Japanese Prime Minister Shinzo Abe may need a change in long-standing policy toward an increasingly aggressive China. Photo: Reuters / Toru Hanai

Tokyo is not unused to Chinese aggression along its coast, and this belligerence has only heightened in recent times. This week, in response to Beijing lifting a ban on civilian Chinese fishing boats operating near the disputed Japan-administered Senkaku/Diaoyu Islands, Tokyo warned its military to stay on alert.

Beijing’s move – seen as a significant escalation in the long-standing maritime territorial dispute between the two states – has prompted Japan to put its military on standby and ready to respond to any intrusions. This reflects a marked rise in tensions in the hotspot, bringing the East China Sea (ECS) dispute into sharper focus on the global stage. 

For the past decade or so, even as tensions between China and Japan over the ECS put a strain on their relationship, Japanese Prime Minister Shinzo Abe adopted a rather pragmatic China policy.

In recognition of the advantages that a warm Sino-Japanese relationship can have on Japan’s trade and economic growth, Abe has been consistently open to bettering ties with China, particularly by concentrating on non-contentious areas where the two nations can function in cooperation.

This approach has led to an adherence to Japan’s long-standing seikei bunri principle (the separation of economics and politics), as Tokyo strove to sustain a positive relationship with China and many other non-friendly countries even during challenging diplomatic times. 

Seikei bunri: a tried and tested approach

The seikei bunri principle is by no means new; it has been a part of Japan’s China approach for decades. Such an approach constituted Japanese mainstream policy to engage in closer trading contacts with the communist countries while maintaining a stronger security or military alliance with the West in the midst of the Cold War.

In fact, Shinzo Abe’s book Utsukushii Kuni E (translated as Towards a Beautiful Country: My Vision for Japan) released in 2006-07 as he began his first prime-ministerial term explicitly states that the seikei bunri’s two-pronged approach is the guiding philosophy underlying Japan’s relations with China.

And up until now, the approach has been mutually beneficial to both states: The high degree of economic interdependence and trade ties between China and Japan has boosted both economies.

However, China has witnessed unprecedented economic growth, eclipsing Japan’s, which has slowed considerably in recent years. This, in turn, has only made China more assertive in securing its economic, political and security interests in the Indo-Pacific region, leading to a strained and uneasy geopolitical environment. 

Sino-Japanese ties have always been tumultuous. In the immediate aftermath of World War II, the two countries barely shared any purposeful relationship, with China leaning toward a communist doctrine and its lingering resentment regarding Japan’s imperialistic actions during the war. However, in the 1980s, when China pursued economic liberalization reforms, Japan emerged as its chief economic, developmental and technological partner.

Arguably, China could not have achieved its rapid and expansive growth without Japan’s (and America’s) extensive support. 

The 1989 Tiananmen Square incident put a damper on healthy Sino-Japanese ties. Instead of the strengthened mutually beneficial relationship that Japan no doubt expected, Tokyo saw the emergence of an extremist Beijing that cared little for liberal international norms.

Nonetheless, the implementation of seikei bunri along with a pragmatic approach of dealing with China (along with many other communist countries) continued to provide for comparatively smooth Japan-China ties, as Tokyo recognized the positive impact that a continued and deep-rooted economic and trade partnership with China could bring.

And this strategy has undoubtedly proved advantageous for Japan, particularly in terms of spurring its economy. But with US president Barack Obama’s “pivot to Asia,” and now his successor Donald Trump’s openly antagonistic relationship with China, Japan’s foreign-policy dilemma vis-à-vis China has become more acute. 

The post-pandemic dynamic

At the onset of the Covid-19 pandemic, Sino-Japanese ties were not without synergy: Beijing facilitated the evacuation of Japanese citizens stuck in Wuhan and supplied essential medical equipment to help Japan fight the spread of the virus. In fact, President Xi Jinping was due for a much anticipated state visit to Japan – the first by a Chinese leader in more than 10 years and postponed mutually because of Covid-19 – which both countries were eager to use to redefine their relationship as one of partnership in coming times.

Now, with Japan’s staunch ally the US blaming China for its role in the spread of the virus, Quadrilateral Security Dialogue partner Australia calling for an independent investigation into its origins, and Japan’s growing ties with India and its show of tactical support and solidarity (though not explicit) toward New Delhi over the deaths of Indian soldiers in the Galwan Valley, Sino-Japanese ties have quickly soured.

