Opportunities arising to improve Sino-Japan relations

By Wang Jun Source:Global Times Published: 2017/7/20 21:08:39

Illustration: Peter C. Espina/GT

This year marks the 45th anniversary of the normalization of diplomatic relations between China and Japan. We should seize any opportunities to improve Sino-Japanese economic and trade relations and promote a new era of bilateral cooperation.

Many Japanese political and business scholars are optimistic, saying that positive signs and bright spots have appeared in the bilateral relationship, compared with recent times when it seemed that the relationship was in the dark. It is high time for China and Japan to embark on a new round of economic and trade cooperation.

First, the two countries should work together to develop the third-party market for the "Belt and Road" (B&R) initiative, expand bilateral cooperation in complementary fields and jointly promote globalization. Although the Japanese government's acceptance of the B&R initiative is undergoing a difficult change, there are more and more studies about the initiative in Japan and more attention is being paid to it there.

In this context, both countries should encourage domestic enterprises to invest more in countries and regions along the route of the initiative, jointly develop third-party markets and make full use of Japan's long experience in external cooperation to promote globalization. After years of rapid development, the division of labor between China and Japan is gradually evolving from vertical to horizontal. In this pattern, common interests will be the main direction of bilateral development. In the future, China and Japan will cooperate more in fields like transportation, energy, communications, artificial intelligence and elder care industry. Achieving win-win situations will be more likely to be welcomed.

Second, China and Japan need to actively explore the most suitable application mode and unremittingly promote a high-level free trade agreement (FTA) that also includes South Korea. As to economic integration in Asia, there are a number of free trade arrangements initiated by different leading parties: the Trans-Pacific Partnership looks good, but it may not be suitable for complex and volatile Asia. After the exit of the US, it's become very hard to tell whether Japan can handle the situation. The Regional Comprehensive Economic Partnership is just a very general FTA that is limited in its scope.

Given current developments, the big powers should not abandon their responsibility in terms of regional FTA negotiations. China and Japan should strengthen cooperation and seek the best ways to optimize the regional production and trade structure, promote mutual investment and release huge market potential.

Third, more financing cooperation serving landmark projects in the B&R initiative should be carried out, resorting to the international multilateral platforms like the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB).

 The ADB and AIIB are not in competition with one another, although they are different in terms of business focus, regional coverage, geography and economic interconnection. A complementary, cooperative and competitive relationship between them is important.

Faced with a regional infrastructure shortage and financing needs, Asia is urgently in need of the money and wisdom that can come from more and different financial institutions. China and Japan can use their respective influence in the AIIB and the ADB to provide a full range of investment and financing services for influential, iconic infrastructure construction projects. Through incremental reform, both countries may improve their economic and trade cooperation, which has long been seriously deadlocked by political factors.

Fourth, more competitive policies should be introduced to improve the Chinese business environment and attract more direct investment from Japan. Compared with ordinary market risk, the biggest concern of most Japanese businessmen is being unfairly treated.

In recent years, many Chinese consumers went on shopping sprees in Japan, reflecting the imbalance between China's supply and demand structure, especially in terms of the increasing demand of consumers for product quality and safety. This can be precisely the focus of cooperation between the two countries. We can attract more Japanese companies to invest in China to meet Chinese consumers' need for high-quality products and services.

China needs to improve the investment environment faster and introduce competitive policies, rather than rely on an industrial policy that's part of a planned economy. In addition, for State-owned enterprises and services, just opening up is far from the whole story. More attention should be paid to standards and regulations so that effective convergence with international conventions can be realized.

Market access is easy. Convergence with international rules is a much more difficult thing than opening up.

The author is a senior economist at the China Center for International Economic Exchanges. bizopinion@globaltimes.com.cn


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