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API Geoeconomic Briefing is a series provided by the Asia Pacific Initiative, an independent think tank based in Tokyo. The series will look into geopolitical and economic trends in the post-COVID-19 world, with a particular focus on technology and innovation, global supply chains, international rule-making and climate change.

The top diplomatic priorities for Prime Minister Yoshihide Suga’s administration are to stabilize Japan’s good relations with the United States and China.

These were probably the most significant diplomatic legacy of the previous administration of Shinzo Abe. But now U.S.-China relations are deteriorating further amid the COVID-19 pandemic, making the situation even more difficult for Japan to navigate.

Geoeconomically speaking, the U.S.-China relationship is already approaching close to a new Cold War. Both Japan and the U.S. are facing geoeconomic threats — the decoupling of China from global supply chains for 5G telecommunication networks and semiconductors, China’s military-civilian integration aimed at utilizing technology for geopolitical ambitions and its leapfrogging strategy to use digital yuan to overcome the dollar hegemony — which could endanger the foundation of their economic technology.

Then came COVID-19. White House trade adviser Peter Navarro, who had led the “America First” trade policy of U.S. President Donald Trump’s administration, said, “If we have learned anything from the coronavirus and (the) swine flu H1N1 epidemic of 2009, it is that we cannot necessarily depend on other countries, even close allies, to supply us with needed items, from face masks to vaccines.”

Like Western nations, Japan also realized this time the vulnerability of depending on China for medical supplies and equipment.

And at the same time, governments had been frantically hunting for medical supplies and trying to keep them all to themselves. Alliances are not all that reliable, either.

All countries with close ties to the U.S. and China are now facing an extremely difficult situation, being forced to walk a tightrope between the two countries.

For Japan in particular, the U.S. is its key ally, and the Japan-U.S. alliance is the linchpin of Japan’s diplomacy and security policies.

Meanwhile, China is Japan’s top trade partner, accounting for 21% of its total trade, topping 15% for Japan’s trade with the U.S.

The U.S., China and Japan are the world’s top, second and third largest economies, respectively. Trade relations among the three nations and their currency systems largely affect the global economic order.

From a military standpoint, China remains cautious about directly confronting the U.S., but the country’s challenges to the U.S. include cyberspace, maritime gray-zone operations, influence operations and political warfare.

In the South China Sea, China is undertaking moves to make the area its closed territory, posing future risks of bringing about a full-scale conflict with the U.S. for hegemony over the Western Pacific.

China named the islands stretching from the Japanese archipelago through the Nansei Islands chain, including Okinawa, Miyako and Ishigaki islands, to Taiwan, the Philippines and Borneo the “first island chain,” and has adopted what has been described as an anti-access and area denial (A2AD) strategy against the U.S. Navy advancing inside that line.

In the eyes of China, seeking to become a regional power in the Pacific, the Japanese archipelago stands as nothing but an obstructive barrier. For the U.S., on the other hand, an alliance with Japan is vital to remain predominant in the Western Pacific and maintain power projection capabilities over Eurasia.

Located between the Pacific Ocean and Eurasia, Japan should not remain as a mere neutral asset — it is in a position to exert overwhelming strategic leverage.

‘Nature abhors a threesome’

Just as in human society, a tripartite relationship in international politics comes with many difficulties and pitfalls.

Aristotle said, “Nature abhors a vacuum.” In international politics, a power vacuum can break the balance of power and easily become a destabilizing factor.

But from a geopolitical standpoint, I think there exists one more source of instability — “Nature abhors a threesome.” A trilateral relationship contains the risk of causing an imbalance of power in the international order, and the relationship between Japan, the U.S. and China is no exception.

Relations between the three countries, however, were basically stable for nearly two decades from the 1980s, except for the period when sanctions were imposed on China following the 1989 Tiananmen Square crackdown.

Lee Kuan Yew, the founding father of modern Singapore, once said that relations between Japan, the U.S. and China are most stable when they take the form of an isosceles triangle. This means the golden rule for stability would be to maintain a triangular configuration in which U.S.-Japan ties are kept closer and stronger than Sino-Japanese relations and Sino-American relations, while the other two should be kept weaker but at about the same distance as each other.

In fact, the golden age for the trilateral relationship was when they managed to keep this isosceles triangle. But it changed quickly after the beginning of the current century.

In 2019, the amount of trade between the U.S. and China totaled $525.2 billion, far outweighing the $215 billion between Japan and the U.S. and the $277.9 billion between Japan and China.

