New power landscape demands sophisticated approach to China

Sino-Japan cooperation takes on new urgency as global economic rules change and Asia rises

by Takashi Kitazume

With China firmly on its path toward becoming a top player in the world economy, it is crucial for Japan to work out a relationship with its giant neighbor or risk hampering the rise of Asia as a whole, a renowned U.S.-based journalist told a recent lecture meeting in Tokyo.

China and India have become the central players in a new world economic order where the importance of physical location is increasingly being lost due to progress in digital technology, said Fareed Zakaria, editor of Newsweek International.

Economically, Japan — like the rest of the industrialized world — will have to move up the value chain while integrating more with the global economy, Zakaria said at the Dec.7 seminar organized by Keizai Koho Center at Keidanren Kaikan.

Politically, Japan needs to rebuild its troubled relationship with China, because its alliance with the United States alone will not solve all the problems in a world that has witnessed the emergence of so many new players, said Zakaria, who is also the former managing editor of the Foreign Affairs magazine.

Zakaria was speaking on the theme, “Globalization and the future of democracy — How will the United States, Japan and China cope with the new world order?” Yoshinori Imai, executive editor and commentator of NHK, served as moderator of the event.

According to Zakaria, the availability of such technologies as the broadband communication and high-quality teleconferencing — plus changes in people’s mentality — are altering the basic law of economics.

With those technology, “You could move people around. . . . People may not go to where the job is, but the job can go to where the people are,” he said.

“All of a sudden people who are talented around the world have a way to plug into the global economy . . . and that’s changing the landscape,” he told the audience.

New giant players

In this new landscape, the sheer size of China and India — which together account for 40 percent of the world’s working population — “changes everything,” Zakaria said.

He cited the example of Infosys, India’s second-largest information technology company, which hires 10,000 new people to its workforce each year. Last year, there were 1 million qualified applications for the 10,000 jobs, he said.

The figures are even bigger in China, he said. In a major annual fair sponsored by the U.S. microchip maker Intel Corp. to recognize talents in science and engineering among high school students, 6 million students from China participated this year — compared with 64,000 from the United States, he noted.

The rapid growth of China and India is bound to continue, because they are still very poor countries and have a lot of potential for further growth, Zakaria said. That is where their story is different from Japan in the 1980s, when Japan was already the world’s second-richest economy, he pointed out.

“China’s per capita GDP is $1,200. . . . But will it be able to double that to $2,400? Sure. Will it be able to triple that to $3,600. Sure. And then it becomes the largest economy in the world,” Zakaria noted.

What does this mean for Japan and all other industrialized countries in the world?

“There’s really only one answer. You have to move up the value chain. You have to produce goods that are more complicated, more sophisticated, and you have to do them highly efficiently,” Zakaria said. “You have to provide services that cannot be provided easily and cheaply.”

This means embracing globalization and modernizing Japan’s economy, he said. And despite its position as the world’s second-largest economy, “Japan has many strange black holes within its economy that are very un-globalized and un-modernized,” he said.

“It needs to open itself up more to the world economy. Otherwise the world economy will leave it behind,” he warned.

While Japan tends to judge its current economic performance through comparison with its past, the real comparison should be with what is happening in the rest of the world today, Zakaria said.

The question, he said, is not whether Japan is doing better than it was five years ago but whether Japan is doing better than other countries in the world. “When everyone is playing the game, you have to benchmark to what other people are doing. and that becomes the standard,” he added.

Politically, Japan has to find a way to become more integrated with this changing world order, where the biggest shift will be the rise of Asia, Zakaria said.

He noted how in just 15 years, three of the four largest economies are forecast to be in Asia, while in 25 years only two of today’s six richest countries will remain on the list.

A sensitive relationship

And as Asia moves forward on its upward path, the most important relationship in the world — and perhaps the most sensitive one — will be the one between Japan and China, he said.

The Japan-China relationship will have the “greatest potential for serious problems . . . because these two countries have never been great powers at the same time in history,” Zakaria said.

“Now you have a reality that both countries are powerful and they have to live together. They have to find a way to cooperate,” he said.

What is most troubling, he went on, is that “there does not seem to be enough recognition among the leaders of both countries that they must take very strong measures to try to make this process begin.”

Since 2001, mutual visits of top Japanese and Chinese leaders have been halted following Beijing’s protest over Prime Minister Junichiro Koizumi’s pilgrimage to Yasukuni Shrine. Irked by Koizumi’s further visits to the shrine — considered by many in Japan’s Asian neighbors as a symbol of the country’s militarist past — Chinese leaders refused to meet with Koizumi on the sidelines of this week’s inaugural East Asia Summit in Kuala Lumpur.

Even during the Cold War, leaders of the United States and its archrival Soviet Union were meeting regularly to engage in confidence building, Zakaria noted.

“In Japan and China, the dynamic is the opposite. . . . (It is) very difficult to arrive at even the basic agreement that there should be talk. It’s difficult to talk about talks, and that is going to be a great hindrance to the rise of Asia and to the global economy in general,” he told the audience.

Zakaria said it is “sad” that Japan’s ties with China have been marred by the Yasukuni dispute because it has undermined Tokyo’s efforts over the past 20 years to put its past behind — through a series of apologies by government leaders and even the emperor for the nation’s wartime aggression.

Zakaria said while he understands Koizumi’s viewpoint that he visits Yasukuni to pay respect to Japan’s war dead and renew the nation’s pledge never again to wage war, it’s not how Japan’s neighbors would see the visit.

What really counts

“What you think does not matter. It’s what others think” that counts when one considers the impact the Yasukuni controversy has on Japan’s ties with its neighbors, he said.

In a sharp contrast with the troubled ties with China, Koizumi’s years in office since 2001 have been marked by a solid relationship with the United States. But Zakaria warned that the Japan-U.S. alliance alone will not solve all the problems.

“There are too many new actors in the world, too many new forces shaping this world, and that’s why you have to achieve a much more complicated economic, political and diplomatic balance, and it is that balance that Japan is going to have to try to achieve in the new world,” he said.

Zakaria also urged Japan to place a much greater emphasis on a “wise and skillful diplomacy.” He cited Japan’s stalled bid for a permanent seat on the United Nations Security Council as an example of poor diplomacy.

“It wasn’t just China who opposed (Japan’s bid). It was difficult to find any country that was supporting it,” he said. “I think part of the problem is the Japanese diplomacy has simply not achieved the level of sophistication, skill, long-term planning, and most importantly, of integration with the world.”

Compared with their Chinese counterparts, Japanese diplomats are “very hierarchical, bureaucratic, very quiet and often don’t speak English,” he observed. “That has to change if Japan is to achieve its rightful place in the world.”