DAVOS, SWITZERLAND – Japan on Wednesday told the world it must stand up to an increasingly assertive China or risk a regional conflict with catastrophic economic consequences.
In his speech to the World Economic Forum in Davos, Switzerland, Prime Minister Shinzo Abe issued what amounted to an appeal for international support in a potentially explosive dispute with its superpower neighbor over the Senkaku Islands in the East China Sea. Abe was Japan’s first prime minister to deliver a keynote speech at the main session of the annual forum.
“We must restrain military expansion in Asia . . . which otherwise could go unchecked,” Abe told the annual meeting of global business and political leaders, which Chinese Foreign Minister Wang Yi is due to attend on Friday.
“If peace and stability were shaken in Asia, the knock-on effect for the entire world would be enormous,” Abe added. “The dividend of growth in Asia must not be wasted on military expansion.”
Although Abe did not explicitly mention China, his speech had been flagged up in advance by Japanese officials as an alarm call to an influential audience over what Tokyo sees as bullying by Beijing.
Tensions over the Senkakus, which China refers to as Diaoyu, have come perilously close to boiling over into armed clashes on several occasions in recent years. They resurfaced last month when Abe visited Yasukuni Shrine, a memorial to Japan’s war dead that commemorates a handful of convicted war criminals.
Abe stressed Japan “has sworn an oath never again to wage a war,” trying to brush off concern that his shrine visit suggests he is unrepentant about the country’s past militaristic aggressions.
Abe, however, defended the visit, saying his “praying for the souls of the departed” should be regarded as “something quite natural for a leader of any country in the world” while emphasizing he had no intention of hurting Chinese or Korean feelings.
Much of Abe’s speech was given over to a review of the progress of “Abenomics,” his bid to end two decades of deflation that he said was on the verge of bearing fruit.
Abe pledged that Japan will “set about further reform on corporate tax this year,” expressing eagerness to carry out tax cuts to attract investment from abroad. He also put emphasis on the significance of structural reforms in Japan, particularly aimed at restoring the country’s international competitiveness and reinforcing its innovation capacity.
The government must “make the tax system for companies internationally competitive,” Abe said.
“We will also encourage companies to use the cash they have gathered toward capital investment, R&D, and raises in workers’ salaries. To do this, we will put tax incentives into place in a way completely different from before,” he added.
To up private-sector investment, Abe promised that the government will end its decades-long policy of protecting rice farmers by limiting their production and will allow firms to enter the retail electricity market, saying, “In Japan, people have long said that such a thing is just impossible.”