Tag Archive for: Japan

Tensions over future international order on display at Tokyo Global Dialogue

The inaugural Tokyo Global Dialogue took place on 2 and 3 December to mark the founding of the Japan Institute for International Affairs (JIIA), by Shigeru Yoshida, who served as the country’s prime minister from 1946–47 and again from 1948–54.

The track 1.5 event gathered together an array of regional and international experts from government, think tanks and academia to debate the proposition: ‘Is it possible to build an international order based on free, fair and transparent rules?’ Speakers included Japanese Prime Minister Shinzo Abe and Foreign Minister Toshimitsu Motegi as well as leading defence and foreign policy specialists from around the globe.

The 700 participants hotly debated the nature of international order. On the headline issue of a ‘free, fair and transparent’ international order there were naturally divergent views from the parties involved. There was strong consensus that the ‘liberal international order’ championed by the West and spread more widely across the globe in the post–Cold War ‘unipolar moment’ was under siege from within and without.

Western-held values such as democracy, human rights, multilateralism and free trade that in many ways underpinned the globalisation process are now challenged by ‘revisionist’ authoritarian states led by China and Russia, with others such as Iran and North Korea also prolific irritants to this order. Evidence of this is to be found in heightened Sino-US strategic and economic rivalry, the collapse of arms-control regimes (such as the INF Treaty) and simmering turmoil in global hot spots such as the Middle East.

The liberal international order is also being hollowed out from within, with its key Western champions losing faith in their core values in the face of rising economic inequalities, and undermined domestically by populist and anti-globalisation movements, lending support for international isolationism and protectionism. The political disarray of the US and the Brexit process in the UK are stark evidence of this.

These trends are being exacerbated by the prevalence of disruptive digital technologies including social media, leading to ‘fake news’, cyber warfare and interference operations; as well as the employment of advanced surveillance technologies to control public opinion in authoritarian states. The actions of the Chinese Communist Party in Xinjiang and Hong Kong came in for strong criticism from some participants,  which a Chinese respondent countered were clearly the work of an American ‘black hand’.

For an international symposium held in Northeast Asia, the concept of the ‘Indo-Pacific’ was point of particular contention, as the US and its allies seek to advance their ‘free and open Indo-Pacific’ (FOIP) initiative to address territorial and international legal disputes, safeguard the maritime commons, and deal with issues of infrastructure development and connectivity. The US and its allies advocated that the principles of ‘free, fair and transparent’ behaviour were the best way to counter the Chinese Belt and Road Initiative (BRI), which seeks to expand strategic control across parts of Southeast Asia, the Indian Ocean and South Pacific.

There was also debate in Tokyo around the genuine inclusivity of the FOIP since authoritarian powers would not only have to radically adjust their existing policies to conform with the liberal principles that are embedded in it, but also because they are presently concentrating on alternative governance structures to facilitate their own preferred institutions, such as the Shanghai Cooperation Organisation, Asian Infrastructure Investment Bank and BRI. Thus we can discern two competing orders—the Western liberal democratic one and the authoritarian alternative led by rising powers. The future international order will be shaped by the tension between these two antithetical visions.

While the US and its allies were adamant that their liberal international order had served the world well in terms of bringing peace and prosperity, they recognised that more needed to be done to restore trust in a system that was certainly ‘good’ but not ‘perfect’. In this respect, both domestic and international (multilateral) governance needed rethinking and reforming to adapt to a new era, as outlined at the dialogue by Motegi.

Even the Western participants were divided on whether it was possible to maintain the liberal order globally, or whether it would simply revert to a ‘bounded order’ that encompassed only the democratic powers. Outside of this community those powers would be confronted by an external operating environment in which their values and norms held lesser sway. One outspoken Chinese participant left little doubt that this non-democratic condominium would be presided over by a triumphant China.

Overall, the Tokyo Global Dialogue sought to fulfil two objectives according to JIIA President and former ambassador Kenichiro Sasae: to open free and frank discussion on the problems of an unstable international order, and to step up efforts by JIIA to research and disseminate timely analysis on such matters. This initial gathering made an admirable contribution to both these missions.

Field notes from the foothills of the new cold war

The growing pace of strategic change means that every week brings more data points charting the Indo-Pacific’s slide towards a riskier, more dangerous reality.

Tokyo

More than 300 attendees of the 1st Tokyo Global Dialogue—hosted by the excellent Japan Institute of International Affairs on its 60th anniversary—watched with concern and amusement the performance of Liu Mingfu, professor at China’s National Defence University and ‘an outstanding Chinese Communist Party member of the Chinese People’s Liberation Army’.

Liu is a type of celebrity PLA colonel, something of a media star and author of a 2010 book, The China dream: great power thinking and strategic posture in the post-American era. The flamboyant professor shouted, saluted, marked time and heroically pointed to the upper-middle distance while explaining the unstoppable but nonetheless desirable rise of the People’s Republic to global dominance.

Liu’s book is a calmer account of how China will win a race for dominance with the United States. Here’s a small taste:

China’s role as a great power cannot be limited to a major economic role. Those who think China’s rise is not an ideological and military rise, or who think China’s rise is just an economic rise, and that China is only rising to become an economic power or a GDP power, are making a strategic mistake. A rich nation without a strong military is an insecure power.

Those many folk in Australia who conveniently claim that China is too complex or too opaque to form views on should read Liu’s book. He’s a hardliner, but no less believable for that. He offers a clear guide to the thought processes behind China’s military expansion and activities in the South China Sea, the Pacific and elsewhere. Liu is pleased to be credited with coining the now familiar phrase ‘new China dream’.

