China, Japan to avoid rat race by moving from competition to collaboration

By Bi Shihong Source:Global Times Published: 2018/10/31 18:28:41

Japanese Prime Minister Shinzo Abe wrapped up his Beijing visit on October 26, the first of its kind made by a sitting Japanese prime minister in seven years. Abe, who's on track to becoming the longest-serving prime minister in the country's postwar history, said his three-day China trip opened a new era of Sino-Japanese ties "switching from competition to collaboration".

During the trip, the two sides held the first China-Japan Third Party Market Cooperation Forum, aiming to forge such cooperation into a new pillar. Local governments, financial institutions and businesses clinched 52 memorandums of understanding worth over $18 billion in investment in third countries and other areas. The cooperation will involve infrastructure, logistics, information technology, medical care and finance.

In this way, the two countries have reached a political consensus on cooperation, which is also a demand of the era as well as an anticipation of the region and the international community.

Cooperation in third countries is an optimal choice to further Sino-Japanese pragmatic cooperation and the all-win idea in a global economy. During Premier Li Keqiang's Japan visit in May, the two governments signed a memorandum on cooperating in third markets and agreed to establish a related working mechanism.

According to Hiroshige Seko, the economy, trade and industry minister of Japan, the first project of such cooperation will be launched in Thailand's flagship Eastern Economic Corridor (EEC).

So far, a multitude of Chinese and Japanese firms have entered the seaboard region to engage in building its industrial parks, smart cities and high-speed rails connecting three airports. Thai companies will also participate and are expected to play a role in coordinating conflicts of interest between Chinese and Japanese firms if there are any.

From a geopolitical perspective, the EEC is of enormous significance to China, Japan and Thailand. At the Seminar on China-Japan Cooperation on Eastern Economic Corridor of Thailand in Bangkok on May 31, Thai Industry Minister Uttama Savanayana said that Thailand, China and Japan had highly aligned development strategies and launching trilateral cooperation is conducive to the three countries and the development of peripheral regions.

If China and Japan can collaborate on the Bangkok Mass Transit System, they will likely create a more mutually beneficial cooperation model for infrastructure export. 

Thailand and other countries along the Mekong River including Cambodia, Laos, Myanmar and Vietnam are inextricably linked to China in politics, economy and security. Furthermore, China boasts investment superiority in these countries. Japan also has major projects and mature mechanisms. Plus, the five nations are in dire need of improving industrial structure and infrastructure. All these factors contribute to a mood of beneficial cooperation.

As of now, China and Japan have witnessed vehement rivalry for overseas infrastructure projects. Their predatory pricing competition in the Jakarta-Bandung railway project only earned China a Pyrrhic victory. The cost was high, driving people to question whether it lives up to the purpose of enhancing cohesion through high-quality infrastructure.

That China and Japan take the lead in cooperation in countries of the Greater Mekong will avoid a rat race and stanch a deterioration of corporate earnings brought about by a price war. The region will probably become the optimal test field for an all-win scenario.

Actually, China-Japan cooperation in third markets is not a completely new concept: It probably dates back to the 19th century.

As of now, they have developed close trade ties and multiple models in third markets, but it's unprecedented to see the collaboration mounting to such a grand scale and involving so many countries. It's noted that such cooperation can extend to more countries outside the region and more areas like traditional manufacturing, transport and logistics, finance, artificial intelligence and personalized services.

Japanese corporations own advantages in brand, technology and managerial expertise while Chinese firms have equipment, manpower and funds. They can complement each other to explore new ways in joint bid, joint investment, joint cooperation and risk sharing.

Given US President Donald Trump's "America First" obsession and the escalating trade war, China and Japan are drawing closer with more common interests. Now it seems collaboration is the best choice for Asian countries. Beijing and Tokyo should have a greater sense of urgency to accelerate negotiations on the China-Japan-South Korea Free Trade Agreement and the Regional Comprehensive Economic Partnership. They should also mull over Japan joining the Asian Infrastructure Investment Bank and China engaging the 11-nation Trans-Pacific Partnership.

The author is a professor at Center for China's Neighbor Diplomacy Studies and School of International Studies, Yunnan University.

Posted in: VIEWPOINT

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