Settling China–Japan territorial problems

Author: Peter Drysdale, Editor, East Asia Forum

The historical baggage in the China–Japan relationship infects resolution of the dispute between China and Japan over the Senkaku or Diaoyu islands as it does other things.

It is a reminder to Chinese of Japan’s colonial past and the war of liberation against Japan’s colonial rule; it is a reminder to Japanese of the reach and suzerainty of China in the past and its potential threat in the future.

These neighbouring economic giants are also locked into a huge and enormously productive economic relationship that has grown over the past three decades out of their independent commitment to development under the open global economic system and its rules. Despite the current contretemps, their rivalry and historical baggage do not dominate the China–Japan economic relationship today.

Nor is the China–Japan economic relationship a narrowly bilateral relationship. It underpins regional growth and prosperity and plays a major role in the East Asian economic interdependence and the regional production networks that have created it. The bilateral relationship is nested in a complex set of links led by trade and investment throughout the region. Regional economic partners cannot view their relationships with Japan in isolation of their relationships with China. And Japan’s relationships with them are closely bound up with China. Japanese firms — once manufacturing powerhouses confined largely to Japan — now produce over 45 per cent of their electronics output and 33 per cent of all their manufacturing output offshore, a very large portion of that in China. Like most international brands, Sony, Panasonic and the Japanese big-name brand products are put together in China and elsewhere in Asia, and products made in China frequently come with a Japanese name.

Over the past months, as the troubles over their disputed territories have escalated, there have been some effects on China–Japan business relationships, but fewer, and of much less consequence, than some commentary would suggest. The remarkable fact is that, for now, the economic relationship continues in robust shape.

Yet anxiety continues to grow that what is at stake — for Japan, China, East Asia and the global economy — in the China–Japan economic relationship might not be sufficient to constrain a terrible miscalculation that led to open hostilities from which neither side could easily withdraw. The issue will loom over the upcoming visit of Japanese Prime Minister Abe to Washington later this week. The rights and wrongs of this dispute are not as straightforward, of course, as either partner might want us to believe. Third parties are wise to take a neutral stance. The United States, of course, is at special risk of being dragged into affrays instigated by its alliance partner whether it wants to be or not. US spokespersons have been extremely careful in commenting on Japanese claims of Chinese provocation to avoid exacerbation of tensions. It is a major test of US Asia Pacific diplomacy to avoid being wedged into conflicts where it has no wish, nor any interest, in being involved and where its taking other than a neutral stance will likely make worse any conflict in which it has no fundamental stake.

In truth, both Japan’s and China’s’ foreign ministries have managed the current spat with admirable restraint, exercising a judicious mix of assertion and restraint within firmly established diplomatic bounds. And there is evidence that the leaderships in both countries are reaching out for a solution to the problems that will save the national dignity of both parties. The real challenge is how for both sides to find a way through.

In the week’s lead essay, Sourabh Gupta offers some wise counsel on what might be the elements in resolution of the problem in the immediate term.

In the eyes of international law, Gupta argues, neither party has a water-tight case. Japan can confidently assert that it has assiduously protected its claim of evidence of title. And it can assume that no international court will strip a sovereign of disputed territory that it has administered from a point of time that predates the court’s establishment itself. Yet the way in which sovereignty was asserted by Japan in a period of imperial aggrandisement and the fact that no international case law precedent exists with regard to a territorial dispute between a state and its erstwhile imperial master adds to the unpredictability of the verdict.

‘Whatever the rights or wrongs of the dispute’, Gupta suggests, ‘there are clear reasons for restraint, moderation and seeking practical ways of cooperation to achieve win–win outcomes on both sides’.

Gupta suggests that the elements of a settlement would first require Japan to acknowledge, as it has been unwilling to thus far, that a dispute exists, without prejudice to its legal claim. China would, in appreciation of that acknowledgement, agreed not to disturb the status quo and renounce the use of force to alter the deposition of administrative control over the islands. Japan would likewise commit to maintaining the status quo and agree to consult with China on any material activities affecting the islands. Over time, a maritime communication mechanism and joint resource development projects in the abutting EEZ (exclusive economic zone) waters can also be envisaged.

‘The East China Sea has been an arena of peace and cooperation in the post-normalisation era and bilateral, principles-based arrangements have been concluded in the areas of fisheries, marine scientific research and joint development of oil and gas resources’ Gupta notes, and it is important that this circumstance be restituted.

As Gupta concludes, these elements of a settlement should not be too much to hope for. China’s and Japan’s friends and alliance partners have every incentive to quietly encouraging this outcome.

Peter Drysdale is Editor of the East Asia Forum.