A Japanese audience member asked the professor/colonel if he understood that his shouty calisthenics were putting the audience offside, which led to a loud declaration that this was the moment when Japan could escape from under the American yoke to join China in redesigning the regional security order. Also on the stage was the Hudson Institute’s Michael Pillsbury. No meek-minded accommodationist, Pillsbury said he once organised for Liu to give a talk at the Pentagon which had resulted in an ‘immediate’ $5 billion US defence budget increase. Feeling the love, Liu said that it was his intention to save Pillsbury from internment when the moment came.

South China Sea

In late November both China and the US were reported to have increased their naval activities in the South China Sea. China transited a carrier south through the Taiwan Strait into the South China Sea to conduct research and routine training, according to Xinhua. Two US warships conducted freedom-of-navigation operations.

At around the same time, reports emerged that China had deployed an aerostat (a Zeppelin-like airship) to Mischief Reef in the South China Sea. There are multiple potential uses of these highly stable platforms, but broad-area surveillance potentially linked to weapons targeting is an obvious application in the South China Sea.

Even as China pursues agreements with several Southeast Asian countries on resource exploration in the region, Beijing continues to strengthen its capacity to operate from its artificial island airbases. In front of a large Perth audience, the case was once put to me by a senior political figure that, having built the islands, China was unlikely to provoke further international incidents by actually using them for any military purpose.

What is clear is that—years after the islands’ construction—China is sharply strengthening its military capacity in the region, giving it first-mover advantage and options for control of sea and airspace that could not be quickly countered.

London

It was lost in the media coverage of President Donald Trump’s goodwill visit to NATO’s 70th anniversary meeting, but the alliance’s secretary general, Jens Stoltenberg, pointed to important work that NATO is doing to develop a shared policy on China:

What we see is that the rising power of China is shifting the global balance of power and the rises of China—the economic rise, the military rise—provide some opportunities but also some serious challenges …

[W]e have to address the fact that China is coming closer to us, investing heavily in infrastructure. We see them in Africa, we see them in the Arctic, we see them in cyber space and China now has the second-largest defense budget in the world. So of course, this has some consequences for NATO.

Not before time, but hopefully just in time, Europe is starting to get its collective and individual act together on China. Few, if any, serious European countries continue to regard China simply as an economic opportunity. Earlier this year the European Union in an official document described China as an ‘economic competitor’ in critical industrial fields and, notably, a political ‘systemic rival’.  The aim is to have a common EU China policy settled by the time the annual EU–China Summit is held in Leipzig in September 2020.

Canberra

Special mention this week goes to Treasury deputy secretary Meghan Quinn who, according to an article in the Australian Financial Review by John Kehoe, told a recent conference: ‘We do tend to be trained about incentives in a monetary form but there are actors out there that have a different framing on what the final objective is.’ Yes indeed! This is one small step at least towards Treasury acknowledging that all is no longer sunlit economic uplands in relations with China. We have come a long way since the dangerous single-track economic thinking of the Australia in the Asian century white paper of 2013.

Sadly, with one step forward there’s also one step back. What a pity to see News Corp’s approach to dealing with Channel Nine’s story about alleged spy and asylum seeker Wang Liqiang. ‘China Spy Farce’, the Daily Telegraph thundered, Colonel Liu-like, last weekend. Is there no issue so important that it can’t be reduced to the battle for eyeballs?

The suggestion that Australian agencies (partners in the Five Eyes community) would have no interest in Wang because he didn’t operate in Australia rings completely hollow to me, as does the suggestion that being in one’s late 20s is somehow too young for espionage. Remember Chelsea (Bradley) Manning, aged 26, convicted by court-martial in July 2013 of violations of the US Espionage Act.

Wellington

And finally, we have the welcome news that New Zealand has revised its laws on donations to political parties with the effect of limiting foreign donations to no more than NZ$50. But the changes may amount to less than meets the eye. The new legislation reportedly does nothing to limit party donations from foreign business entities domiciled in New Zealand, or money channelled through New Zealand citizens. Redoubtable Kiwi blogger Michael Reddell says:

I’m not sure what the law can do about this particular risk, but political parties can. Political parties can choose to do the right thing, and declare—and take seriously—a determination not to take money from, or solicit it from, people—even registered electors—who are known to have close associations with foreign regimes, perhaps especially with such troubling regimes as the PRC.

Just like in Australia, one has to wonder how serious New Zealand political parties are about rigorously clamping down on foreign donations. The cash seems irresistible to some, even if the long-term price is the loss of credibility for these institutions.

Why the China–Japan economic relationship overrides political tensions

For more than a century, close economic ties between China and Japan have developed in the absence of cooperative political and security relations, suggesting that the first is not a necessary precondition for the second. But the relationship also demonstrates the limits of the thesis that close economic ties can mitigate key sources of bilateral insecurity or political tension.

Following Japan’s victory in the First Sino-Japanese War (1894–95), Japan received a series of valuable but highly unequal economic rights in China: most-favoured-nation status, preferential treatment for Japanese goods, and foreign investment rights for Japanese manufacturers. These economic rights created the foundation for a highly complementary economic relationship that has endured despite colonialism, war, a Cold War divide, historical grievances, territorial disputes and contestation over the future of the US-led order in Asia.

Deep patterns of economic integration between China and Japan offer three critical lessons for thinking about the factors that might help to build habits of cooperation in Asia.

First, individual businesspeople have helped to sustain close economic ties between the two countries despite major changes in governing regimes, political systems and economic ideology over the past century. In the 1930s and 1940s, Japanese business leaders travelled to China as part of Japan’s colonial empire in Manchuria. They established the industries in China that would extract Chinese soybeans and iron ore in exchange for Japanese machinery and steel. In the 1950s and 1960s, these same Japanese were among those who sought to rekindle trading ties between communist China and post-war Japan. They would also develop government and business relationships that flourished following China’s economic reforms in the 1970s and 1980s.

