China and Japan May Not Like Each Other, but They Need Each Other

As the two Asian giants spar over disputed islands, critical economic ties come under threat

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Yuriko Nakao / AP

A Japanese flag flutters in front of a shipping container area at a port in Tokyo

Relations between China and Japan are on the rocks these days, ­literally. The long-running dispute between the two nations over a splattering of small islands in the East China Sea — known as the Senkaku in Japan and Diaoyu in China — has escalated in recent weeks, raising fears that the heightened tensions could lead to a real shooting war. Beijing late last month attempted to impose an “air-defense zone” over the area, causing jets from both countries, as well as the U.S. and South Korea, to buzz about the region. U.S. Vice President Joseph Biden will visit Tokyo, Seoul and Beijing this week, hoping to defuse the situation. When it comes to these islands, passions are clearly clouding pragmatism.

(MORE: China’s Restriction on Airspace Over Disputed Islets Could Lead to War)

On the less emotional matter of economics, China and Japan are putting at risk much more than the few clumps of dirt are probably worth. As tensions rise, the economic relationship between the world’s second and third largest economies has come under strain as well. Though the island group may offer some material benefits ­— fishing rights, perhaps —­ the economic ties between China and Japan are so critical to both sides that undermining them would cost each nation much, much more.

For two countries that so distrust each other, they sure do a lot of business together. Total trade between China and Japan was almost $334 billion in 2012. For Japan, struggling to emerge from two decades of economic malaise, exports to burgeoning China are a key source of growth. Companies from Sony to Toyota desperately need Chinese consumers to buy their cars and TVs to offset a sluggish home market and compete with rivals like GM and Samsung. But the relationship is hardly a one-way street. China imports more from Japan than any other country, and many of those goods are indispensable to China’s economic advance ­— high-tech components to fuel its export machine and capital equipment for its expanding industries. Japan also possesses special expertise in technologies that China badly needs for its future development, such as energy efficiency and other eco-friendly know-how that could help China contend with the environmental damage brought about by rapid industrialization.

Yet the tensions are inflicting an economic toll. Trade between the two has been on the decline since 2012. In the first half of 2013, total trade dropped by 10.8% to $147 billion. The decline is partly due to slower growth in China, but rising anti-Japanese sentiment caused by the island row hasn’t helped. In 2012, sales of Japanese-branded cars plummeted amid large anti-Japan protests. China is taking a hit as well. Japanese firms are beginning to shift their money away from China and toward its emerging-market competitors, where they don’t face nearly as much ire. According to statistics from the Japan External Trade Organization, Japanese direct investment into China plunged by nearly 37% in the first nine months of 2013, to only $6.5 billion, while investment in Southeast Asia’s four major economies ­— Indonesia, Malaysia, Thailand and the Philippines —­ surged by over 120% to almost $7.9 billion.

Japan is not the only nation caught between political priorities and economic necessity in its dealing with a rising China. The U.S. and China too jockey for geopolitical influence, and increasingly eye each other as rivals for global primacy, even as their economies become ever more fused together. The challenge facing China’s President Xi Jinping and Japanese Prime Minister Shinzo Abe is how to set aside their territorial sparring and create a more favorable environment for the trade and investment both sides need for their economic futures.

Hopefully they’ll realize that the sorry rocks can’t substitute for exports and jobs.

PHOTOS: Anti-Japan Protests Hit China’s Capital

25 comments
JusticeFirst
JusticeFirst

@Tobias

Alright, the SFPT was signed in 1951, not 1971, which is a typo. It is important to note that China was not a signatory of this treaty, making it improperly authorized under international law. It legality is certainly lacking.

However, the Cairo Declaration is included in the Potsdam Proclamation. Potsdam itself was named and accepted by Japan in the Instrument of surrender. Here is the point. You have to read the Cairo "carefully" to understand that Japan was made to give up "all", yes all, its conquered territories, even those obtained before 1914. Taiwan was seized in 1895 as you know, and the islands were part of Taiwan.

This means the Ryukyu Islands were no longer Japan's after 1945.

It is also very clear about Japan's sovereignty: only the four main islands, plus some minor islands... to be determined.

JoseGonzales
JoseGonzales

The biggest debtor nation in the world needs the biggest creditor nation in the world, yeah right.


zhenfeikua
zhenfeikua

The People's Republic of China is becoming like Imperial Japan during the Second World War. Her image is getting much worse actually. Ask every citizen in the world what they perceive about China and most probably will give a negative response. A lot of greediness and selfishness brewing within the Mainland. Instead of forgiving a former Imperialist, all she wants is an ultimate revenge and lasting destruction. She cannot accept that a small country made up of four islands with a short history compared to theirs could destroy her well carved image through centuries in a very short of time. She always and aims to be the number 1 in every form of competition using quackery and stratagem. She loves to use these two words inherent and indisputable whenever she claims something which she personally believes not hers. She always boast that their long and proud history of civilization help shaped the present world but she has forgotten that she is the mother of corruption.

an honest comment from a proud Singaporean but so ashamed of having Chinese genes.

