(Project of the Kajima Institute of International Peace)

June 2017

The Outlook for the Relationship between Two Great Powers and
Implications for Japanese Diplomacy

Shin Kawashima
Professor, The University of Tokyo

1.The Outlook for the Relationship Between the U.S. and China in the Long Term: More Competitive

In the first half of the Obama administration, the U.S. government offered the idea of a G2 to China, to incorporate China into the present international regime. However, since the last half of the Hu Jintao administration, China started to take a hard line in diplomacy, and President Obama never presented the G2 proposal again in the second half of his administration. On the other hand, China, which welcomed the new Xi Jinping administration in 2012, indicated that it would accept a G2 and offered a new relationship between the great powers to President Obama. President Xi's idea was about mutual guarantee of core interests, in other words, he requested that the U.S. accept Chinese claims about the East China Sea and the South China Sea, but President Obama did not agree with this idea. Though President Trump criticized China and promised to change the "One China Policy" during his campaign, he is maintaining a soft line with the Chinese government after becoming President of the United States. When the Secretary of the State, Rex Tillerson, visited China in March 2017, he used the phrase "non-confrontation, no conflict, mutual respect", and "win-win solutions," which Xi Jinping noted in his 2014 concept of a new relationship between the great powers. President Xi did not mention this phrase in the China-US summit.

From the view point of Chinese policy, so-called "two 100 years" are significant. One is the 100 th anniversary of the China Communist Party in 2021, and the other is the 100 th anniversary of the People's Republic of China in 2049. China aims to achieve a per capita GDP of over US$10,000, which is three times larger than the Japanese economy. In foreign policy, it aims to gain the initiative in neighboring countries to secure a foothold in the world in 2021. This is the One Belt, One Road initiative. In 2049 China seems to aim to overtake the U.S. and may challenge her. However, China will challenge the existing network of alliances, if it challenges the United States. Because China does not have alliances under the "Independent Peace Diplomacy", this will present a large problem for the Chinese government.

2.Strategic Space Between the U.S. and China

In the 15 years from the Hu Jintao administration to the Xi Jinping administration, Chinese foreign policy has changed dramatically. Since the last half of the Hu Jintao administration, especially after the financial crisis of 2007–2008, the Chinese government started to adopt a hard line. Xi Jinping's foreign policy basically follows this line. However, there are still differences between the two administrations. President Xi accelerates this hard line, when he constructed the bases in the South China Sea and opened the "Sea Road" (which relates to security policy) from the South China Sea into the Indian Ocean and the African Continent, and expands its power beyond neighbouring countries.

President Obama compromised with China to a degree in his first administration, but in his second administration, he started to gradually take a hard line with China. President Obama valued the multilateral framework, so he urged a network of alliances in security policy and the TPP in economic and trade policy. For China, it seemed that the second Obama administration tried to encircle China with a close network of alliances and to keep China out of the new economic regime. Specifically for Xi Jinping, who promoted One Belt, One Road, this seemed a challenge to his policy. President Obama's multilateral China policy was significant to some extent, but it is very doubtful that his intention of a hedge and engage policy was correctly interpreted in China. For example, during Freedom of Navigation Operation in the South China Sea, the U.S. conducted the U.S.-China joint exercise and invited China to RIMPAC. President Obama took a soft line, on the whole, so China concluded not to stop the construction of bases in the South China Sea.

President Trump questioned the multilateral framework as he left the TPP, and he is not keen on making a network of alliances. President Trump however emphasizes the importance of bilateral alliances. The question remains how the Trump administration deals with these policies. Meanwhile, the problem of North Korea challenges the U.S.-China cooperation. China has great influence over North Korea, and the Korean peninsula is crucial for China in terms of its security policy. The Chinese government wants to show its influence on North Korea and to use it in the US-China relationship. However, the options China can adopt are limited, and an aggressive policy will damage China. It seems that President Trump tries to test US-China relationship with this problem, while he puts pressure on Xi Jinping with the Syrian attack. Because the public opinion on North Korea became harder in China, China will take a hard line to some extent. However, China is afraid of the U.S. government's list of companies that cooperated with North Korea, and the Chinese government never wishes to make it public that Chinese companies support North Korea.

3.From Summit to Communist Party Convention

The biggest concern for China in 2017 is how smoothly the Xi Jinping administration will move to the second administration in the Chinese Communist Party convention in the autumn. Therefore, Xi Jinping should well control the domestic and foreign policy and emphasize the legacy of his first administration. U.S. policy is the most delicate "variable" for China, so it is not preferable that the U.S. will be unpredictable under a Trump administration. Thus, Chinese U.S. policy is quite cautious at present.

Though President Trump tried to change the "One China Policy" before his inauguration, he reaffirmed it with Xi Jinping via telephone conference before he met with Japanese Prime Minister Shinzo Abe. The latest U.S.-China summit had no joint statement and was too brief. Moreover, the President attacked Syria during the summit, and Xi Jinping might have lost face in this situation. Yet, it was enough for domestic political reasons that both leaders shook hands and President Trump' granddaughter sang a song in Chinese. The Xi Jinping administration will need to demonstrate accomplishments leading to the Communist Party convention: The forum of "One Belt, One Road" in May, the general meeting of the AIIB and SCO in June, the U.S.-China summit and the G20 in July, and the conference in Peitaihou in August. U.S.-China top-level conference was the first footstep of foreign policy leading to the autumn. President Xi Jinping had no reaction when he was told by President Trump about the attack on Syria during the conference.

There were, nevertheless, positive discussions during the summit. It was significant to raise their strategic relationship to a "comprehensive strategic relationship." The other note-worthy fact was the composition of the Chinese delegation that attended the summit. It is notable that Fang Fenghui, Wang Huning and Li Zhanshu who are at the center of the Chinese military and the Communist party attended the summit. This means a great deal as the military and the party play the important roles in China's North Korea policy. It is also suggestive when thinking about the composition of the second Xi administration.

4.Proposals for Japanese Foreign Policy

In the long term, the biggest advantage for the U.S. and its alliances is the national power of United States and its network of coalitions. Japan, which is a member of alliances, has to encourage the U.S. to maintain this network. It is also necessary for Japan to share the information about Chinese policy with the U.S. and other alliances that share mutual interests. Japan should suggest a regional cooperative framework in the East China Sea and the Indian Ocean to contain China. At the same time, though, the Japanese government needs to deliver messages that Japan engages in, (or at least does not oppose,) the framework that the Chinese government is advocating. Above all, Japan should confirm that the Japanese approach is grasped and understood accurately by China. The worst-case scenario would be that China adopts a "China First" policy. When, and even if only superficially, the Chinese government emphasizes international cooperation and free trade, Japan should agree and support this.

In the short term, Japan has to approach the Trump administration to respect the multilateral framework that President Obama promoted, for instance, the EAS and the network of security alliances. Japan might hope for the U.S. to rejoin the TPP, while promoting at the same time the TPP11 or a Japan- EU and a Japan-U.S. FTA. This attitude to make a new international regime will bring a political pressure on China. On the other hand, the Japanese government should avoid being excluded from RCEP, where India and ASEAN might gain over China, because India wants to lower liberalization rate and ASEAN wants to make a deal within the year.

Lastly, Japan has to realize that Taiwan remains the biggest concern for the Chinese government. The relationship across the Taiwan Straits is changing dramatically, so Japan should not be too optimistic that Taiwan is "pro-Japanese" and should react realistically. We should realize that Japan does not maintain so good relationship with Taiwan as it has been said.

To handle with changes in the long and short term, Japan should have a firm picture of its national interest, while also demonstrating flexibility based on it.

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