As Kristin Vekasi has shown, Japanese firms with a high degree of familiarity with China’s business and political environment are much less risk-averse than firms that have limited experience in China. Japanese firms that are deeply integrated into Chinese society and business communities have been willing to maintain or increase their economic presence in China, even as they have experienced costly anti-Japanese riots, boycotts and physical damage to their firms and products.

Second, flows of goods and people between China and Japan have been accompanied by flows of economic ideas. Japan has been a major influence on Chinese thinking about industrial-led development, the role of science and technology in a modernising economy, and linkages between the military and civilian segments of an industrialised economy.

As China’s largest-ever provider of official development assistance, Japan played a major role in shaping China’s contemporary approaches to foreign aid and development, including its large-scale Belt and Road Initiative. Beginning in 1979, Japan provided bilateral loans to finance the building of roads, railways, ports and other major infrastructure projects in China.

Japan’s focus on infrastructure-led development stemmed from its own experience of economic development. Japan had a view that infrastructure it provided would enable it to facilitate trade with, and extract natural resources from, recipient countries. Japanese firms also frequently won contracts to build large-scale infrastructure projects in China.

China’s firsthand experience of Japanese development assistance—and the hundreds of Chinese officials who worked closely with Japanese government agencies to administer infrastructure-led development in the 1980s and 1990s—have shaped China’s own infrastructure-based development assistance as it shifted from recipient to donor country.

Third, deep patterns of economic cooperation between China and Japan have created a separate sphere of regional economic activity that has often worked against the grain of the global order. During the first half of the Cold War, when global trading relations became divided into rival US-led and Soviet-led blocs, Japan and China continued to trade across Cold War lines.

Maintaining these trade ties wasn’t easy in the absence of diplomatic relations—a result of the wishes of Japan’s ally, the United States—and given China’s Soviet-style planned economy. But the persistence of China–Japan trade helped to chip away at US expectations that its allies would undertake wholesale economic containment of China. It also provided China with important economic alternatives to the Soviet Union and laid the foundations for supply chains that would later underpin a distinct East Asian economic order.

Japan and China continue to exhibit similar patterns of strengthened regional economic activity in the face of a fracturing global order. Since 2018, they have established mechanisms that facilitate joint investment in third-country infrastructure projects. Agencies such as the Japan External Trade Organization and the China Council for the Promotion of International Trade are collaborating on joint business development in Southeast Asia. The China Development Bank and the Japan Bank for International Cooperation have agreed on common principles, initiated by Japan, to guide ‘high quality’ infrastructure investment.

Ongoing economic cooperation between China and Japan seeks to bring about greater convergence in global infrastructure investment to counter simplistic narratives seeking to pit ‘Western’ and ‘Chinese’ approaches to economic development against one another. This bilateral economic activity shouldn’t be expected to ease the deep-seated political and security challenges in the China–Japan relationship. But the China–Japan infrastructure, investment and trade relationship serves as a critical example of how regional economic activity can resist the march towards economic decoupling or a ‘new Cold War’.

Economic cooperation between Japan and China has become habituated in persistent flows of people, goods and ideas. These flows have their own independent momentum that has helped to sustain economic ties throughout periods of bilateral political conflict, serving to weld a fragmenting global order.

Asia’s scary movie

History at any moment can be understood as a snapshot, telling us where we are, or as a moving picture, telling us not just where we are but where we have been and where we may be headed. It is a distinction with an enormous difference.

Consider East Asia and the Pacific. A snapshot would show a region at peace, with stable societies, growing economies and robust alliances. But a moving picture would be considerably less reassuring. We may well come to look back on this moment as the time in which the most economically successful part of the world began to come apart.

North Korea is one reason. War has been avoided, not because North Korea has done anything to reduce the threat posed by its nuclear weapons and ballistic missiles, but because US President Donald Trump’s administration has not matched its fiery words with actions. The nuclear and missile threat posed by North Korea has actually increased since Trump embraced summitry with Kim Jong-un just over a year ago.

There is no reason to believe that the Kim regime will ever denuclearise. The question is whether it will agree to place a ceiling on its nuclear capabilities in exchange for some reduction in sanctions—and, if so, whether it lives up to the agreement and whether neighbours such as Japan believe they can be safe without developing nuclear weapons of their own.

The latter question makes the deterioration in relations between Japan and South Korea all the more disquieting. Japanese officials are uneasy with South Korea’s approach to North Korea, viewing it as too conciliatory, and are furious with South Korea for reviving its demand that Japan apologise and compensate Korean women abused by the Imperial Japanese Army before and during World War II. Tensions between these two American allies are spilling over into their trade relationship and will make it harder to coordinate policy towards North Korea and China.

Then there are the ongoing protests in Hong Kong. As mainland control over the former British colony has increased, the ‘one country, two systems’ formula promised in 1997 has not played out as the people of Hong Kong had hoped, steadily giving way to ‘one country, one system’. This is unlikely to change, as China is less dependent than it once was on Hong Kong as a financial gateway and is concerned that a liberal approach towards demonstrators there will signal weakness and encourage protests—and even a leadership challenge—on the mainland. The authorities in Beijing are thus likely to do whatever they believe is necessary to maintain order.

China’s turn towards repression is even more starkly apparent in its policies toward its Uyghur minority. At the same time, Deng Xiaoping’s careful foreign policy has given way to a more assertive approach under President Xi Jinping. In the South China Sea, China is militarising islands in an effort to gain control of this strategically vital waterway and intimidate others into abandoning their claims. Likewise, with its Belt and Road Initiative, China is providing infrastructure loans to countries throughout Eurasia, often on onerous terms that enhance China’s access and influence, while yielding questionable benefits for the recipients.

