by
Lakhvinder Singh
[Research Fellow,The Institute for Far Eastern Studies,Kyungnam University]
posted January 23, 2008
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Article : |
Current Status of Relations between Korea, Japan and China
Trilateral Trade
The recent visit by Japanese Prime Minister Mr. Yasuo Fakuda to China has once again highlighted the increasingly closer ties between the regional countries. The Japanese Prime Minister’s visit demonstrated that the economic logic of relationships has been taking over the political logic in the region for some time now. Never before in modern history have China, Japan, and Korea been as closely linked economically as they are now. As an indication of their growing economic interaction, Japan has become China’s third largest trading partner. In 2006, Chinese exports to Japan reached US$118.4 billion and imports for Japan were valued at US$92.9 billion, taking the total trade between the two countries to US$210 billion. By the end of 2006, Japan had invested more than US$58.2 billion in China, making it the second largest investor there. Similarly, Korean companies have invested more than US$36 billion in 44,000 projects in China. In 2006, China became South Korea’s largest trading partner, surpassing the United States.
To give further boost to their growing economic ties, the three countries are also exploring the possibilities and prospectus of a China-Korea-Japan Free Trade Agreement (FTA). In November 2007, the Development Research Center (DRC) of the State Council of the People’s Republic of China, the National Institute of Research Advancement (NIRA) and Korea Institute of International Economic Policy (KIEP) submitted a joint report highlighting the many positive effects that a China-Japan-Korea FTA could have on the respective economies. This joint research also reflected the direction of new trade relations in Northeast Asia as a result of the rapid growth of China and Korea.
Financial Cooperation
Apart from growing trade ties, the three countries are also coming together to help each other during financing difficulties. All three countries have set up bilateral currency swap mechanisms under the “10+3” framework: an agreement of US$2 billion was signed between Japan and Korea in July of 2001; China and Japan signed a similar agreement for US$3 billion in March of 2002, and China and Korea signed an agreement of US$2 billion in June of 2002. Financial organizations from China, Japan and Korea, such as the Bank of China, Japan’s Mitsi-Sumitomo Bank and the Korea Exchange Bank, are also cooperating on several services such as international trade and financing with each other. Talks are also going on between the three countries on establishing an advanced framework for a regional liquidity support arrangement (CMI multilateralization, or Post CMI). The three countries are also trying to push forward with the development of Asian Bond Markets Initiatives (ABMI).
Industrial Cooperation
Industrial establishments from all three countries have also begun co-operating with each other. As an example of this growing cooperation, steel enterprises from China, Japan and Korea have agreed on the establishment of the “Steel Community of China, Japan and Korea”. Other industries such as textile, clothing, mechanical, electronics, transport, automobile, and urban gas from each country are also cooperating under an agreement signed in 2003.
The three countries are also pushing for a trilateral investment agreement to promote mutual investment. In this regard, three trilateral investment agreement meetings have been held, in March 2007 in Tokyo, in August 2007 in Korea, and again in November 2007 in China. On the basis of the joint draft submitted by the three countries, they are now holding discussions on the issues of ‘Principle of the Agreement’, ‘National Treatment’, ‘Intellectual Property Rights’ and ‘Dispute Settlement Procedures’.
To improve the business environments in their respective countries, nine meetings have been held between the three countries since 2004. Through these meetings, the three countries have reached a consensus on an “Action Agenda” to improve the transparency of laws and regulations, the protection of intellectual property rights, and dispute settlement mechanisms.
Transportation and Tourism Cooperation
To facilitate the growing business air passenger traffic, the three countries have agreed to establish passenger charter flights. In April 2007, China and Japan established passenger charter flights between Haneda Airport (Tokyo) and Hongqiao Airport (Shanghai) and between Hongqiao Airport and Gimpo Airport (Seoul). The launch of these flights has shortened flight times between the cities, which not only benefits passengers but also contributes to increasing the overall exchange of people as well as regional trade in goods. These flights have made it possible to connect the three countries into a ‘one day fly zone’. The three countries are also making progress in the fields of maritime transport and logistics. In September 2006, the three parties adopted a ‘Joint Statement of the China-Japan-Korea Ministerial Conference on Maritime Transport and Logistics’.
