[PINR] 06 December 2004: The Potential Deterioration of Sino-Japanese Rel

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Power and Interest News Report (PINR)
http://www.pinr.com
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06 December 2004
For past analyses on East Asia, consider reading the following articles:

"China's Xinjiang Region: An Area of Strategic Interest"
http://www.pinr.com/report.php?ac=view_report&report_id=209

"Russia and China: Business Partners, Weary Neighbors"
http://www.pinr.com/report.php?ac=view_report&report_id=193

"Myanmar's Costless Shift to a Hard-Line"
http://www.pinr.com/report.php?ac=view_report&report_id=228

"Tokyo Questions Relevancy of Article Nine"
http://www.pinr.com/report.php?ac=view_report&report_id=138

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The Potential Deterioration of Sino-Japanese Relations
Drafted By: Adam Wolfe
http://www.pinr.com

In the past few months, Japan's and China's relationship has been tested by a wandering submarine, visits to a ceremonial shrine, oil drilling rights on disputed territory, proposed cuts in state aid, currency revaluations and trade disputes. Underlying all of this has been China's economic expansion, Japan's attempts to reverse its economic stagnation and increased competition between the two largest economies in East Asia for raw materials and energy resources. Beijing appears to have the upper hand in most of these disputes, but Tokyo has been uncharacteristically forceful in challenging China's influence.
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Competition Over Natural Resources

China has experienced meteoric economic growth over the past several years, which has increased the demand for natural resources in East Asia and amplified the argument between Beijing and Tokyo over natural gas drilling rights in the East China Sea. The Chunxiao gas field lies in the middle of the two countries' disputed exclusive economic zones (E.E.Z.). Under the United Nations Convention on the Law of the Sea, countries have an exclusive right to regulate seabed resources up to 230 miles (370 km) from their coastline; however, Japan and China have differing interpretations of the U.N. convention.
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Diplomatic Disputes

Prime Minister Koizumi has visited the Yasukuni Shrine every year since taking office in 2001. The shrine honors Japan's war dead since 1853 but also contains the remains of 14 WWII Class-A war criminals. Beijing views the shrine as a symbol of Japan's brutal campaign against China during WWII, and has cited Koizumi's visits to the shrine as a major obstacle in Sino-Japanese relations. Koizumi's visits are the first reason cited every time Beijing declines Tokyo's invitation for a high-level, official meeting.
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Conclusion

The degradation of Sino-Japanese relations has come at an unfortunate time -- both countries are facing major economic upheavals, and their conditions are tightly linked by the growth in trade across the East China Sea. Outside conditions are putting further pressure on the relationship as well. The United States' current account deficit has caused a decline in the value of the U.S. dollar, which has strengthened the Japanese yen -- a major stumbling block for an export-based economy emerging from several years of decline. The Chinese yuan is pegged to the dollar and its value has been kept at an artificially low value -- a major boon to an economy based on providing cheap exports. Japan may act to prevent any further strengthening of the yen to the dollar and yuan, which would put further pressure on the Sino-Japanese relationship.
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Report Drafted By:
Adam Wolfe

complete report at http://www.pinr.com
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The Power and Interest News Report (PINR) is an analysis-based publication that seeks to, as objectively as possible, provide insight into various conflicts, regions and points of interest around the globe. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of [e-mail]. All comments should be directed to [e-mail].