Abe in Beijing seeking gentler economic terrain

Prime Minister Shinzo Abe, embarking upon the first trip by a Japanese prime minister to China in seven years, faces challenges on the strategic front but may find gentler economic common ground to traverse, as he and Chinese President Xi Jinping face off against a gale blowing across the Pacific.

Abe is set to meet Xi and Premier Li Keqiang on Friday and will return home on Saturday. There will be much to discuss.

While the two Asian giants – the world’s number two and number three economies – are regional strategic rivals with a bloody history, they are increasingly finding themselves confronted by US President Donald Trump’s assault on their trade practices.

Economic and commercial pros…

The United States is engaged in a trade war with China. It has also pulled out of the Japan-promoted Trans-Pacific Partnership trade agreement and is shoulder-bumping Tokyo into a bilateral free-trade agreement. Meanwhile, the shadow of US action over Japanese auto imports and its trade surplus with the United States hang heavy for Abe, and both Beijing and Tokyo would be impacted by Trump’s apparent intention to weaken the dollar.

Partly as a result of the cross-Pacific antipathy, there is widespread speculation that the two leaders, when they meet on Friday, will agree to bury strategic hatchets in order to focus on shared economic goals. Abe is traveling to China – Japan’s leading trade partner – with a hefty delegation in tow: 500 businessmen.

Before leaving Japan, in a speech on Wednesday, he vowed to upgrade the troubled relationship with leaders’ visits and increased business. He said that China and Japan are responsible for regional prosperity, and that he would import more foreign labor to overcome the country’s labor shortage.

Abe has also said that Tokyo will halt overseas development aid to China – given China’s economic size, ODA is outmoded – and instead has suggested updated formats for economic cooperation.

At a time when major investment banks, the Bank of International Settlements, and the International Monetary Fund are forecasting possible global financial turmoil, Japanese newspapers report that the two will also discuss resuming a currency swap arrangement that was halted in 2013.  The size of the swap is likely to be ten times the previous amount – making the new arrangement worth US$30 billion, sources said.

One bellwether of the trip will be whether Xi agrees to make a return visit to Japan. He did not attend a trilateral regional forum in Tokyo in May hosted by Abe. While South Korean President Moon Jae-in showed up, Xi dispatched premier Li.

…diplomatic and strategic cons

Despite the bilateral economic promise, Abe, who will be celebrating the 40^th anniversary of the Peace and Friendship treaty with Xi, is not relenting on the strategic front.

The day before he departed for China, he made clear in a speech to the House of Representatives that he will push ahead with a revision of Japan’s pacifist constitution. While Japan’s Self Defense Force is already powerfully armed and increasingly active around the region, the move would enable a wider scope of action in conflict zones and would enable Tokyo to enter military alliances with nations other than the United States.

Beijing frequently lashes out at Tokyo over what it sees as the latter’s failure to acknowledge the devastation it unleashed in the 1937-45 Pacific War. While the Western world tends to view that through the prism of World War II – the suffering of Allied priosoners of war, the naval battles in the Pacific and the atomic bombings – China was the key loci of ground combat. It was also the biggest victim of Japanese imperial aggression: The nation suffered some 15 million dead.

However, Beijing may be mollified by the fact that Abe has refrained from visiting the controversial Yasukuni Shrine – where war dead (including a handful of war criminals) are enshrined – since 2013.

The two capitals dispute ownership of the Japanese controlled Senkaku-Diaoyu island chain, the setting for numerous clashes,  between Chinese fishing vessels and the Japanese Coast Guard. It was Japan’s “nationalization” – a financial acquisition – of part of the chain in 2012 that led to chilled relations, including boycotts of Japanese enterprises in China, that, it is hoped, Abe’s visit may thaw.

The international waterways of the South China Sea are yet another casus belli. Japan, which has dispatched a powerful naval battlegroup to conduct exercises in the region and has also rallied ASEAN states on the issue, is increasingly at odds with China over the latter’s creation of militarized islands in the South China Sea.

And in the international diplomatic sphere, while Beijing pushes for eased policies and sanctions on Pyongyang, Tokyo urges a harder line until the country denuclearizes.

Still, there may be some movement on the defense side – even if it is largely optical.

Japanese government sources say, according to Kyodo Newswire, that the two leaders will announce exchanges of naval personnel, and China will invite Japan to join a naval review next year.