.2018 Author: Dmitry Mosyakov

Concerning the Rivalry Between China and Japan


South-East Asia has now entered into a new phase of its development: the influence of the US administration is waning in the region, and instead, increasingly, the main area of confrontation in the region is the relationship between China and Japan. In an attempt to limit the expansion of China in South-East Asia Japan has begun to show that it has considerable power to both preserve the status quo and also to find new forms of political and economic integration in the wider East Asian region.

We are talking about the quite revolutionary policy -by Japan’s standards, which are always cautious- proposed by Shinzō Abe at the APEC summit in Da Nang. Mr. Abe proposed the creation of a new body- a Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), instead of the Trans-Pacific Partnership (TPP), from which America, on President Trump’s initiative- has withdrawn. The leaders of the 11 Pacific Rim countries then immediately expressed their willingness to prepare a new trans-Pacific partnership and co-operation agreement. It appears from their declarations that the new partnership will only be different from the old TPP in that the USA will not be a member, and as a result the member countries’ combined GDP will be reduced by about two thirds.

That raises the question of why Japan has decided to continue with that project and whether it is able to build that major international market, particularly in the light of China’s competing plan for the creation of a no less ambitious Regional Comprehensive Economic Partnership (RCEP), which poses a real danger to the future of the proposed CPTPP.

On the one hand it is understandable that Shinzō Abe has his own political ambitions, and in addition to ‘building a well-ordered country’ he also wants to significantly extend Japan’s role, position and importance in both the Pacific Rim region and in South-East Asia. Equally understandable is his evident wish to restrict Chinese expansion in the region, and, in the absence of the USA, to reassure the ASEAN countries that Japan will make every effort to preserve the balance of powers in the region. But it is clear that these intentions are not enough to guarantee the proposed project’s success.

There is no doubt that Shinzō Abe has worked everything out properly. According to an annual survey among public opinion leaders in the Trans-Pacific Partnership countries, the growth of protectionism is considered to pose a greater risk to their development and prosperity than anything else. Unlike in the USA, where Donald Trump is moving away from globalism towards nationalism and is seeking to protect the national market and giving priority to the development of American industry, in the Asia-Pacific Region the idea of integrated markets as a guarantee of peace, prosperity and sustainable development is still popular. And that is entirely natural, as it is international organizations that played a decisive role in promoting these goals, particularly APEC- especially in the 1990s-, the EAC in the 2000s, and ACFTA since 2010.

In addition, the Japanese leaders first started talking about the creation of the СPТPP before Trump came to power. Following the unsuccessful attempt to sign a final agreement on the Trans-Pacific Partnership in Singapore in February 2014, in November that year, in the last meeting of APEC in Indonesia, they put up for discussion the idea of creating a free trade zone in the Pacific Rim region that would be even wider in scope than the TPP. This would be a mega-market which would account for 80% of Japan’s exports, 60% of its imports and 70% of its direct investments. One of the most influential Japanese newspapers, Asahi Shimbun pointed out at the time that Japan does not see any dangers in the existence of several parallel routes towards integration. What is more, the paper added, ‘the TTP may become the core of the СРТРР.’

It may be said that the Japanese were prepared for America’s departure from the TPP and so immediately proposed a real alternative to the Asian countries in the TPP which, so it seems, will incorporate all the best features that have resulted from the many years of negotiations on the creation of the TPP. This will include CPTPP members giving up state control over enterprises, high labor-protection and ecological standards, the prohibition of human trafficking and child labor, and support for trade unions. It is not yet clear whether the new integrated body will wish to include clauses on the protection of intellectual property. Such clauses were prepared and adopted on the insistence of the USA and after its withdrawal their purpose is unclear. It is also unclear whether there would be any clauses on the rights of transnational corporations. A paragraph stating that their rights are practically equivalent to those of national governments and parliaments and that they can appeal to a special TPP court against decisions of such bodies was also included to protect the interests of the USA- the home of 80% of the world’s transnational corporations.

To judge by the enthusiasm with which the ASEAN countries met Japan’s proposals concerning the СPТPP, and considering the fact that the TPP’s foundation documents are already at a late stage of development, it is likely that it will not take long to prepare the new documents, and the new integrated body, headed by Japan, will probably appear either at the end of next year or in 2019.

It is likely that the CPTPP will include more of the ASEAN countries than the TPP would have done: in addition to Singapore, Malaysia, Brunei and Vietnam, -all of which would have been in the TPP- Indonesia, Thailand and the Philippines may join the CPTPP.

The СPТPP may thus become rather more of a South-East Asian organization that the TPP would have been, as, out of the 10 ASEAN countries, only Cambodia, Laos and Myanmar are likely to be excluded. It is unlikely, however, that the creation of the СPТPP will materially undermine the unity of the ASEAN, as these countries are the weakest and most underdeveloped in the region and it would not make much difference whether they were included or not. However in theory there is still a risk that they might be drawn into Chinese’s powerful sphere of influence either through the RCEP or through the One Belt and One Road Initiative, although the future of these Chinese proposals is still unclear and vague.

This is particularly relevant to the much-talked-about RCEP, which, according to the plan, should have ‘taken off’ after the American departure from the TPP, but so far has failed to do so. The problem is that the RCEP negotiations are taking a long time to get off the ground. Apparently, these will involve China, Japan, South Korea, India, maybe Russia, plus Australia and New Zealand, as well as a number of other countries. The area of cooperation would thus seem very wide, and full of potential. But it appears that the large number of participants, all with different interests, constantly prevent the RCEB from making any progress.

As the well-known journalist Ravi Veloor comments in the Straits Times, ‘progress towards that agreement has been less than satisfactory despite 20 rounds of talks. The bulk of the agreement, including fixing the levels of market access, has yet to be firmed up.’ He also notes that, ‘one of the trickiest issues is India’s demand that any “comprehensive” pact should also include liberalization of trade in services, the area in which it feels its economy has a competitive edge.’ Other RCEP members are not ready to accept such a radical proposal from India. Another ‘stumbling block’ for the RCEP is the question of liberalizing trade in agricultural products. By the way, the CPTPP nations managed to resolve that issue.

There is one more issue which is clearly slowing down negotiations on the RCEP. That is the clear lack of any trust between the parties. China suspects that India, Indonesia and Japan are somehow working against the integrated economic organization that it is proposing.

As we have seen, the rivalry between China and Japan in both the Asia-Pacific Region and South-East Asia is now taking on a new character, and this is particularly evident in their struggle for leadership in integrated projects. It appears that in this way the Japanese hope once more recover their pre-eminence among the ASEAN countries –a pre-eminence that they still enjoyed at the end of the 20th Century, when Japan had the leading economy in the Asia-Pacific Region. Later, by the end of the first decade in the 21st Century, China had taken over that role and become the ASEAN countries’ main regional partner, creditor and investor. By creating a free trade area between China and the ASEAN countries in 2010, Beijing appeared to have cemented its position as the dominant economic influence in the region. But it seems that despite all China’s success and power, Japan is not ready to give up the struggle for economic leadership in the region, and is attempting to position itself as a leading economic center. And what is more (and this is very important) it is ready to act without the USA’s direct support.

That is why, in the scenario which we can see developing, we can detect the blueprints of a new political architecture in Asia.

Dmitry Mosyakov, Professor, Doctor of Historical Sciences, Director of the Centre for Southeast Asia, Australia and Oceania and the Institute of Oriental Studies of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook.