Political and Economic Influences in Japan's Relations with China Since 1978

See J.E. Spero , The Politics of International Economic Relations (New York : St. Martin's Press, 1984), pp. 1-25; and Bruno S. Frey , International Political Economics ( Oxford: Basil Blackwell, 1984), pp. 1-12.

The Chinese have complex views about dependency associated with major trading partners. Although they welcome trade, investment and technology transfer, they are often quick to suspect that they are not getting just benefits. As one analyst noted, to sustain the interest and concern of the one on whom they are dependent, they may feel the need to be provocative. See Lucian Pye , Chinese Negotiating Style (Santa Monica, CA: The Rand Corporation, 1982) pp. 48-9.

See Albert O. Hirschman , National Power and the Structure of Foreign Trade (Berkeley, CA: University of California Press, 1945), pp. 3-81.

The difficulty for country B, C, D, etc., of dispensing with the trade conducted with A seems to depend on three main factors: I the total net gain to B, C, D, etc., of their trade with A; 2) the length and the painfulness of the adjustment process which A may impose upon B, C, D, etc., by interrupting trade; 3) the strength of the vested interests which A has created by its trade within the economies of B, C, D, etc. Hirschman, op. cit., p. 18.

The number of Japanese companies moving production abroad has been increasing rapidly, but not the overseas production ratio, i.e. the sales of goods manufactured overseas to sales of goods domestically manufactured. See Japan Economic Journal, 18 June 1988, p. 3.

For an excellent discussion of theories of foreign aid see John White , The Politics of Foreign Aid (London: The Bodley Head, 1974).

On the controversy in Japan as to whether or not ODA is a strategic means, see Juichi Inada, 'Japan's Aid Diplomacy: Increasing Role for Global Security,' in Japan Review of International Affairs (Vol. 2, No. 1, 1988), pp, 91-1 12.

See Taifa Yu , Progress, Problems, and Prospects of Sino-Japanese Economic Relations: Bi-lateral Trade and Technological Cooperation,' in Asian Perspective (Vol. 2, No. 2, Fall-Winter, 1987), pp. 218-247. Yu's article discusses how bilateral economic relations are inextricably bound up with politically motivated factors. Chalmers Johnson , 'The Patterns of Japanese Relations with China, 1952-1982,' in Pacific Affairs (Fall 1986), pp. 402-428. Johnson elaborates on the relative success of Japan's China poiicy in view of Chinese politico-economic manipulations. Also see Robert Taylor , The Sino-Japanese Axis ( New York: St. Martin's Press, 1985 ); Chae-Jin Lee , China and Japan: New Economic Diplomacy (Stanford, CA: Hoover institution Press , 1984); Robert E. Bedeski , The Fragile Entente (Boulder, CO: Westview Press, 1983); Harry Harding , China's Foreign Relations in the 1980's (New Haven, CT: Yale University Press, 1984); Reinhardt Drifle , 'China and Japan,' in Harish Kapur, (ed.), The End of Isolation: China After Mao (Dordrecht: Martinus Nijhoff Publishers, 1985), pp. 24-46.

See Richard Rosecrance , The Rise of the Trading Slate: Commerce and Conquest in the Modern World (New York: Basic Books, 1986).

Kent Calder , 'Japanese Foreign Economic Policy Formation: Explaining the Reactive State,' in World Politics (July 1988), pp. 517-541. This basic theme has been discussed in the Wall Street Journal and the New York Times for most of 1988 and well into 1989.

Sino-Japanese relations are officially governed by four principles enunciated by China and accepted by Japan: 1) Peace and Friendship; 2) Reciprocity; 3) Mutual Trust and 4) Long-term Stability.

On equality and mutual benefit in China's foreign trade see, C. Liu and L. Wang , China's Foreign Trade (Hong Kong: China Translation and Printing Services, 1980), p. 8.

For example, Japan's ODA has been closely tied to China's Seventh 5-Year Economic Plan (1986-1990) and Sixth 5-Year Economic Plan (1981-1985) which emphasised energy development, transportation and communication.

This point was made by Dennis T. Yasutomo , The Manner of Giving: Strategic Aid and Japanese Foreign Policy (Lexington, MA : Lexington Books, D.C. Heath Co., 1986), see especially pp. 120-ff.

For an excellent and detailed discussion of political and economic motives leading to the 1978 agreement see Bedeski, op. cit.

On the average during the 1978-1986 period, 23.7 per cent of China's exports went to Japan, while 3.8 per cent of Japan's exports went to China. Author's own calculation.

See Ryosei Kokubun , 'The Politics of Foreign Economic Policy-Making in China: The Case of Plant Cancellations with Japan,' in China Quarterly (March 1986), pp. 19-44.

