The rise of China need not be a threat to either Japan or the United States, although Tokyo and Beijing may need some time before they get comfortable with their coexistence as two major powers in Asia, U.S. Ambassador to Japan Thomas Schieffer told a recent symposium in Tokyo.
The U.S. envoy also noted that despite widespread forecasts that China would overtake the U.S. as the world’s biggest economy in decades to come, its future prosperity is not guaranteed as the nation faces a host of economic, political and social challenges.
Schieffer was the keynote speaker at the Jan. 23 symposium organized by Keizai Koho Center and the Massachusetts Institute of Technology Japan Program, in which MIT and Japanese scholars held discussions under the theme, “Meeting a rising China.”
He described China’s economy today as still a mixed picture of good and bad news.
While nearly 300 million people in China have attained a middle-class income level over the past few decades — a number roughly equivalent to the entire U.S. population, another 300 million are estimated to be living on less than $2 a day, creating tensions between haves and have-nots, Schieffer said.
The world’s changing economic structure will also pose a challenge for China, he said. Advances in agricultural technology will continue to reduce the number of people engaged in the farm sector, and this will hit China particularly hard because almost half of all Chinese jobs today are in agriculture, Schieffer said.
Manufacturing will also be under the same rationalizing pressure as agriculture, he said. Quoting from Tom Friedman’s book, “The World Is Flat,” Schieffer noted the U.S. lost 2 million manufacturing jobs from 1995 to 2002 while Japan lost another 1.75 million over the same period. While most Americans and Japanese may think the jobs all moved to China, the envoy said, China in fact lost 15 million nonstate-operated manufacturing jobs during the same years.
“If China is to be successful in the long run, it will have to create more and more jobs in the service sector,” where it will run into fierce competition from the developed and developing world, he said.
Still, Schieffer acknowledged that China’s economic rise has put Asia — particularly Northeast Asia — in a “state of transition” and anxiety. “The old order is changing and no one is quite sure how they will fit in when it is over,” he said.
There has never been a time in history, the ambassador pointed out, when Japan and China have been great powers simultaneously.
“Neither is fully comfortable with the notion that such a time can work to their mutual benefit. Both view each other with suspicion and sometimes even fear,” Schieffer said.
The U.S. can play a key role in reducing these suspicions and tensions, but only if it is “careful how it pursues both relationships” and correctly understands what’s behind the suspicions, he said.
Schieffer pointed to what he described as different power structures among nations in Europe and Asia.
In Europe, power has traditionally been “horizontally” shared by nations, which tried to balance their interests against those of their neighbors, he said.
This horizontal balance of power, the envoy argued, is a foreign concept in Asia. “Power has never been shared horizontally in Asia, where power has been exercised vertically. Someone is above and someone is below,” he said.
“China and Japan will need time to get comfortable with the notion that one’s advance does not have to come at the expense of the other’s decline,” Schieffer said.
The U.S., for its part, must adopt an Asian diplomacy “that is more Eurasian than either European or Asian,” he said.
Schieffer said the U.S. must respond to the anxieties in Japan that Washington might “trade the old friendship with Japan for a new friendship with China” by continually reassuring “that we are friends who understand the strategic importance of Japan to America.”
The ambassador called for greater multilateral cooperation among U.S. allies in the region — in a shift from the postwar “hub and spoke” model based mainly on U.S. bilateral alliances with Asian nations.
He cited the recent increases in trilateral cooperation among the U.S., Japan and Australia as one example, and stressed that such cooperation is not aimed at containing China.
“We must continually remind the Chinese that we are not trying to contain them, we are trying to integrate them into a new international order, where Chinese influence will be recognized in a constructive and productive way,” he said.
Richard Samuels, director of the MIT-Japan Program who served as moderator of the symposium, said China today matters to everybody — either in considering the future of East Asia, Japan, the U.S., the Japan-U.S. alliance or the whole world.
“China and Japan account for nearly three-quarters of Asia’s economic activity and more than half of its military spending. Japan provides China with technology and capital while China provides Japan with a low-cost production and export platform,” he said.
The two nations have become so deeply interdependent economically in recent years that a popular view has emerged in Japan that China is rapidly becoming the nation’s most important trade partner, Samuels said.
“China and Japan have an abiding interest in a vibrant regional economy. Today, some 30 percent to 40 percent of Japanese production in China is being exported, and China has become responsible for much of the growth in Japanese exports,” he said.
Still, the deepening economic ties have not prevented an increase in “mutual political and strategic suspicions” between the two nations, Samuels said.
The sources of these suspicions range from Japan’s history of wartime aggression, competition for regional energy resources, as well as Japanese uncertainties over China’s intentions behind its rapid military modernization, he said. Despite repeated diplomatic initiatives on Japan’s part, including the visits by Prime Ministers Shinzo Abe and Yasuo Fukuda in the past two years, “history issues and others remain potentially volatile,” he noted.