Moreover, the Sino-Japanese side of the triangle cracked amid rising tensions over the Senkaku Islands, and the Sino-American side also began to lose shape under the leadership of Trump and Chinese President Xi Jinping.

It can be said that Japan’s modern history has been all about struggling to control its relationship with the U.S. and China.

Japan’s path to World War II — beginning with the Russo-Japanese War, followed by the Manchurian Incident and the Sino-Japanese War, leading to the Pacific War — was indeed a history of failure to achieve the challenge.

Even after the war, trilateral relations came under threat many times as the countries encountered pitfalls which can be called the “Japan-U.S.-China trap.”

‘Power vacuum’ and ‘cap in the bottle’

Regarding U.S.-China relations, there was a time when Washington sought detente with Beijing, going over the head of Tokyo. When President Richard Nixon visited China in 1972 and held talks with Chinese Premier Zhou Enlai, he said, “we feel that if the U.S. were to leave Japan naked, one of two things would happen, both of them bad for China.”

He said Japan “could well turn toward building their own defenses in the event that the U.S. guarantee were removed,” adding, “On the other hand, Japan has the option of moving toward China and it also has the option of moving toward the Soviet Union.”

Nixon also said, “the U.S. will use its influence with Japan and those other countries where we have a defense relationship or provide economic assistance, to discourage policies which would be detrimental to China.”

In order to convince China of the benefits of Sino-American rapprochement, Nixon used two threats that can be described as a “power vacuum” theory — the risk of the Soviet Union expanding into Asia if the region lacks an identifiable power — and a “cap in the bottle” theory — the risk of Japan’s militarism rising again in the absence of a cap to suppress it.

Decades later, during the times of U.S. President Barack Obama, China began to promote its concept of a “new type of major power relations,” which the U.S. was initially receptive to.

During a meeting with Obama, Xi said, “The vast Pacific Ocean has enough space for two large countries like the United States and China,” apparently trying to float the idea of dividing the Pacific region between the two.

As for U.S.-Japan relations, there is Washington’s reluctance to get involved with the territorial dispute between Tokyo and Beijing over the Senkakus. While the U.S. is clearly committed to defending the Japan-administered Senkakus in the event of military conflict, under Article 5 of the Japan-U.S. security treaty, it has adopted a policy of not taking sides on their ultimate sovereignty.

To avoid becoming embroiled in military confrontation between Japan and China, the Obama administration tried to dissuade Japan from purchasing three of the islets from their owner in 2012 and effectively nationalizing the uninhabited chain. The action raised fears in Japan that the U.S. might abandon its commitment.

Concerning the Japan-China relationship, when the Democratic Party of Japan came to power in 2009, Prime Minister Yukio Hatoyama proposed an “East Asian Community” initiative, which provoked Washington’s antipathy as it appeared to be led by Japan and China, excluding the U.S.

The Obama administration became increasingly distrustful of Hatoyama due to this initiative, even more than Hatoyama’s idea of relocating the U.S. Marine Corps Air Station Futenma outside of Okinawa Prefecture.

On the other hand, it is often the case that when U.S.-China relations deteriorate, China makes friendly overtures toward Tokyo with an apparent aim of driving a wedge between Japan and the U.S.

China is now making what a senior official from Japan’s Foreign Ministry called “the strategic friendly overture” toward major Japanese businesses including companies in the financial and securities sector. A typical example is the China Securities Regulatory Commission giving approval to Nomura Holdings Inc. in March 2019 to hold 51% of a securities joint venture in China.

The worst trap

Japan’s policy options are limited. To begin with, it is both impossible and undesirable for Japan to completely decouple from China with which it has deep economically interdependent relations. That is not an option for Japan.

Moreover, if the U.S.-China conflict escalates to military confrontation, Japan will be put, existentially, in a dangerous situation. That should not be an option for Japan.

The Japan-U.S.-China trap will come up in various forms more than ever before. The most frightening trap that could appear in the coming era would be the case in which Japan and the U.S. determine China to be their most dangerous adversary, stirring up China’s exclusive ethno-nationalism and seeing both sides going beyond the point of no return.

It is necessary for Japan, the U.S. and China to accurately grasp each other’s intentions and constantly hold dialogues with each other to fill the perception gaps between them.

This is where Japan’s diplomatic power and skills count more than anything else.

Yoichi Funabashi is chairman of API.

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