JusticeFirst
JusticeFirst

By contesting with China on the islands, japan may have opened a can of worm. Now China has to reopen all the treaties of WW2, such as the Cairo Declaration, the Potsdam Proclamation,and the Instrument of Surrender of Japan in 1945.

Japan will face losing more territories such as the Ryukyu Islands(Okinawa), all the islands in the Pacific, and the Diaoyu/Senkaku islands of course. These are the conditions of surrender clearly spelled out in those treaties. Now China has to bring all of them to the UN and the world. 

The SFPT does not have the authority to "alter" the terms of surrender because China, a major victor of WW2, was not a signatory of the treaty. 

AT2003
AT2003

Japanese government recently posted a video explaining the Senkaku Island.

 It is just a two-minute film but informative enough for both Japanese and Chinese people.


The Senkaku Islands - Seeking Maritime Peace based on the Rule of Law, not force or coercion 

 http://www.youtube.com/watch?v=aC9gyVeCAp0

JasonDStanfield
JasonDStanfield

the Chinese have never forgotten the war crimes that were committed by the Japanese in the lead up to WW2. 
but the Japanese, carry on like they have never committed a single one.
The Islands in dispute belonged to China prior to the Japanese invasion at that time. but after america won the war, they gave the Admin rights to Japan, and now 'recognise' japan as administrators... oh the Irony.
but lets not let the facts get in the way of a good story.

KateLi
KateLi

US 'solid' commitment to ally Japan burdens with ironies:

1. US has much more commercial interest in China than it has in Japan. Just ask the CEOs US fortunate 500. China is Ford's biggest market. How many ford cars sold in Japan last year, few thousands

2. Japan never had a sense of appreciation for what US had done for them since WWII. Instead, the society prevails a sense of resent, which see US as 'imperialistic' power keeps an uphand over Japan. Check out this video 

http://www.youtube.com/watch?v=r4Veih24Dsg

3. Japan doesn't share the same social value with the US. The videos below tells something.

http://www.youtube.com/watch?v=2pE2ms1P56I 

http://www.youtube.com/watch?v=LBjQcPdgHWA

http://www.youtube.com/watch?v=G-n3XBz-fig

4. Since Japan has no remorse to it’s past sin.  Japan’s politicians constant insult Asia WWII victim nations with most abusive language and attitudes including respect war criminals.    

Allying with Japan cost US to lose the total moral credibility as a respectful world leader to the global Chinese.

wonderful666888
wonderful666888

U have no conscience . There are 300000 being killed and raped. Japan until today did not admit this and still try to provoke the wound for the victimised countries. Lucky only Philippine and you support Japan in this agenda

LiChina
LiChina

@zhenfeikua Please DO us all a favor, NEVER EVER mention you have Chinese genes.  Sigh, one of your Chinese forefathers should have used birth control. 


Everything you said was NOT fact, period. Lets forget about you being Singaporean and me being Chinese American, lets talk facts.


"China is the mother of corruption"? Whoa, easy here. China has corruption, but didn't "invent" it. And educate yourself by reading about corruption in India, South Africa and Taiwan.... 


" China always aims to be number 1"? Prior to Opium War, China didn't even know or care there's a world outside. Unlike Russia, or Roman Empire before that, China never set sights on conquering the world, hence the Great Wall ( to keep us secluded, IN but not OUT ), duh!... Recently, after finally succeeded in building a strong economy, China set out to claim back what we lost when we were  powerless., its not about being No.1, its about getting it back... Lastly, its just common sense even if China aims to be No. 1, you don't "aim" to be No.1 in school? at work? Singapore doesn't aim to have the best economy? the best airline? the best cuisine?.. 


"instead of forgiving the former imperialist", you made it sound like its China's "fault" for not forgiving..  If somebody killed every loved one you had but spared you ( which would be a mistake by the way ), please remember its YOUR fault for not forgiving the "former killer".


"Every citizen in the world will give a negative response about China" .. I don't know what kind of countries you visited, people can't love me enough for being Chinese. They never seemed satisfied when I said "im from NY", they pushed to hear the word "Chinese", then broke out a big smile, and starting raving about the strong economy, the delicious food, the beautiful scenery and the wisdom of our philosophy...... 


China has over a billion of us, and many fans from all over the world converting to "Chinaism" or supporting China. You are nothing to us. Ooops, you are already forgotten. 