Taiwan’s future is also unclear. This year marks the 40th anniversary of the establishment of diplomatic relations between the United States and the People’s Republic of China. At that time, the US recognised the administration in Beijing as China’s sole legal government, but pledged to maintain unofficial relations with the people of Taiwan. And in the 1979 Taiwan Relations Act, the US pledged to provide the island with arms and stated that it would view with great concern any effort to determine Taiwan’s future other than peacefully.

It all made for an arrangement that finessed positions in the absence of a commonly acceptable solution, one that has worked well for four decades, as Taiwan has become a thriving democracy with a booming economy. Differences over Taiwan have not precluded a viable Sino-American relationship, and the lack of an official relationship hasn’t prevented strong US–Taiwan ties.

Now, however, it seems as though Xi may decide to push this issue, as unifying Taiwan with the mainland appears to be integral to achieving his ‘Chinese Dream’. Meanwhile, some in the US and Taiwan advocate forging closer ties or even recognising Taiwan as an independent country. At some point, a crisis is likely to materialise when one or more parties cross a line the others can’t accept.

A final question mark over the region stems from US policy. The US has been central to Asia’s success. Its alliance with South Korea has reduced the chances of conflict on the Korean peninsula and its alliance with Japan has reduced the chances of a Japanese nuclear program or a war between China and Japan over disputed islands.

But Trump has publicly questioned the value and fairness of both alliances, suggesting that they are at risk unless South Korea and Japan pay more and adjust their trade policies. And, more broadly, Trump’s foreign policy is at its core unpredictable and disruptive, whereas strong alliances require predictability and confidence.

When all of these snapshots—a nuclear-armed North Korea, an uneasy Japan, a more assertive and repressive China, growing impatience over Taiwan and mounting uncertainty over US policy—are viewed as a moving picture, it becomes clear that the stability underpinning Asia’s unprecedented development can no longer be assumed. It’s difficult to imagine the future being better than the past, but it’s not at all difficult to imagine it being worse.

Australia’s strategic symmetries

Australia’s first foreign and trade policy white paper in 1997 was titled ‘In the national interest’ and its successor in 2003 was titled ‘Advancing the national interest’. The 2017 white paper dispensed with the catchy title (although it does have a three-word slogan on the spine and cover: ‘Opportunity Security Strength’). For the claim of a single unifying national interest (and the corresponding one of a unifying grand strategy to advance that interest) to be valid, there should be a high level of policy coherence and continuity across different administrations and different policy areas.

Australia’s foreign and trade policy choices and their implications for Australia’s alignment in the major-power rivalry between the US and China strongly support the idea of a single unifying national interest and the claims of the first two foreign policy white papers. Over the past decade, and particularly since Donald Trump became US president, this defining major-power rivalry has expanded, deepened and become more acute in the economic arena.

As I show in a new ASPI paper, Between Japan and Southeast Asia: Australia and US–China economic rivalry, a close look at Australian economic policy choices reflects the same alignment pattern when compared with key neighbouring states, and with Australian defence policy choices.

Longitudinally, the red centre of Australia is between Tokyo and Singapore but closer to Tokyo. The geographical location of Australia mirrors Australia’s alignment position in the US–China rivalry. Australia’s position is close to that of Japan, but Japan’s position is more aligned with that of the US than that of Australia. Southeast Asian states’ alignments are closer to China and more distant from the US than that of Australia.

The World Trade Organization has been the main institutional arena for the US–China economic rivalry. The US is responsible for more than half of the complaints filed against China in the WTO. China is the number one target of US complaints in the WTO despite China’s later entry into the organisation. The US has been the target of 15 of the 22 complaints filed by China in the WTO, including five since 2018. Japan has filed two complaints against China, while Australia, along with Indonesia, the Philippines, Vietnam, Thailand, Malaysia and Singapore, have filed no complaints against China.

Japan has joined 16 of the 23 US complaints against China as a third party—more than any other WTO member. Australia has joined 11 of the 23 US complaints (the third most after Japan and South Korea) covering a wide range of economic sectors. Southeast Asian members of the WTO have been more reticent. Vietnam and Thailand have joined five of the US complaints against China, while Malaysia has joined none. Like the US and the European Union, Japan hasn’t recognised China as a market economy within the WTO and has no preferential trade agreement with China. Australia, as with the Southeast Asian states, recognises China as a market economy and has a preferential trade deal with China.

This alignment pattern is repeated when it comes to engagement with recent US and Chinese regional economic initiatives. The US and Japan are not members of the China-initiated and -led Asian Infrastructure Investment Bank. Australia and all 10 states of Southeast Asia are founding regional members. Yet, like Washington and Tokyo, Canberra has demurred from signing the memorandum of understanding in support of China’s Belt and Road Initiative that Beijing wanted. The Australian prime minister was not invited to either of the Belt and Road Forums held in China. All 10 Southeast Asian countries have expressed their support for the Belt and Road Initiative and their respective leaders have attended one or both forums.

Japan and Australia have both been more supportive of US trade initiatives than their Southeast Asian neighbours. Australia and Japan joined the Trans-Pacific Partnership trade negotiations after the US joined. Six of the 10 Southeast Asian states never joined, while Singapore and Brunei were founding negotiating partners long before the US came onboard. More recently, Australia, Japan and the US have been working together on Indo-Pacific trilateral economic initiatives.

This alignment pattern in the economic arena replicates that of the defence realm. Australia and Japan are more actively engaged with the US than any Southeast Asian state is, and more willing to criticise aggressive destabilising Chinese activities in the South China Sea and beyond than Southeast Asian states are. Yet Australia, particularly the Australian navy, has a closer relationship with China and the People’s Liberation Army Navy than the US and Japan do, while many Southeast Asian states have closer and broader defence relations with China than Australia does.

