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When they met during an international business conference on the southern Chinese island of Hainan in March, Prime Minister Junichiro Koizumi and his Chinese counterpart, Zhu Rongji, agreed to inaugurate a high-level comprehensive forum for dialogue on economic topics.

But more than two months later, the neighboring countries have yet to agree on when they should actually hold the inaugural meeting.

As Zhu pointed out at the time, the forum — the first of its kind between the world’s second and seventh largest economies — is supposed to “nip in the bud” potential conflicts and keep relations between the current and emerging economic powers on a stable footing in the medium and long terms.

The forum, dubbed the Sino-Japanese economic partnership talks, is slated to be held at the deputy ministerial-level and attended by officials from foreign, trade, finance and other ministries.

It is expected to cover mainly trade and investment but could also delve into macroeconomics, finance, industrial cooperation and other areas.

Japan began pushing the establishment of the forum last autumn, ahead of China’s entry into the World Trade Organization in December.

The agreement to launch the forum came nearly one year after an annoying trade war erupted. Tokyo had imposed “safeguard” import restrictions on three Chinese farm products in April 2001, and Beijing retaliated two months later by slapping punitive import duties on some Japanese industrial goods, including automobiles.

The tit-for-tat trade row was settled in December, but it continues to reverberate.

So do some nasty political issues resulting from Japan’s wartime aggression in China, which have come to the forefront now that Koizumi has twice visited Yasukuni Shrine, which honors Class A war criminals alongside the nation’s war dead.

With issues such as this beginning to fester and a clear need to be “nipped in the bud,” why the delay?

There may be at least two reasons, one unilateral and the other bilateral.

“There seems to be an internal battle within the Chinese government over which ministry should play a leadership role in the Sino-Japanese forum,” one Japanese government source said. “That’s why they have been unable to form their team of participants.”

Another Japanese government source gave another viewpoint.

“The delayed launch may reflect an unfavorable political atmosphere that has gripped bilateral ties in the past couple of months,” he said. “Japan and China apparently have been in no mood to discuss a specific date for the forum’s first meeting.”

Although Sino-Japanese ties began to improve with Koizumi’s fence-mending trip to Beijing in October, the trend seems to have stalled, if not been put into reverse, because of disputes over Koizumi’s second visit to Yasukuni Shrine, in April, and the recent rhubarb over North Korean asylum seekers who were dragged by Chinese police from the Japanese consulate in Shenyang before eventually being allowed to fly to Seoul.

While Tokyo and Beijing have delayed launching what they expect to serve as an early warning mechanism for potential new conflicts, there are already growing signs of new tensions.

Tokyo is increasingly and loudly complaining about what it views as Beijing’s insufficient protection of Japanese companies’ patents and other intellectual property tights and about “protectionist” abuse of antidumping measures applied to Japanese goods, especially chemicals.

Tokyo is also concerned about Beijing’s recent imposition of “safeguard” steel-import restrictions, which Beijing claims is a necessary step to prevent steel producers from dumping their products on China in an attempt to make up for lost sales now that the U.S. has imposed its own “safeguard” duties.

In addition, while Japanese authorities repeatedly act to weaken the yen, Japanese businesses are voicing strong calls for a revaluation of China’s currency, the yuan, hoping to make Chinese exports more expensive and Japanese products more competitive.

China is Japan’s second largest trading partner, after the United States, with two-way trade totaling well over $80 billion annually. Japan is also a major export market for China.

China will be the second country, after the U.S., with which Japan has established a high-level comprehensive economic-dialogue forum. The Sino-Japanese forum will be modeled on a comprehensive mechanism for economic talks that Japan has set up with recent and current U.S. administrations.

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