Tourism is also increasing among all three countries. Japan has opened its tourism market to China, and China has exempted Japanese tourists from the visa process for short periods of travel to China. In 2006, more than 3.75 million Japanese visited China. In 2005, more than 19,000 Japanese students went to China and approximately 90,000 Chinese students went to Japan for studies. Tourism is also increasing very quickly between Korea and China. In 1992, when China and Korea first established diplomatic ties, the annual number of Chinese and Koreans visiting each other were 87,000 and 43,000, respectively. Ten years later, in 2002, these numbers reached 540,000 and 2,120,000. Currently, China and Korea have become the second largest origin of tourists mutually, and the two countries’ tourist exchange continues to grow quickly.
Environmental Cooperation
In non-economic areas as well, relations between the three countries have been growing steadily in the recent past. Korea, Japan and China are working together to protect their shared environment. As an example, dust sandstorms that have posed serious problems in the region for many decades have now being tackled jointly by China, Japan and Korea since 2001. They have jointly built 5 monitors in dust storm areas such as Liaoning Province, China since 2004. China, Japan and Korea have also set up an “environmental protection commission” to protect the local surroundings. The three countries have also agreed to set up a Steering Committee for a Joint Research Group on the dust sandstorms. The first meeting of this committee is expected to be held in January 2008 in Tokyo, Japan. Under the banner, “Ocean Policy Forum”, the three countries are also jointly trying to address the issue of marine litter management in the region.
Cultural Exchange
The three countries are also promoting cultural cooperation in the region. In June 2007, in Jeju, Korea, the foreign ministers of the three countries agreed to promote the Northeast Cultural Shuttle Project. Under this project, the first ‘Northeast Asian Film Festival’ was organized. Four movies produced either jointly or in cooperation among the three countries, were presented during the Busan International Film Festival in October 2007. After decades of regional mutual distrust, this cultural cooperation project is expected to play a significant role in bringing the three peoples together.
Problems for Regional Integration in East Asia
North Korea
Despite this growing cooperation, there are some serious problems that are hindering the growth of the integration process in these three countries. There are some serious political differences among the three countries on the issues facing the region. Foremost is the issue of North Korea’s nuclear program. Despite of the fact all three countries agree on the fact that North Korea’s nuclear program poses a serious threat to peace and stability in the region, they have failed to agree on a common approach to deal with it. Each has adopted a separate approach to deal with North Korea based on their own national interests and domestic political dynamics. Japan, even though taking the threat of North Korean missiles and nuclear programs seriously, has refused to enter into serious negotiations with North Korea until the issue of Japanese abductions by North Korean agents during the cold war years is satisfactorily resolved. Thus, for purely domestic reasons, Japan has failed to align its policies with other countries in the region. Similarly, the South Korean government has also taken a bilateral approach to strengthen its relations with North Korea without much apparent concern for the other players in the region. Through its “Sunshine Policy“, it has given North Korea aid worth billions of dollars, which often cuts across the purpose of the polices of other countries in the region, especially Japan and the United States. Similarly, China has refused to take a hardline approach towards North Korea’s nuclear program despite the urging of Tokyo and Washington, refusing to use its leverage to stop the North’s nuclear program. Thus the three countries’ failure to produce a joint strategy towards North Korea is emerging as one of the most significant setbacks to the ongoing integration process in the region.
Historical Differences
Lately, historical issues have also been causing serious frictions between the three countries. Despite the growing economic relations between these three countries, they have somehow failed to resolve their past problems and come to a common agreement on historical issues. Due to various domestic political pressures, the three countries are refusing to give in to each other’s demands. As a result, narrow nationalism has been growing in all three countries. This growth has the potential of causing further serious harm to the forces of regional integration. Issues such as Japan’s past use of comfort women, misleading history text books, the Yasu Kuni Shrine visits, and the issue of chemical weapons in China have caused much mistrust between the three countries and need to be resolved.
Territorial Disputes
Territorial disputes between all three countries are also causing serious tension. Japan has disputes with China (Senkaku/ Diaoyutai Islands) and Korea (Dokdo/ Takeshima Island). China and Korea are also in the midst of territorial disputes (Ieodo Island/ Suyan Rock) with each other. In the recent past, some of these disputes have taken a very ugly turn and brought the concerned countries to the verge of war. In 2005, disputes between Korea and Japan and in 2006 between China and Japan reflected the conflict between the regional powers on politics, security and economic competition for natural resources. Each country is currently overstepping its national boundaries to claim natural resources. This exploitive race for regional wealth has the potential for causing major armed clashes in the region.