These symmetries of Australian policy choices and their alignment implications strongly suggest that there’s a bipartisan understanding of the national interest and grand strategy in Australia. Those predicting or hoping for major changes in Australia’s alignment position in the US–China rivalry will continue to be disappointed.

Don’t feed the Donald

What do French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe have in common? For one thing, they both believe that, by stroking US President Donald Trump’s fragile ego, they can coax him into maintaining the traditional alliances that he has proved all too willing to abandon. But, while America’s narcissist-in-chief is undoubtedly susceptible to flattery, there are limits to this approach.

Macron is already learning this. The ‘friendship tree’ that he gave Trump last year—which the leaders and their wives planted in the White House lawn—is now dead. It’s an apt metaphor.

But Abe’s charm offensive is still in full swing. The first world leader to meet with Trump after his election victory in 2016, Abe returned to Washington in April. The next month, Trump was in Japan, where Abe pulled out all the stops.

Trump presented to a sumo wrestling champion the ‘United States President’s Cup’, a 137-centimetre trophy that was made up for the occasion. He also became the first foreign leader to be received by Emperor Naruhito. He was, in his own boastful words, ‘the guest of honor at the biggest event that they’ve had in over 200 years’.

Abe has reportedly nominated Trump for a Nobel Peace Prize—at the request of the US—for opening talks with North Korea. And he has offered to mediate in America’s dispute with Iran. (Abe’s recent visit to Tehran—where he reportedly asked Iran’s leaders, at Trump’s request, to release detained Americans—made clear that, even squeezed by sanctions, Iran has no interest in negotiating with a serial violator of signed agreements.)

What Trump calls an ‘incredible partnership’ is, in reality, a largely one-sided relationship. But, for Abe, appeasing Trump is not so much a choice as a necessity: he must prove to Japan’s people and their neighbours, particularly the Chinese, that he knows how to keep Trump on his side.

The problem is that, no matter how hard Abe tries—no matter how many complimentary words are spoken or friendship displays are photographed—the US and Japan remain divided on the same issues as always: North Korea, trade and the reliability of US security guarantees in Asia.

On North Korea, Trump reacts assertively to tests of long-range missiles, which could reach the US mainland, but has declared that he is ‘personally’ unbothered by tests of short-range missiles, which could reach Japan. In contrast not only to Abe, but also to his own national security adviser, John Bolton, and former acting defence secretary, Patrick Shanahan, Trump refused to acknowledge that the short-range tests violated United Nations Security Council resolutions banning all ballistic missiles. ‘Perhaps [Kim Jong-un] wants to get attention, and perhaps not’, Trump said flippantly. ‘Who knows? It doesn’t matter.’

America’s withdrawal from the Middle East, after opening the way for Russia to gain a foothold in the region, has only intensified Japan’s fears for its own security, and not just with regard to North Korea. China—the world’s second-largest economy and home to 20% of the world’s population—may be a vital trading partner for its neighbours, but its aggressive, destabilising and largely unchecked actions in the East and South China Seas raise serious risks for the region.

Abe is well aware of Japan’s vulnerability. For years, he has been pushing to amend Japan’s pacifist constitution to expand the mandate of the country’s self-defence forces. In the meantime, Japan plans to spend US$245 billion—1% of its GDP—on defence over the next five years, more than France or the United Kingdom.

But, of course, that investment won’t put Japan in any position to confront China, whose defence budget is more than four times larger. That leaves Japan with little choice but to keep trying to improve the odds that the US will uphold its commitments.

Unsurprisingly, Trump has made no concessions on trade either. On the contrary, he complains that the US has an ‘unbelievably large’ trade deficit with Japan, and has threatened—invoking national security concerns—to raise tariffs on US imports of Japanese automobiles.

Such a move would hurt Japan far more than the steel and aluminium tariffs Trump imposed last year; in fact, it would probably send Japan into recession. Such an outcome would be all the more likely in view of the Trump administration’s pushback against the Bank of Japan’s stimulatory monetary policies, which it insists are unfairly driving down the yen’s value.

Japan’s plans to purchase 105 F-35 fighter jets will go some way towards reducing Japan’s trade surplus with the US and may help to persuade Trump not to follow through with the auto tariffs. But the truth, as Japanese Finance Minister Taro Aso recently observed, is that as long as the US doesn’t produce the goods it consumes at competitive prices, tariffs on one country will merely shift its deficit to other trading partners.

For Trump, however, tariffs aren’t logical. Rather, they are a knee-jerk reaction to any disagreement or challenge. Nowhere is that more apparent than in his threats to slap tariffs on US imports from Mexico, unless the country’s government curbs illegal immigration to the US—a move so reckless that even Senate Republicans, who have been all too willing to fall in line behind Trump, publicly oppose it.

Trump did make one small concession to Abe: a trade deal will be reached only after Japan’s parliamentary elections next month. But while that may ease pressure on Abe in the immediate term, it’s cold comfort coming from a US administration as fickle and self-serving as Trump’s.

Time for global leadership, Japan-style

Japan has taken up the G20 presidency at a key time in global economic affairs and has the opportunity to shepherd the global economy through a period of greater uncertainty than there has been in decades. But the task is tough. Not only are the issues on which progress must be made substantial, but Japan’s G20 presidency will effectively be one of the shortest ever, with leaders meeting in the middle of 2019.