ChinaLee
ChinaLee

@zhenfeikua Oh please, we all know that you are a Japanese ultra-nationalist pretending to be a Singaporean.

ysprefer
ysprefer

you should be shamed, I am shamed that a Chinese origin people may say such things, I am presently living outside of China, but no matter where I am, I still a Chinese. China is not that we can not forgive, but because Japan never apologize, and we are very clear what is the result in the story of the "Farmer and the Serpent". If you talk about gene, Genetically the Japanese and Singapore may be very close to that of Chinese, genetically all human being in the world are very close.

GilbertOng
GilbertOng

@zhenfeikua Japan never admits to the atrocities they committed, whether in China or in Singapore where 50,000 were murdered and many raped. So you cannot forgive someone who has not admitted to their crimes. As of the corruption in China, I am not going to ignore her past achievements just for some present problems which happens all the time somewhere in the world. It's like missing out the beauty of the forest in Bukit Timah nature reserve for the millipedes and dirt.

I would like to say most Singaporeans like me are proud of being Chinese and we honour and thank our forefathers for making this little island we live in and we would not forget the ordeals they have gone through to do just that. So my advice to you is to read up our history and quit those self-discriminatory views for after all, you would be recognised as a Chinese.

banlastheway
banlastheway

@zhenfeikua Fools are born every second and you are definitely one of them.  Most of the times, they think they are smart but nevertheless inside their brain, it's all empty vessel.    If fool really cares to think a bit deeper, they will have a better understanding of their fellow humans what more their own ethnic race.   The world is such unfortunate that lesser man can easily be influenced and brainwashed especially from Western propaganda of lies, deceit and disinformation.   Anything that China did or does are all improper and undesirable.   Once when they were poor, the Chinese are being ridiculed and humiliated.   Now when they are richer, they are despised of being greedy and materialistic.    It doesn't matter that there is not a single nation that can uplift hundreds of millions of poor from abject poverty to have a better comfortable lives in such short period.    Of course, Mao is a monster for causing untold suffering on his people but why is Mao being singled out when the Japanese are equally savage and brutal or in the same breath, the West especially U.S isn't faring any better in its indulgence in endless bloody wars until now.   The Chinese may not be the most benevolent race but then they aren't sadistic people who go around attacking and murdering millions of people outside of their country like what the Japanese and Americans have committed.

To be forgiven of those who committed sin against you is noble and virtue but it must be sincerely be reciprocated.   In all fairness, the Japanese have neither show any remorse for the heinous crimes they have committed nor are they willing to banish their bestial behavior hidden in their inner soul.   If every human can be saint, the world will be devoid of all the earthly problems.    When the Chinese were humiliated once before, there isn't a second chance for them to repeat the same nightmare again.    Otherwise they should perish forever and never to exist again.   Amidst all the commotion, the loud thunderous noise at the background, on the coming 2nd Rape of Nanking is applauded roundly and cheerfully by the Japanese for their past great success.   The Chinese have no other alternative except to prepare for war.   

If lesser man can't accept the reality of life, they should be better off be born as pig in their next life.  

- a frank response from a proud Chinese

Tjdodge12
Tjdodge12

@JusticeFirst China would have to give up Tibet if they wanted to claim these small islands at the UN, if they plan on using treaties for vindication. 

JusticeFirst
JusticeFirst

@AT2003 you said the rule of law. The very post WW2 order is based on the original documents, such as the Cairo Declaration of 1943, the Potsdam Proclamation of 1945, and the Instrument of Surrender of 1945. You have to read all of them to get to know the string of legal foundation of this world order. Some may say: what happen to the San Francisco Treaty of 1971 ? Can this treaty replace the original documents as a "new" basis to form a new order? The answer is no, because the SFPT is only a unilateral peace agreement between Japan and the US, and some other countries. It has no power and no authority to "alter" the terms of surrender of Japan without China as a signatory. 

The SFPT is not a valid agreement to determine, or alter, the terms of surrender set up by both the Cairo and Potsdam declarations, as long as they are not legally substituted by the SFPT.

zeustiak
zeustiak

@JasonDStanfield Japan claimed the islands in 1895, long before WW2....  That is why the US gave them back to Japan.  Otherwise we would have probably given them to Taiwan, our ally during WW2.  

JusticeFirst
JusticeFirst

@KateLi By contesting with China on the islands, japan may have opened a can of worm. Now China has to reopen all the treaties of WW2, such as the Cairo Declaration, the Potsdam Proclamation,and the Instrument of Surrender of Japan in 1945.

Japan will face losing more territories such as the Ryukyu Islands(Okinawa), all the islands in the Pacific, and the Diaoyu/Senkaku islands of course. These are the conditions of surrender clearly spelled out in those treaties. Now China has to bring all of them to the UN and the world. 