Japan’s statements terming Beijing’s Hong Kong security law “regrettable,” support for Taiwan’s inclusion in World Health Organization deliberations as an observer, and its growing investment in the emerging Indo-Pacific multilateral calculus have added to this. 

Under the current circumstances, Japan’s economic ties with China have experienced a stronger nationalistic outlook of decoupling or delinking amid the Covid-19 pandemic while the People’s Liberation Army Navy’s adventurism in the ECS has led to tense political relations.

These rising tensions in the ECS in combination with a much more assertive China flexing its muscles in almost all its land and maritime territorial disputes have mandated that Japan re-evaluate its policy with regards to its neighbor. Does the seikei bunri strategy continue to be the best way forward? Moreover, considering their economic interdependency, can Japan viably retreat from a seikei bunri outlook in its new China policy?

Moving away from seikei bunri?

Japan has always maintained a delicate balance in its foreign policy between the US and China. However, this may no longer be an effective strategy. China’s maritime adventurism is a clear indication of its escalating political aspirations to challenge the United States’ global leadership and establish a world order that reflects its ideals – posing a warning that Japan might have to accept a Sino-centric regional order.

Consequently, Japan has made “countering China” and preparing for a potential conflict on its western border a priority in recent times. 

In September 2019, Tokyo’s annual defense review concluded that Japan’s biggest security threat came from China’s military might – above North Korea’s possible nuclear capabilities. Japan’s newly released 2020 Defense White Paper reiterates such assertions.

In response to Chinese aggressiveness in the ECS, Japan is operating at a “near constant air presence” in the region. Nonetheless, should tensions between them escalate, Japan would likely be severely out-matched by the significantly stronger Chinese naval, military and air forces.

Thus acquiring new military strength and building alliances or new partnerships in the Indo-Pacific region is turning out to be crucial for Japan to secure its territorial integrity, as are its ties with the US. 

Supply-chain diversification

Economically too, Japan aims to focus on expanding the Quad and the Quad-Plus narrative – a larger, more inclusive alignment – through foreign direct investments (FDIs) in other Indo-Pacific nations, along with provision of sizable aid packages.

In a step toward this goal, Tokyo incentivized 87 Japanese companies to move production back home or diversify to other Southeast Asian countries. These subsidies are part of a $2.2 billion fund (approximately 243.5 billion yen) in Japan’s coronavirus stimulus package set aside to reduce Japan’s over-dependency on Chinese manufacturing.

Nevertheless, moving production out of China – and in the process, economically decoupling from it entirely – may be easier said than done. 

For multinational companies predominantly concerned with their bottom lines, leaving the world’s second-largest economy and one with supreme manufacturing capabilities might not be particularly easy or desirable. Despite subsidies, the process would be expensive and long-drawn-out for businesses. It could also potentially limit their access to a market of more than 1.3 billion people.

Toyota, for instance, has already declared that it has no plans to move its manufacturing facilities. A concerted strategic effort would be required from Tokyo to persuade Japanese companies to consider such a move, as well as an appealing alternative destination that might make it worth their while. Even then, cutting off ties completely would be rather unviable for both sides. 

Devising a new path forward

Therefore, the liberal international economic order is such that Japan’s temporary (no matter how permanent it looks) economic detachment from China is unfeasible. It therefore needs to devise an effective strategy to deal with the growing Chinese military threat despite their trade entanglements.

However, in light of unprecedented tensions in the ECS, Japan’s seikei bunri approach of bifurcating its political and economic policy may no longer be the most effective or pragmatic strategy moving forward, especially since China’s conversion of economic power to diplomatic influence is notorious. This practice, amid global anti-China rhetoric, has the potential to alienate Tokyo from its other partnerships. 

Stability in Asia and Japan’s grip over the ECS can only be safeguarded by balancing Chinese power within a multipolar structure. Japan is far from sufficiently prepared – economically and militarily – for an unwanted confrontation with China in the (possibly) immediate future. Japan must therefore use all its foreign-policy tools to build alliances and deep-rooted security partnerships while without completely making a retreat from its traditional seikei bunri approach vis-à-vis China. 

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Jagannath Panda

Jagannath Panda is a research fellow and center coordinator for East Asia at the Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. He is the series editor for Routledge Studies on Think Asia.