Japan Can't Afford Fight with China

Posted by: Bruce Einhorn on September 21, 2010

I was in Beijing late last month, shortly after news broke that China had passed Japan as the world’s second-largest economy. The official line in the Chinese media: No gloating over passing China’s longtime rival. For instance, when Premier Wen Jiabao met with Japanese foreign minister Katsuya Okada in Beijing on August 29, leaders about ways the two countries could work together. Wen talked about enhancing bilateral cooperation and Okada was upbeat, too. “During the meeting on Sunday, Okada said the future of China and Japan was becoming increasingly integrated,” the official English-language China Daily reported. ” ‘Not only do Japanese companies position it (China) as a manufacturing base, more importantly, they regard it as a very important consumer market,’ Okada said.” Reflecting Beijing’s don’t-kick-them-when-they’re-down approach, on August 31 the China Daily followed up with this headline: “China, Japan can herald ‘golden age for Asia’

The era of good feeling didn’t last long. Less than a month later, Sino-Japanese relations are at their worst point in years. Beijing has cut senior-level government contacts and Japan’s top spokesman has warned against “extreme” nationalist sentiment. The two sides are fighting over Japan’s detention of a Chinese shipping-boat captain following a Sept. 7 collision near islands in the South China Sea administered by Japan but also claimed by China and Taiwan. My colleagues at Bloomberg News report investors in Tokyo are nervous the fight could hurt Japanese companies that do business in China. “There’s a possibility Japan would try to implement sanctions on China, which would be bad for related companies in Japan,” Daiwa Securities Capital Markets general manager Kazuhiro Takahashi told Bloomberg.

I don’t see that happening. Japanese Prime Minister Naoto Kan’s government last week declared war on currency traders, intervening in the markets to strengthen the yen for the first time in six years. That yen battle is far from over, and the fortunes of Japanese exporters like Sony, Honda and Toyota are up in the air as it plays out. The last thing the Japanese need now is to open a second front and invite Chinese retaliation against Japanese exporters. The Chinese captain is currently scheduled to be in detention until Sept. 29. Chances are, he’ll be on his way back to China soon after that.

Reader Comments

gummi

September 21, 2010 10:03 PM

I know very smart people within People's Liberation Army

Corruption, low morale, indiscipline now plaque Chinese PLA rank and file.

If China goes to naval batter, the outcome is predictable.

Yehe

September 24, 2010 3:20 PM

I doubt that you know anyone in the PLA, there are corruption in some ranks but morale are hardly low, and talk about indiscipline are even more rediculous, I am yet to see a more disciplined army than the PLA.

Some people obviously still live in the past and think China was still what it was at 1895, a decentralized, internally tumoil revolt striken empire, wake up, the rest of the world have moved on.

Rise and fall and rise again, this is how China have always been thoughout the history, now its on its way to rise, and the PLA have yet to lose a single war since the PRC was established.

Perhaps it's time

September 24, 2010 11:09 PM

Perhaps it is time for us to step in. Even a beginning of boycotting Chinese goods in the U.S. until China stops trying to shake Japan down might be a good signal to send.

And if they retaliate, so much the better. :-)

Asia's Orphan

September 25, 2010 9:54 AM

Japan's isolation in Asia is largely due to its own arrogance in post WWII era. For long time, Japanese looked down the rest Asia as worthless and stupid. Japan is the most racist country that I ever been. To many Japanese, white is the only superior race. Everything else is lower including its own race. Now US and Europe are in trouble and Japan wants Asia to buy its aging product. Too late! (BTW, Japanese products now feel like aging and out-dated just like to country.)

Japan should learn from Germany on how to improve relationship with its neighbors which still think Japanese were never punished for their war crime. Germany war criminals are hunted to this day no matter how far they escaped and how old they are. But the Japanese war criminals are enshrinded in Tokyo!

For long time, Japan pretended the war crime never happened. They never want to mention about it. They just hope the memory die when the war generation dies. Now Japan's new primary minister call resentment to Japan as "extreme nationalism". What a croc tear.

Robert

September 25, 2010 11:00 AM

Japan can't fight China, but Japan certainly must have second thought about going all in with China in terms of investment and new technology transfer. It's time for Japan to actively help smaller Asian nations to stand up to the newest bully on the block.

Robert Smith

September 26, 2010 12:10 AM

Japan can't afford a disagreement with China? Yes, China is Japan's number one trading partner. However, consider the national security of Japan on this one. Too much economic dependence is dangerous if that dependence is on a unstable trading partner. Japan's problem is very apparent. China is unstable politically and willing to react extremely over small issues. We in the US should take note. Our dependence on a politically unstable and militarily aggressive trading partner is a very risky prospect to US economic stability. With great rewards comes great risks - constant vigilance.

Son of China

September 26, 2010 1:32 PM

In any military confrontation with the Japanese, they will not win because the PLA is dedicated to destroying this hated enemy, once and for all. Cheers...!

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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