When Senator Barack Obama was elected as the 44th American President in early November many observers, including leading Japanese newspapers, predicted that the new administration might prefer China over Japan as a partner in East Asia.

Indeed, on the campaign trail, Mr. Obama told the press that the relationship between the US and China is the most important relationship in the world. China is the largest holder of US national bonds, totaling $585 billion (as of September 2008), which means that it is China and not Japan that underwrites the US in financial terms.

Besides, China holds roughly $US 1 trillion of $US 2 trillion in US foreign reserves. These two countries are definitely interdependent in economic terms, though they may be wary about each other militarily. It is therefore natural that power elites and members of the public in Japan should have had nightmares about a Japan-passing or Japan-nothing policy emerging from the Obama administration.

Now everybody seems more relaxed. They were happy to hear that Joe Nye is to be named Ambassador to Japan, because he is widely credited for his efforts to ‘redefine’ the US-Japan Alliance after the end of the Cold War. He also worked hard to strengthen security ties. Also welcome was Secretary of State-elect Hillary Clinton’s clear statement at a public hearing on January 13 that:

‘Our alliance with Japan is a cornerstone of American policy in Asia, essential to maintaining peace and prosperity in the Asia-Pacific region, and based on shared values and mutual interests.’

Perhaps the current Japanese mood about the Obama administration is overly optimistic.

Firstly, it goes without saying that a nation will desperately pursue its own national interests in this anarchical international society, and the United States under Obama will definitely do that, despite unfurling the banner of multilateralism. And the Obama administration will have to direct all its energies inward in its focus on salvaging the US economy.

As it faces large challenges in Iraq, Afghanistan, Iran, Palestine, India-Pakistan and North Korea, it will also need to mobilize its allies, including Japan, to resolve conflicts in these areas under the banner of multilateralism.

Though Clinton showed her willingness to negotiate directly with North Korea, the top priority will be denuclearization of North Korea, and not the abduction issue.

Secondly, the Obama administration will demand that Japan contribute to stabilizing the situation in Afghanistan. The US once pressured Japan to accept burden-sharing during the Bush Sr. administration and to agree to power-sharing during the Clinton administration, which attached a much greater importance to China than Japan.

The new administration is likely to tactfully request that Japan fulfill the US demand of both burden-sharing and power-sharing. The new US administration has little sympathy a global strategy based on an alliance of shared values, however worthy. And it is pinned down by economic turmoil.

Thirdly, the fear is that American economic difficulties will lead to more protectionist policies and that this might result in other nations retaliating. The Bush Administration, and more precisely the Federal Reserve Board, lowered the official interest rate to zero per cent thereby weakening the US currency. The Big Three auto makers were also granted a huge amount of federal money.

If the Obama administration introduces more extensive protectionist policies, including tariffs, Japan will have to edge even closer to the Chinese market.