Factors for Strengthening Regionalism between Korea, China and Japan
Currently, the Northeast Asian integration process is becoming more complex by the day. Opposing forces are at work at the same time. Economic forces are bringing the countries of the region together like never before. Each day, new business deals worth million of dollars are signed by major companies in the three countries. However, political forces prevailing in the region have failed to reconcile with each other and are forcing each other in opposite directions.
Despite the growing economic exchanges, politically, the three countries are not ready yet to take each other on as equal partners. Japan, which has been the dominant country of the region since World War II, is not yet ready to accept a rising China as an equal partner. However, China is no more willing to leave the dominant position to Japan any longer. Both are suspect of each other’s intentions and are trying to outdo each other in the region. Thus the most important factor that is hindering the growth of regionalism among the three countries is the “Trust Factor”. Korea, Japan and China simply don’t trust each other. However, if they want to continue on the path of regionalism, they need to go the extra mile to win each other’s confidence. Japan as the largest economy, and with a past history of aggression has a special role to play in this process. However, thus far it has failed to fully recognize the benefits of further regionalism in Northeast Asia and hence has yet to play a more proactive role in promoting mutual trust amongst the three countries. Japan needs to do more to reduce regional fears. It should promote regional free trade and open its markets (most importantly its agricultural market) to other countries. On historical issues that have caused so much regional friction, it should adopt a more pragmatic approach and work more proactively to soothe the hurt national pride of Korea and China.
Changing power equations in the region are spurring narrow nationalism in Japan, Korea and China. This can aggravate the already complex situation in the region with long standing disputes over territory and history. Thus, this rise of narrow nationalism in all three countries is a very worrisome phenomenon. This may hurt the forces of regionalism very badly and can even spill over into violence. All three countries must understand the sensitivity of the situation and curb this rise of nationalism. As the European experience shows, regional integration can be achieved only after the concerned countries curb the rise of nationalism in their respective countries.
Role of the United States
The question of the future role of the United States should be answered once and for all. The United States remains the main trading partner of all three countries in region. It also has the largest regional foreign military presence. Korea, Japan and Taiwan have much closer military and political ties with the United States than with each other. The economic and political role of America has to be properly integrated into the regionalism process. The Northeast Asian regionalism process should by all means be inclusive of the United States. Without the inclusion and support of America, regional stability simply cannot be sustained. All three countries thus have to share and adopt some kind of common approach towards Washington. Differing approaches towards U.S. policies in the region will only cause major friction among themselves. All three countries must agree that the U.S. presence in the region is a positive force and is beneficial for the peace and prosperity of the region.
The economic rise of China has raised myriad questions in the minds of many people in the region. For any successful conclusion of the integration process, suspicions regarding the rise of China should be resolved for once for all. The “China threat” theory currently prevailing in the region should be dismissed.
Japan and Korea must not fear the rise of China either militarily or politically. Economically, Japan should stop looking at China as an exporter of deflation to their country. The rise of China has to be seen as an opportunity for economic growth and prosperity. Without a positive attitude from Korea and Japan towards the rise of China, the regional integration process is simply not possible.
Conclusion
Economic relations between the three countries are growing very quickly. However, regional integration cannot be left to only economic components. There is a limit to which economic forces can push the integration process further. Some kind of political understanding between the three players is crucial. Currently, the three countries share very few common political values and beliefs. While Japan and Korea are functioning democracies, China is still (at least politically) a socialist state with very few rights afforded its people. Conflict management and resolution techniques of the three countries are also very different. Given the nature of political, territorial, historical and military disputes in the area, it can be argued that these problems cannot be easily solved until and unless all three countries share some common political values and beliefs and work with similar conflict management and conflict resolution techniques. Common political values such as respect for international law, respect for each other’s sovereignty, and a desire for peaceful resolution of conflicts must be shared by all three nations. Without such shared beliefs in basic political values, no amount of economic exchange will work. Political and economic integration must go side by side. Promoting one at the cost of the other can only have counterproductive results in the long run.
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