Tjdodge12
Tjdodge12

To the first point, You seem to blame everyone in Japan and America for your disastrous history, you should be angry at your own past governments and England. Your emperor claimed your culture and your people were above all others, your country at the time brought it on its self. Not once did your emperor even have the courtesy to refrain from insulting another culture's ruler, but he felt it necessary to continually claim his own benevolence magnificence in the same letter. Did China get taken advantage of, yes it did, did China deserve it, no, but was it Japan or America that started your country down that long road to ruin, NO! Was it's China's own inability to deal with others as equals instead of sticking its nose up in the air, thinking everyone should be a tributary state? Did the Taiping rebellion have anything to do with it?  Hell maybe the very corruption after the Opium Wars had something to do with it. America did nothing but help China during and even prior to World War Two. 

To the second point, You seem to think that China has not had any wars where they killed millions. If you'd read a book not sponsored by the CCP (though i have feeling your part of the 50 cent club) you would know in the last 60 years every conflict the Chinese have been involved in the first blow was struck by China. Examples would be The Third Vietnam war, the sino-Indian border war, and even to some extent the Korean war, though the last one is a bit of stretch considering The US and Russia really forced China's hand.This excludes civil wars and various other disasters sponsored by the CCP such as the take over of Tibet, the shelling of Taiwan and it's own policies that destroyed much of Chinese culture and history.

The last point, the easiest to make is no one, not the Japanese, not the Chinese, and not the Americans ever want to see another Nanking. Just like no sane person in the entire world wants to see another nuclear bomb go off in Japan or anywhere for that matter. If you feel otherwise you are truly and utterly lost. The only people who really want anything to happen over a bunch of rocks, is the PLA and the CCP. They want to stretch their hands across the chess board and take back a pawn lost hundreds of years ago for their own glory and vindication of their right rule.

-read history and learn from it


GilbertOng
GilbertOng

@Tjdodge12 @JusticeFirst Which treaty was signed by China on Tibet in this sense? I cannot recall any Chinese government ever ractified any treaty or line drawn up by Europeans on Tibet.

TobiasRiepe
TobiasRiepe

@JusticeFirst @AT2003 

First of all, the Treaty of San Francisco was signed in 1951, not 1971.

Secondly, the Cairo Declaration is not a treaty.

Thirdly, the Cairo Declaration does not say what you apparently think it does. It only refers to Islands in the Pacific which Japan seized after 1914, to Chinese territories including Taiwan and to vague "other territories seized by violence and greed." It does not include the Ryukyu Islands (which never were Chinese territory and had been incorporated into Japan well before 1914) nor technically the Senkakus which were Japanese long before 1914 as well and arguably considered to be part of the Ryukyus. 

Sorry to say it, but all your comments in this thread are baseless and characterized by a severe lack of elementary knowledge of the subject matter.

JusticeFirst
JusticeFirst

@zeustiak @JasonDStanfield you have overlooked the 2 most important treaties of WW2: the Cairo Declaration and the Potsdam Proclamation which set the conditions of surrender. Japan agreed to all the conditions in the Instrument of Surrender of 1945.

If you study carefully all the above, you will see that they cover all Japanese conquered territories from China, including the Ryukyu Islands (now Okinawa), and all the islands in the Pacific. Japan has lost all of them.

This is why Japan is largely ignoring the Cairo Declaration which requires them to give up a whole lot of territories. What are left to them are the four main islands of Japan, plus some minor island to be, yes to be, determined by the allies. 

banlastheway
banlastheway

@zeustiak @JasonDStanfield If you are damned sure that Japan owned the islands, why U.S is repeating the same phrase that Japan has no sovereign rights over the islands.   

atoznotnow
atoznotnow

@Tjdodge12  Read history and learn from it...take your own advice. The Japanese does not want to see another Nanking? The problem is the Japanese tries to deny there ever was a Nanking. In Germany, it is a crime to deny the Holocaust. In Japan, they built a shrine to honor their Hitlers. Furthermore, you are like the guy that said: I wouldn't have raped her if her dress wasn't so short. Why don't you go steal something from 7-11, then blame them for having bad security, or tell them that their own employees steal too.


Tjdodge12
Tjdodge12

@GilbertOng @Tjdodge12 @JusticeFirst I'd have to find the treaty, it's in Henry Kissinger's On China,  it may be the best book I have read about Chinese diplomacy and statecraft. I'll take a look again perhaps I am mistaken; perhaps it was part of Simla conference that everyone reneged on one way or another. 

It was between England, India and China, The Chinese refuse to acknowledge it as the diplomat signed his initials rather than the full signature. this is part of the reason for the Indian/sino border war, that is still, to some degree going on today.  Whether Beijing accepts it or ratified it, does not mean they never signed it or even accepted it in the first place.