The World Trade Organization, at the core of the multilateral trading system, is in crisis. With only three out of its seven possible appellate court judges, the WTO’s dispute settlement body is down to the minimum number of judges needed to function. If one of the three judges has to recuse himself or herself from a case or becomes unable to serve, the enforcement mechanism of the multilateral trading system will cease to function. This is the system that holds countries accountable to the world trade rules and, without it, a core function of the WTO will collapse.

It’s the United States that is vetoing the appointment of new judges because it says it wants changes to the system.

The importance of the multilateral trading system and dispute settlement mechanism is more hardwired into Japanese strategic thinking than perhaps that of any other country. Japan’s post-war reconstruction and rapid rise were made possible by reliance on open international markets underpinned by the WTO’s predecessor, the General Agreement on Tariffs and Trade. The WTO entrenched the dispute settlement process that has avoided much conflict over trade issues. Recently, for example, the dispute over the cutback in Chinese exports of rare-earth metals to Japan and other countries was resolved in a WTO dispute settlement case. China accepted the ruling against it. Japan didn’t retaliate and the matter was settled peacefully. For Japan and other countries, the WTO dispute settlement system works.

The WTO, of course, is far from perfect and is in need of some reform. The failure to conclude the Doha Development Round—the most recent negotiations on multilateral liberalisation, which started in 2001—has meant that some rules are out of date or do not exist for new areas of commerce relevant for the 21st century. Gaps in the rules have become issues of contention between the major trading powers.

The leaders of the G20 recognise the importance of reform and, for the first time, in the communiqué from last November’s meeting in Argentina, they committed ‘to work together to improve a rules-based international order that is capable of effectively responding to a rapidly changing world’.

There is now an opening for G20 leaders to set the strategic direction of reform for the WTO. As the president of the G20, Japan has a responsibility to develop a framework to help prioritise reforms and catalyse action on those that are most urgent. A clear direction needs to be set during Osaka’s G20 summit, or else momentum will be lost.

Of all the areas in which the WTO needs to change, priority must be given to those that help to settle the trade tensions between China and the United States. The trade war has already affected global trade and shaken confidence in global markets, disrupting investment and reorganising some supply chains. Confidence in the multilateral trading system is at stake. Trade wars can easily spread as countries incurring direct or collateral damage seek to ‘protect’ themselves or retaliate by putting trade barriers up.

A G2 deal between the US and China that eases trade tensions may seem a positive outcome but will do little to calm the now bipartisan push in the US to contain the rise of China. There is also a real chance that a bilateral deal would undermine the multilateral trading system. The proposed packages of massive Chinese purchases of US energy and agricultural goods may temporarily ease bilateral tensions but will likely be outside of the established rules and potentially divert trade from others.

The global economy will be better served by a US–China deal that is done within a multilateral framework, extending market opening in China to other countries on a most-favoured-nation basis. That would serve Chinese interests as well, even though the instinct will be to do a narrow, bilateral deal to appease the Trump administration. This is where countries like Japan are crucial for marshalling support from other countries to encourage China in particular to avoid a narrow, bilateral settlement and frame a multilateral settlement.

Japan has the ability to mobilise and work with like-minded countries in Asia and around the world to preserve the open, liberal rules-based order and to set a direction on strengthening it. Such an approach will make it easier to avoid a bilateral game of divide and conquer played out of Washington or Beijing.

There will be plenty of distractions for Japan as it negotiates its own bilateral deal with the US, manages a successful G20 summit and continues to improve its relations with China while managing all the attendant risks. But these challenges will be made easier if Japan works with a coalition of middle powers that share the same core interest in an open, rules-based multilateral order.

The success or failure of Japan’s G20 presidency ultimately depends on whether that is the defining strategic outcome of the Osaka summit next June.

Slow and steady wins the race—Japan and the Pacific Island Leaders’ Meeting

Japan, like many countries, has strong strategic interests in the Pacific. But unlike many countries, Japan hosts a forum every three years with the leaders of the 14 Pacific Island countries (PICs), as well as ministerial representatives from Australia and New Zealand.

The Pacific Island Leaders Meetings have been a key part of Japan’s Pacific strategy since 1997. The eighth meeting (PALM8) begins today in Fukushima. Its theme: ‘We Are Islanders—Partnerships Towards Prosperous, Free and Open Pacific’.

PALM meetings don’t usually attract a lot of attention, but this year may differ given the increased interest in the Pacific. There’s a sharper focus on China’s assertive foreign policy in the region, from island building in the South China Sea to its so-called ‘debt-trap diplomacy’, including in the Pacific. China has promised much-needed infrastructure projects in countries such as Tonga, Samoa, Vanuatu and the Philippines. Now many counties are indebted to China and it’s unclear how they’ll be able to pay back the loans.

Japan’s engagement in the region isn’t new. It has been deeply engaged in the Pacific and has strong bilateral relations with many PICs. Japan provides 10% of all overseas development aid (ODA) that PICS receive. That makes it the third-largest aid donor to Oceania, behind only Australia—which provides 44% of all ODA—and New Zealand (14%). At the end of each PALM meeting Japan announces a cooperation package for the next three years that amounts to approximately ¥50 billion (roughly US$500 million).

Japan also provides infrastructure development, as seen by the Philippines’ project ‘to build subways in Manila and improve rivers in Davao City’, the construction of a highway in the Solomon Islands, the installation of a wind-power generation system in Tonga and the building of roads and bridges—among other projects—in Papua New Guinea.

Previous PALM meetings drew on Japan’s shared identity with PICs as island nations, as well as their shared interests in preserving and managing marine resources. At PALM5 in 2009, for example, they created the Pacific Environment Community Fund to find ‘practical Pacific-specific approaches’ to combating climate change. This led to a commitment at PALM7 to build a Pacific Climate Change Centre.

