Ties with Japan becoming more complementary

By Wei Jianguo Source:Global Times Published: 2018/11/1 20:08:41

Illustration: Luo Xuan/GT

This year is the 40th anniversary of China's reform and opening-up, and it has also been 40 years since the China-Japan Treaty of Peace and Friendship was signed. Through joint ventures, technology transfer and employee training, Japanese companies have given some help to their Chinese peers. And China has become one of Japan's main markets, thanks to the development of the Chinese economy and the increase in domestic consumption.

There have been setbacks for China-Japan relations in previous years, which have affected bilateral economic and trade ties. But this year, there have been positive changes. The bilateral trade volume reached $214 billion in the first eight months, up 11.2 percent year-on-year. There are also 529 newly established Japanese enterprises in China, 40 percent more than last year, and their investment has jumped 38.3 percent to $2.8 billion.

Japan has shown great interest in joining the upcoming China International Import Expo (CIIE) in Shanghai, with 579 Japanese companies having signed up to participate in the expo, more than any other country. Japanese companies also have a positive attitude toward the Belt and Road initiative (BRI).

Large Japanese enterprises such as Itochu Corp, Marubeni Corp, Mitsubishi Corp and Mitsui & Co. have all been studying how to strengthen cooperation with Chinese companies in terms of infrastructure, agriculture, processing and manufacturing, as well as new-energy development.

When Japanese Prime Minister Shinzo Abe visited China at the end of last week, China's Ministry of Commerce organized a signing ceremony, at which more than 50 deals were signed including one for a refinery in Kazakhstan that will be built by Sinopec and Marubeni, as well as the world's largest solar photovoltaic plant in the United Arab Emirates.

The projects have three characteristics in common. First, both sides are using their advantages in terms of technological equipment, funding, talent and management models. Second, China and Japan will cooperate with the spirit of mutual benefit and explore the market hand in hand. Third, it will set an example for cooperation between China and other countries in third-party markets. After these deals were signed, many countries including France and Germany have been carefully studying each project. From their perspective, Japan has taken the first chance.

China and Japan are both countries with huge energy demand. The yuan could be used as a settlement currency when importing crude oil and petrochemical products. If bank consortiums are forged in the future to develop third-party markets, they will have better credibility and will enjoy more convenience.

Take the refinery project in Kazakhstan that will be developed by Sinopec and Marubeni as an example. Japan has technological advantages, as well as market research experience. China can provide equipment and management teams. For the cooperation among banks, Japan-based banks are in the lead when it comes to international business development such as project finance, assurance and fund-raising. They are able to provide better services for the Chinese firms and accelerate their own capital turnover. At the same time, the overseas industrial parks built by Chinese companies can also bring in Japanese companies.

Furthermore, China and Japan are competitive in terms of digital economy, intelligent manufacturing and financial payment. Chinese products can be integrated with Japanese cutting-edge technologies. The two countries can also enhance financial cooperation, for instance by promoting Alipay and WeChat Pay in Japan.

Another unique aspect of this cooperation is that both countries have revealed full details of all the projects. This has eased the concerns among some international researchers about the transparency, funding sources and investment returns of BRI projects.

China-Japan cooperation in third-party markets will be highly significant. It shows that Japan has chosen its own separate path from the US regarding the BRI issue. It also provides a model for future cooperation.

The two countries are expected to unveil more cooperation in third-party markets in the fields of culture, environment, nursing care, health and medicine. Abe's China visit also shows that bilateral trade relations have transformed from being competitive to complementary and that there is a new era of mutually beneficial cooperation. China and Japan will together push free trade as well as fighting against unilateralism and protectionism. The next step would possibly be for Japan to join the Asian Infrastructure Investment Bank (AIIB).

China and Japan should not only push for the completion of the Regional Comprehensive Economic Partnership (RCEP) by the end of this year, but also enhance negotiations for the China-Japan-South Korea free trade area. As for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), if the world's second- and third-largest economies can join hands, the CPTPP could be upgraded to a free trade agreement with better quality and a higher level.

The author is a former vice minister of commerce and executive deputy director of the China Center for International Economic Exchanges. bizopinion@globaltimes.com.cn


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