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The Dynamics of Contemporary China-Japan Political and Economic Ties
Organizer: Eric Harwit, University of Hawaii
Chair and Discussant: Edward Friedman, University of Wisconsin, Madison
Since China’s political and economic opening began in the late 1970s, the PRC’s erstwhile nemesis Japan has become a major player in her neighbor’s economy. In 2005, Japan’s investment in China totaled a record $6.5 billion, at a time when political relations remained frosty. The papers in this panel examine the key factors that have shaped political and business relations between the two largest economies in Asia. What are the major political problems shaping foreign policies ties between the two? What patterns have economic relations taken over the past 30 years? What are the prospects for improved political and economic ties between the Asian nations? Eric Harwit’s paper first focuses on business and economic issues, and chronicles how China has become a key investment ground for Japanese companies. In recent years, growing Chinese bargaining leverage has forced many major Japanese investors to concede technology training in exchange for continued market access. Still, economic relations remain, on the whole, mutually beneficial. Peter Gries’s paper, by contrast, highlights key reasons political ties have faced a rocky road in recent years. Growing Chinese nationalism over the past decade, inspired by the communist one-party state government, has painted Japan as a nation with unrepentant historical antagonism toward the PRC. His empirical study sheds further light on the ways contending historical interpretations shape the perception of mutual threat. Yinan He’s work synthesizes the two disparate strains of economic and political interaction. Her paper (co-authored with Llewelyn Hughes) finds that the political tribulations have had relatively little negative impact on business relations. She argues that commercial interests on both sides have actually been able to ignore the political rhetoric as economic ties remain robust.
Japan’s Economic Ties with China: A Focus on Industrial Investment and Technology Transfer Policies
Eric Harwit, University of Hawaii
This paper analyzes the rapid growth of Japanese industrial investment in China over the past 25 years, and the ways it was shaped by Chinese industrial policy. It highlights the role of Japanese corporations in expanding ties with the PRC, and points out the ways they successfully expanded market share in key sectors. Significantly, the Japanese companies avoided major technology transfer in the early years of interaction. However, under Chinese government pressure, the Japanese moved to share more manufacturing knowledge by the beginning of the 21st century. The paper first chronicles the early years of Japanese investment following China’s economic reforms of the early 1980s. It focuses on key sectors such as consumer electronics, information technologies, and automobiles. It indicates that in most of these areas Japanese companies had greater bargaining power than did the Chinese, and therefore succeeded in gaining market access while sharing little knowledge with potential competitors. By the mid-1990s, the strength of the PRC economy and Chinese political imperatives dictated Japanese companies would have to play a role transferring knowledge. Major companies such as Toyota, Matsushita, Sharp, and others moved to build research and development centers, and train Chinese engineers and scientists. Japanese market share grew, but at the price of some key technology transfers. The paper, based on case study archival fieldwork and interviews done in both Japan and China, concludes that Japan has belatedly begun to follow the path of other nations that early on traded technology transfer for market access. However, Japanese corporate protectionism likely remains strong enough to safeguard the most vital knowledge while still expanding companies’ roles in the PRC economy.
Contending Histories and the Perception of Threat: World War II Textbooks and Sino-Japanese Relations Today, an Experimental Study
Peter Gries, University of Colorado, Boulder
The recent deterioration of Sino-Japanese relations has been blamed, in part, on history textbooks. Chinese nationalists, demonstrating in major Chinese cities in April 2005 as well as venting their anger in cyberspace, have declared “revisionist” Japanese history textbooks to blame. Japanese nationalists, for their part, have argued that China’s “patriotic education” textbooks are to blame for the anti-Japanese anger expressed by China’s youth. Do contending histories about the distant past really influence Sino-Japanese relations in the present? This paper reports results from an experimental study conducted with Chinese and Japanese college students. The 2X2 design exposed four groups of students from each country to excerpts from fake high school history textbooks to explore the impact of self/other textbooks and positive/negative narratives about WWII on threat perception in the present.
Explaining the Economic and Political Paradox in Current Sino-Japanese Relations
Yinan He, Seton Hall University
Relations between China and Japan represent an apparent puzzle. On the one hand bilateral economic interactions continue to grow significantly. On the other hand, political relations are at their lowest ebb since diplomatic normalization. In this paper we investigate the role of historical myth-making and commercial relations as determinants of bilateral political relations. We find that a gap between the two countries' collective memories as result of the instrumental use of history by elites has independently caused worsening bilateral relations, as well as increasing realist concerns about bilateral balance of power. We also develop and test a set of causal mechanisms related to commercial peace theory. Our results show that increased economic interactions have had little influence on Japanese decision-making. Further, we find that commercial interests have not been significantly harmed by bilateral political turbulence, and they have therefore not lobbied decision-makers to alter their policy position.