For an interesting discussion of China's vulnerability and interdependence see Yohng Hai Shi , 'Riben dui hua jingji zhanlue chu tan,' in Yatai Jingi (April 1986), pp. 22-24.

For more detail see, Japan Economic Journal, (4 June 1989), pp. 1 and 6.

For a Chinese view on Japanese FDI in Asia see Chuanbi Wang , Riben dui Ya-Zhou zhi jie tou zi de ge ju yu qian jian,' in Xiandai Guoji Guanxi (No. 1, 1987), pp. 9-13.

Akira Ariyoshi , 'Japanese Capital Flows,' in Finance and Development, (September 1988), pp. 28-30.

For a widely propagated success story of Sino-Japanese economic co-operation see the China Otsuka case in Beijing Review (24-30 October 1988), pp. 20-23.

One can reasonably argue that there are functional equivalent vested interests for FDI and ODA.

In China we identify as 'vested interests' China's designated Special Economic Zones, elements in the foreign trade and economic relations bureaucracy, and numerous regional, provincial and city authorities who have established very close working relationships and commercial contacts with the Japanese. On the Japanese side we identify powerful interests in heavy industry, commercial/trading, and financial circles, as well as economic peak associations located in both the Kansai and Kanto regions and, of course, the national bureaucracy, especially MoF and M1TI.

See Zhang Shubao , 'Does China Face a Debt Crisis?' in Beijing Review, (1-7 August 1988), p. 23.

See Beijing Review (19-24 September 1988), pp. 30-31, 43.

For a detailed discussion of the PFT and possible linkages to the LTTA see Bedeski. op. cit.

It is of interest to note, that the kokaryo verdict, now under appeal, has been taken off the list of pending Sino-Japanese issues for the 1988 Sino-Japanese summit. This could mean that the issue has been shelved until the appeal court's verdict will be announced. This notwithstanding, the kokaryo case may very well become a test case for the resilience of Sino-Japanese relations.

For more recent Chinese views on Japan's defence, see Liu Jun , 'Military Budget a Blow to Peace,' in Beijing Review, 18-24 January 1988, p. 14, and Lui Wenyu , 'Paving the Way to Send Troops Abroad,' in Beijing Review, 2-8 May 1988, p. 15.

Author's interview with Mitsubishi official, Tokyo, July 21, 1988.

For a good general and detailed discussion of Sino-Japanese trade from a Japanese perspective see Seizo Matsumura , 'Japan-China Trade in Retrospect - The 15th Anniversary of Normalizing Relations,' in Jetro China Newsletter (No. 72, January-February, 1988), pp. 19-23.

See Chuanbi Wang , 1987, op. cit

Following nine rounds of negotiations since 1981, the agreement was welcomed by the Japanese business community. and containing guarantees of reciprocal 'national treatment', the pact is expected to boost Japanese investments and technology transfers to China. Based on Japan Report (December 1988), p. 2, and Japan Times, 25 August 1988, pp. I and 3.

This discussion is based on extensive interviews by the author in Tokyo and Shanghai which included many Japanese businessmen, foreign trade officials, and Chinese party officials, bureaucrats, academics, managers and engineers at the plant level.

Based on author's interviews in Japan and China, June-July, 1988, and Japan Economic Journal, 7 November 1987, p. 3, and Beijing Review . 19-25 September 1988, p. 43.

For a Chinese view see Dencong Zeng , 'Zhong-ri jingji jishu hezuo de ji ge wenti,' in Yatai Jingji (June 1987), pp. 53-56.

See Nakae Yosuke , 'China and Japan: Differences between Friends,' Japan Quarterly(Vol. XXXV, No. 3, July-Sept. 1988), pp. 317-21.

According to Seiron Chosa, (Tokyo: Sorifu, April 1988), p. 28. Japanese perceptions of China as a country seem consistently positive. However, the number of respondents that feel the relationship is not good has increased from 14.1 per cent in 1987 to 19.3 per cent, and people that feel the relationship is very good has decreased from 76.1 per cent in 1987 to 70.2 per cent in 1988.

See, for example, Robert O. Keohane and Joseph S. Nye , Power and Interdependence , 2nd edition (Glenview, JL: Scott, Foresman and Co., 1989), and David A. Baldwin , 'Interdependence and Power: A Conceptual Analysis,' International Organization , (Vol. 34, No. 4, Autumn 1980), pp. 471-506.

See Calder, op. cit.

Hirschman , op. cit, pp. 34-35.

Trade with China accounted for the following proportions of Japanese trade in the years indicated: 1980: 3.4% 1981:3.4% 1982:3.2% 1983:3.6% 1984:4.2% 1985:6.1% 1986:4.8%