Because climate change poses an existential threat to island nations, the participants have adopted other mitigation measures. After PALM7, Japan and PICs also initiated the Pacific Leaders’ Educational Assistance for Development of State to increase cooperation in priority areas, including disaster risk reduction, climate change and the environment. That led to the Hybrid Island Project—Smart Energy Integration for Resilient Islands that will introduce renewable energy technologies into the energy systems of five PICs that currently rely on diesel.

Japan has also been a strong advocate for self-sustained development. To that end, it provides capacity building and training. At PALM7, Japan outlined a plan to focus on capacity building and technology transfer, for example by offering exchanges for some 4,000 people from PICs. Trade also features prominently in the discussions.

Such exchanges fulfil another of Japan’s diplomatic objectives: PALMs  are an important platform for Japan to promote values that are fundamental to its interests, such as sustainability, transparency and freedom of maritime passage. All of that fits within the rubric of Japan’s Free and Open Indo-Pacific Strategy.

Given concerns about China’s engagement in the Pacific, PALM8 will be an opportunity for Japan and the PICs to continue to promote values such as freedom of maritime passage, rule of law, peace and security, and transparency.

We can expect topics such as maritime assistance, maritime law enforcement measures, fisheries resource management, independent and sustainable development, and people-to-people exchanges to be on the agenda.

This consistency in PALM topics to date shows that Japan’s Pacific strategy isn’t a reaction to its ‘race’ with China in the Pacific. Rather, the strategy reinforces Japan’s key competitive advantages such as its technology and innovation strengths, its experience in disaster risk reduction management and its shared understanding of the economic importance of fisheries.

Although Japan has been increasingly active in Southeast Asia on maritime security, it hasn’t replicated similar efforts in the Pacific. As some analysts have argued, there’s a need for PICs to develop a regional maritime security strategy. PALM8 provides a good opportunity.

Additionally, Japan hasn’t sought to monopolise PALM meetings. It invited the United States to participate in PALM6. This year, it has invited New Caledonia and French Polynesia to participate for the first time. Inviting those two territories is an interesting choice: France controls both territories’ defence, foreign and monetary policies, and PICs might not appreciate French influence in regional decision-making.

This is particularly so as French President Emmanuel Macron used his recent visit to Australia to reiterate France’s commitment to the Pacific. France’s 2013 White Paper on Defence and National Security emphasised the country’s defence and security commitments in the Asia–Pacific, particularly in relation to maritime security and trade. France has the second-largest exclusive economic zone in the world, the greater part of it located in the South Pacific.

Countries with strategic interests in the Pacific, such as Australia, should recognise that PALM meetings demonstrate a consistent, proactive and longer process of international engagement with PICs that no other country has managed to replicate. If slow and steady wins the race, Japan is well ahead.

Hard Japan versus comfortable Japan

Japan faces a choice. Will it decide on a hard or a comfortable future? Decisions—political, strategic and social—don’t come much bigger. What Japan’s leaders and people pick will say much about our times and the Asian century.

Japan can take the hard road and contend with China, or Japan can concede and settle for comfortable accommodation.

Not long ago, this big choice was a topic for academic speculation and low-level diplomatic musing. The discussion was more about demography than Asian power politics. No more. In the age of Trump, Abe and Xi, the issues come into sharp and pressing focus.

In a review essay for Inside Story on who rules Asia and who will write the future rules, I’ve suggested opposed visions of Japan’s future: Strong Japan versus Comfortable Japan.

Marking the 150th anniversary of the Meiji Restoration/Revolution this year is a reminder of how Japan has twice in that time shown the ability to make huge shifts in its governance and society to respond to external challenges. Strong Japan or Comfortable Japan can both arise from today’s facts.

Strong Japan foresees a Tokyo that refuses to bend to Beijing as Japan reclaims its rights as a ‘normal nation’, building its military strength as America’s key Asian ally and leading Asia in both balancing against and engaging China. This is Prime Minister Shinzo Abe’s vision for Japan.

Strong Japan is expressed in the unusual role Abe has taken in leading Asia’s response to Donald Trump, saving the Trans-Pacific Partnership after Trump dumped the trade treaty. It’s expressed in Abe’s reshaping of Japan’s constitution, and in the fresh effort to create a quadrilateral alliance of democracies linking Japan, the US, India and Australia.

The alternate Comfortable Japan sees Abe as an atypical political outlier, not the leadership model that will be followed by future prime ministers. In this version, Japan matches the decline of its population by declining gently to middle power status.

Comfortable Japan embraces the peace of its pacifist strain, no longer wanting to serve as the US’s unsinkable aircraft carrier. The US–Japan alliance fades away, dismissed as the strange joining of two nations with vastly different histories and values. Putting aside its old nightmares about being betrayed or abandoned by a US turn to China, Japan would drift out of the US orbit. Tokyo could quietly decide that the cost of resisting Beijing is too high.

Comfortable Japan would accommodate a Sinocentric future. For the Japanese, this would be portrayed as Japan turning back to Asia. In China, the Communist Party would proclaim triumph in the history war and start to turn down the heat.

Hugh White’s Quarterly Essay ‘Without America’ argues that Comfortable Japan will beat Strong Japan, feeding his conclusion that China is going to win and America is going to leave. White writes that the benefits of the alliance to Japan are falling as US support in a crisis becomes less certain. He thinks there’ll come a point when Tokyo concludes that America can’t be relied upon any longer:

Japan is the key to East Asia’s emerging order as China’s power grows and America’s wanes. Japan’s alliance with America has been the keystone of America’s strategic position in Asia. While the alliance lasts America will remain a major regional power, and when it ends America’s role in Asia will end with it … For America, the costs of the alliance are growing, while the benefits are not. China’s rise makes it both a more valuable economic partner and a more formidable military adversary, and so the costs to America of protecting Japan against China go up both economically and strategically.

