Tuesday, September 18, 2012

China-Japan Dispute Over Islands Risks $340 Billion Trade

At some point, someone in Japan has to start being an adult. That would entail a few things, including recognition that holding on to World War II-era territorial claims that carry the stench of Imperial Japan's murderous past is costing Japan loads and loads of money.

Not to mention loads and loads of good will. 

Tokyo needs to look soberly at its claims and see where it can strike a reasonable compromise and where it should simply give up. For the good of the country and the region.

With Diaoyu/Senkaku a shared arrangement may be possible, but with the Kurile Islands held by Russia, nothing like that is likely. I've long thought Tokyo could give up its claim to Tokto (Dokdo) in exchange for promises from Seoul that it won't seek to generate an Exclusive Economic Zone (EEZ) from the barely inhabited islands (though a 12-nautical mile territorial zone is maintained) and it gives tacit support to Japan's claim of an EEZ around Okinotorishima way out in the Pacific. 

Get this stuff behind you, Japan. If you think China, South Korea, and Russia are living in the past, it's only because you keep inviting them there.

Bloomberg News, sent from my iPad.

China-Japan Dispute Over Islands Risks $340 Billion Trade

China and Japan's worst diplomatic crisis since 2005 is putting at risk a trade relationship that's tripled in the past decade to more than $340 billion.

Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Panasonic Corp. (6752) reported damage to their operations in China as thousands marched in more than a dozen cities on Sept. 16 after Japan last week said it will purchase islands claimed by both countries. Protesters called for boycotts of Japanese goods and in some instances smashed store fronts and cars.

Tensions between China and Japan further complicate policy makers' efforts to fortify growth in Asia's biggest economies as the European debt crisis saps demand for exports. Panasonic and Canon Inc. (7751) yesterday said they're shutting some plants in China through today and the China Automobile Dealers Association said the protests will hurt sellers of Toyota, Honda and Nissan Motor Co. cars in China more than Japan's March 2011 earthquake.

"The escalating dispute is adding one more layer of uncertainty," said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. (ANZ), who previously worked at the World Bank. "Japan is now more reliant on China for economic growth than vice versa. Its already weak economic recovery may falter. China will suffer less."

In 2011, China was the largest market for Japanese exports, while Japan was the fourth-largest market for Chinese exports. China's shipments to Japan totaled $148.3 billion last year as it imported $194.6 billion of Japanese goods, according to Chinese customs data.



  1. "At some point, someone in Japan has to start being an adult. That would entail a few things, including recognition that holding on to World War II-era territorial claims that carry the stench of Imperial Japan's murderous past ...."

    This is inaccurate and unnecessarily inflammatory. Japan claims both the Liancourt Rocks and the Pinnacle Islands (which it does not just claim; it controls them) under the concept of terra nullius. That is, Japan asserts that both sets of islands in question were uninhabited and unclaimed when Japan took sovereignty of them. It is possible that there were true prior claims to these islands but that they were not able to assert their claim due to the situation at the end of the 19th century and for the first half of the 20th century. But it is indisputable that they were uninhabited when Japan took them, so it is not out-of-the-question for Japan to continue to claim terra nullius today, and that claim hardly carries the "stench" of a "murderous past".

    With the recent landing of the Hong Kong activists on the Pinnacle Islands, Japan charged them with illegally entering the country and promptly deported them. There was no public haranguing of the activists or government-endorsed demonstrations/rioting. How is that behaving unlike an adult?

    With respect to the Liancourt Rocks, the Japanese government has asked South Korea to agree to arbitration at the International Court of Justice. How is that behaving unlike an adult?

    (Note that I am referring to the Japanese government, and not the fools who want to send landing parties, civilian or military, to those islands.)

    In both of these cases, Japan has been very civil in its assertion of its claims. Their claims may be flat out wrong, and Japan may have lost their right to those claims with the documents of surrender and the peace treaties ending WWII, but the Japanese claims are best countered with cool-headed arguing and not accusations of childlike behavior.

  2. "This is inaccurate and unnecessarily inflammatory"

    No, it isn't. I just re-read that part for the second time. It still sounded totally reasonable.


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