http://english.peopledaily.com.cn/200505/12/eng20050512_184750.html
UPDATED: 17:37, May 12, 2005
Economic price paid for Sino-Japanese cold political relations
In his recent meeting with Japanese Prime Minister Junichiro Koizumi, Chinese
President Hu Jintao cliearly pointed out that China and Japan are both
countries of important influence in the Asian region and the world at large,
improper handling of bilateral relations will not only be disadvantageous to
the two countries, but will also affect stability and development in the Asian
region, for this reason, it is imperative to reverse the current difficult
situation in Sino-Japanese relations as soon as possible. This difficult
situation in Sino-Japanese ties is primarily caused by Japan's mistaken words
and deeds on the question of history and the Taiwan issue, which has led to
cold bilateral political relations, the "cold political relations" have, in
turn, given rise to noteworthy economic consequences in bilateral, regional and
global aspects.
Bilateral aspect: "political cold" is leading to "economic cold"
With regard to the current difficult situation in Sino-Japanese relations,
various social circles mostly describe it in such words as "political cold and
economic heat". Superficially, the development of Sino-Japanese economic
relations seems to be very "hot", but an in-depth analysis will reveal signs in
Sino-Japanese economic ties tending to become cold:
(1) Relative slow development of Sino-Japanese economic and trade relations.
For instance, in 2002, 2003 and 2004, China's foreign trade grew 21.8 percent,
37.1 percent and 35.7 percent respectively, while its trade with Japan
increased only 16.2 percent, 31.1 percent and 25.7 percent respectively, lower
than the level of the overall foreign trade growth. The proportion of trade
with Japan to China's foreign trade fell from 16.4 percent in 2002 to 14.5
percent in 2004, this proportion once reached as high as 23.6 percent in 1985.
By 2004, Japan's long-term status of keeping China as the No.1 trading partner
had been replaced by the European Union (EU). In 2004 foreign direct investment
(the amount of paid-in investment) grew 13.32 percent, while Japan's direct
investment in China increased only 7.87 percent.
(2) Drastic reduction in Japan's economic aid to China. Japan's official
development assistance (ODA) to China once played an important role in the
development of Sino-Japanese relations. By the end of 2004, the total amount of
Japan's ODA to China reached 3333.5 billion yen, including 3133.1 billion yen
worth of loans. But after 2000, Japan's ODA to China began to experience a
drastic reduction, of which Japanese loans plummeted from 214.4 billion yen in
2000 to 85.9 billion yen in 2004, a nearly 60 percent reduction. Currently, the
placing of China in Japan's ODA objects has fallen from the first to the third.
(3) Continuous Sino-Japanese economic-trade frictions in recent years, obvious
lagging in cooperative process. Examples for this are cited as follows:
Sino-Japanese trading disputes triggered by the emergency import restrictions
imposed by the Japanese government in April 2001 on three kinds of Chinese
agricultural products, frictions in the aspect of policy on the exchange rate
between the yen and the yuan in recent years, as well as competition between
China and Japan in the aspect regarding Russian oil pipeline construction.
Along with the expansion of economic and trading relations, the emergence of
some frictions and disputes are normal phenomena, but the point is that so far
there is no obvious sign of establishing an effective cooperative mechanism
between China and Japan, especially the Japanese side adopts a very passive
attitude toward the matter.
Regional aspect: Hindering the progress of East Asian economic cooperation
Regional economic integration is a general trend in today's world. Recent
East-Asian regional economic cooperation has indeed witnessed certain progress,
but there also exist some distinct defects, lagging far behind the progress of
European and North-American regional economic cooperation. There are many
factors causing the lagging progress in East-Asian regional economic
cooperation, but Sino-Japanese "political cold" is one of the principal
obstacles.
European and North-American experiences indicate that big countries and
coordination among them are crucial to the smooth progress of regional economic
cooperation. Similarly, without the hand-in-hand advancement of China and
Japan, it would be difficult for East-Asian economic cooperation to achieve
smooth progress. In fact, the economic status of China and Japan in East Asia
is much higher than the economic status of France and Germany in Europe. For
instance, the proportion assumed by France and Germany to the total economic
volume of the 25 EU member countries is less than 40 percent, while the
proportion assumed by China and Japan to the total economic volume of 13 Asian
countries (10 ASEAN member states plus China, Japan and the ROK) exceeds 80
percent. China and Japan that occupy significant positions have failed to play
a leading role in jointly promoting East-Asian economic cooperation through
cooperation and coordination for lack of sufficient mutual trust in the
political aspect, and have thus hindered the smooth progress of East-Asian
economic cooperation. This situation has found expression in the main aspects
of financial cooperation and in the liberalization of regional trade in
East-Asian economic cooperation.
Global aspect: Weakened ability to resist economic risks
The current global economy is in the process of a new round of growth, the
highest growth record was set last year over the past 30 years, but at the same
time the global economy also faces very big risks, especially the radical rise
in oil price and the continued devaluation of the US dollar which has brought
extremely serious risks to and exerted great impacts on China and Japan. In the
first 10 months of last year alone, international oil price swelled 70 percent,
the oil futures price in the New York Commodity Exchange was US$32.5 per barrel
in January last year, the figure exceeded US$55 per barrel in October, and once
further exceeded US$58 per barrel in April this year. China and Japan have to
depend mainly on import of oil, so it is imaginable what influence the
fluctuation of oil price has on the economies of the two countries. Let's come
to see the situation regarding the depreciation of the US dollar, the exchange
rate of US dollar to euro was 0.82:1 in October 2002, by the end of 2004, it
once came down to 1.35:1, with the devaluation surpassing 60 percent, the
devaluation of the US dollar to yen also exceeded 30 percent in the same
period, once falling from 1:135 to 1:102. China and Japan are the world's
second and first foreign exchange reserves countries, the continuous
substantial devaluation of the US dollar is bound to inflict huge property loss
on the two countries, if the Japanese side indulges in one-sidedly forcing the
revaluation of the RMB, hardly expectable consequences will result. In the face
of the rise of oil price and the devaluation of the US dollar-- a kind of
global risk, if China and Japan guard against it by relying merely on their own
strength, and even adopt the beggar-my-neighbor countermeasures, that not only
could hardly achieve anticipated results, but also would increase losses from
risks to both sides.
By People's Daily Online
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