After the US and China, Japan will be central to the contest between Pax Americana and a new Sinocentric order. The Australian journalist Richard McGregor offers a masterful account of how we arrived at this point in his book Asia’s reckoning, charting the complex 50‑year dance between China, Japan and the US: ‘The three countries have developed a profound interdependence alongside strategic rivalries, profound distrust and historical resentment.’

The history McGregor offers has plenty of evidence to support either the Strong Japan or the Comfortable Japan prediction. The choice becomes starker if Donald Trump cuts a deal with China or merely decides that the Japan alliance isn’t worth the effort. McGregor considers the Trump effect in the ANU’s latest East Asia Forum Quarterly and offers this conclusion about Japan’s options:

Japan knows that China is not going away. One day, the United States might. China is keen to emphasise to every nation in Asia a single truth: China’s presence is a geopolitical reality in Asia. By contrast, the US presence is a geopolitical choice, and it is one that China intends to make more and more costly. The institutional ties between the United States and Japan remain strong and deep. For the moment, Abe’s artful diplomacy and flattery of Trump has restored an equilibrium in top-level relations as well. But if Tokyo continues to feel threatened and loses faith in the United States, the next step is going nuclear—a policy that is now discussed openly in Japan. That will be the definitive sign that Pax Americana in Asia is over, and it could come sooner than anyone thinks.

More than at any time in the last 70 years, Japan must ponder the costs and benefits of the US alliance/relationship—and what a less America-centred future looks like. Tokyo faces a sharper, nuclear-tinged and darker version of Canberra’s nightmare.

When Donald Trump and Malcolm Turnbull met at the White House on Friday, any discussion of Asia policy would have been—that word again—Sinocentric. Yet any attempt at Asia prognostication must grapple with deeply different versions of what Japan might or might not do.

ASPI suggests

Welcome back to another week of ASPI suggests.

First up, here are some solid reads on le sujet du jour: North Korea. This Esquire piece delivers what it says on the box: a good read about Kim Jong-un’s campaign to consolidate power by killing off his family. If that piques your interest but 6,000 words is a bit of a tall order, don’t hesitate to devour this pithy, on-point piece of analysis from national treasure Rod Lyon. 99% Invisible has published a singularly compelling effort on the borderlands between North and South Korea—the truce towns, tank traps, tunnels and more. And if you’re a bit rusty on the where-what-how-why etc. of Guam, then this Lawfare piece (What the Heck Is Guam? A Guide for the Perplexed) is for you.

Here on The Strategist we’re not shy about shining a light on the occasional book review. Here are two gold-class entries you shouldn’t have missed. First, from the New Statesman, is a longer read on the tremendous impact World War II had on our collective psychology. (From the review: ‘A German survivor of the Allied bombing of Hamburg confessed to willing the bombers on in the hope of seeing the total destruction of his city, even though he was stricken with terror by the sight. This joy in destruction – which Freud explained as an expression of Thanatos, a death instinct – was evident in some of those who played a part in enabling the destruction to take place.’) Second, from Notre Dame Philosophical Reviews (a Suggests first-timer), comes a review of Fritz Allhoff’s tome on the philosophy of torture, which comes down on the side of allowing torture in specific cases if harm by terrorism might be prevented.

Cats. Travel. History. Yikes. Don’t miss this Smithsonian Mag piece…

Are you feeling wonky? Do you fancy yourself an economics fiend who has outgrown Freakonomics? If so, you’re in luck!  None other than J. Bradford Delong is here to teach you how to think like an economist. Set aside some time because his masterclass is here. And if you just don’t know when to quit, then check out this sweet Quillette piece to learn a thing or two about statistical fallacies and paradoxes. (H/T to former ASPI intern Patrick Kennedy for that one.)

And if there’s a peak suggestion this week, it’s to sign up to Harper’s Weekly Review, which seems to be jostling for the title of best readout on what’s been going on in our brave new world. Head here to have it land in your inbox each Friday.

Podcasts

Regular readers of this feature will have clocked the podcast collab between TCU and CSIS, which brings Bob Schieffer and Andrew Schwartz face to face with some of the fourth estate’s most impressive brains. Sometimes the show grapples with our global dynamica (check out the recent episode with Graham Allison on dynamics in the US–China relationship (46 mins)), but often it’s American political journos talking about their business and their president. Most offer great insight into the DC swamp, with Maggie Haberman being one of the more entertaining guests (40 mins). Haberman recently rocked up to do a show with the gang over at Longform, which is well worth a listen. She is, most certainly, one to watch.

Videos

Here are a couple of good ’uns courtesy of VICE News. Since being published earlier this week, VICE’s vid on the events in Charlottesville has racked up over 4 million views. Check out the chilling 22-minute package, along with this John Oliver segment (4 mins). And on the back of recent bellicosity in the US–DPRK relationship, VICE has re-upped their snappy video highlighting their visit to Pyongyang for the Day of the Sun celebration and military parade on 27 April this year (5 mins).

Events

Sydney: Michael Fullilove and James Curran will soon sit down to talk Trump. (Fullilove is the author of this recent Foreign Affairs essay, while Curran wrote the [a] book.) Head along to Bligh Street on the 23rd.

Canberra: Andrew Carr has bipartisanship on security issues in his sights. Don’t miss what’s sure to be a compelling presentation at SDSC next Thursday. Details here.

The ANU’s Japan Update is back again this year, with the Australia–Japan Research Centre having assembled its usual deeply impressive group of speakers to help you navigate Japan’s current economic and political landscape. Register online and then head on over to the ANU’s Finkel Theatre on 6 September.