On the horizon

HEADNOTE

PERSPECTIVES

HEADNOTE

The Down of o New Sino-Japanese Rivalry

Asia first glimpsed its future in 1997 when Japan and the

United States renegotiated their long-standing defense arrangements and China tried to sway Taiwan's elections by lobbing missiles into the Taiwan Strait. As the US Pacific fleet positioned itself to stop the missile exercises, Being realized how much more latitude the new defense arrangements gave Japan. Suddenly, Tokyo factored into China's calculations. The leadership in Beijing felt it necessary to demand Japanese assurances concerning Taiwan. In a dramatic break with past Japanese passivity, China received an almost challenging response when Prime Minister Ryutaro Hashimoto told Beijing, "This is not the sort of situation where we can draw a line on the globe and say, `up to here.' It is not that simple."

As this incident demonstrated, a Sino-Japanese rivalry has been building, and it will surely intensify in coming years. Japan's recent assertiveness is not an aberration. It stems from economic and demographic imperatives that will increasingly force that nation to engage the rest of Asia more fully than at any time since World War II. The contest between these old enemies will confront US policy with new challenges that neither a continuation of the Clinton administration's laissezfaire approach nor a return to Cold War rigidities can adequately answer.

Japanese Renaissance

Although the pressure on Tokyo to raise its profile elsewhere in Asia will have profound foreign-policy implications, its origins are strictly domestic. One source of pressure lies in Japan's economic woes. Despite government stimulus efforts, the Japanese economy has been stagnant, growing at less than half the pace set by the United States in recent years. Under this strain, Japanese reformers argue that the country needs a new economic model that is more open to the rest of the world and particularly to Asia.

Reinforcing the impetus for change is Japan's unfolding demographic problem. The country's population is aging rapidly, and within 15 years one in four Japanese will be 65 years of age or older; the nation will have fewer than two working people for each dependent retiree. This scenario precludes any return to Japan's former status as the world's leading manufacturer and exporter. Under these pressures, Japanese industry will have to move abroad, and with a limited domestic labor force, Japan will become more dependent on imported goods-perhaps from Japanese firms operating in Malaysia, China, Korea, Thailand, the Philippines, Vietnam, and other Asian states. The domestic economy will cease to emphasize manufacturing and exporting and increasingly will become a center for management, design, and finance.

These changes will stretch beyond economics and force an equally radical shift in Japanese diplomacy and foreign policy. Unlike earlier Japanese business expansions into North America and Europe, the expansion into Asia will demand official government support from Asian nations. In the West, well-developed legal structures and respect for contract law have allowed Japanese businesses to protect their interests in local courts with little intervention from Tokyo. But in Asia, where underdeveloped legal structures permit political influence to trump contracts, diplomatic support is essential to secure equitable treatment. The more the nation's productive power moves abroad, the more vulnerable Japan will become to the economic policies, corruption, incompetence, and expropriation of other countries. No nation can stand by and simply accept such vulnerabilities. Faced with such circumstances, Tokyo will eagerly seek to increase its foreign influence and begin to anticipate extreme situations, enhancing its ability to back diplomacy with the threat of military force.

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Sending a Message: A Japanese Self-Defense Force anti-tank helicopter fires at a target during a 1998 training exercise.

It will be a wrenching change for both Japan and its neighbors. Since World War II, Tokyo has been content, indeed anxious, to maintain an extremely low diplomatic profile and to stay in the United States' shadow on most foreign policy issues except for the most straightforward trade issues. Japan has hidden behind the pacifist ninth article of its constitution that forbids it the right to "belligerency" and "war-making potential." Tokyo has even insisted on calling its armed forces "self-defense forces." Officially, the nation does not have an army, navy, or air force. The prime minister's office and the Diet have agonized and equivocated over minor diplomatic problems where most nations would not have hesitated. In 1989, for example, Tokyo could not even bring itself to join most of the world in condemning China over the Tiananmen Square massacre. Tokyo also hesitated to send supply ships to support the allies in the Gulf War, much less ground troops or combat pilots, and it has long refused to contribute military personnel to UN peacekeeping operations.

This pattern of passivity has led Japan, until recently, to rely almost exclusively on aid as a means of foreign influence. Even in the face of Japan's hard times, Tokyo has spent more than twice as much as Washington on international assistance, especially to Asian countries. Fully one half of China's foreign aid comes from Japan, as does up to 80 percent of aid to Malaysia and South Korea. Because aid has served as its primary means of influence abroad, Tokyo has seldom made direct grants. Instead, it has favored the increased control of specifically directed subsidized loans. The Organisation of Economic Co-operation and Development, an international economic alliance for highly developed nations, noted recently that of all major donor nations Japan has imposed the most conditions on and offered the least flexibility in giving its aid. Occasionally, these strings have enabled Japanese officials to all but write pollcies on trade and development for aid recipients in Southeast Asia.

As successful as aid has been, the growth of Japan's economic power in Asia will render this old and largely low-profile pattern inadequate. To cope with this, Japan has tentatively begun asserting itself as Asia's spokesman to the rest of the world. Tokyo made an especially dramatic step in this direction during the Asian financial crisis of 1997 when it defied both Washington and the International Monetary Fund to propose a yen-based reserve to stabilize Asian currencies. By asserting itself as Asia's champion, Japan also has begun to leverage its position as the only fully developed Asian power and the only non-Western state included in the G-7 group of the world's most powerful economies. To complement this effort, Tokyo has begun to campaign for a permanent seat on the UN Security Council, which would eliminate one diplomatic advantage that China presently enjoys.

In a similar vein, Tokyo also has tried to exercise more leadership in the Association of Southeast Asian Nations (ASEAN). Recently, Japan reversed its initial stance against Malaysia's proposal to establish an East Asian Economic Caucus to set general Asian trade and development guidelines. Tokyo has also shown a willingness to back its diplomatic assertiveness with military capabilities. The government has already begun to seek ways around the ninth article of its constitution, and the Diet has before it a bill to abolish the article outright. Although that effort has been stalled for the time being, Prime Minister Junichiro Koizumi has talked openly of developing the country's military and naval capabilities. Meanwhile, Japan has begun to seek ways to improve the efficacy of its self-defense forces. Recently, Tokyo has promoted its role in UN peacekeeping missions where Japanese troops can gain training, experience, and even a reputation for effectiveness while incurring few negative diplomatic side effects. Tokyo has shifted so far from its former reluctance to use force as to propose a permanent "Asian Standby Force" for the United Nations with a core of Japanese troops, modeled on the long-standing UN "Nordic Standby Force." Tokyo has also renegotiated its security arrangements with the United States to give its forces a higher profile, a more significant role in its own defense, and potential leadership in maintaining peace in Asia.

Sino-Japanese Rivalry

China has every reason to counter such assertions of Japanese leadership. Beijing never misses a chance to turn the rest of Asia away from Japan by dredging up the horrible memories of World War II and the Japanese occupations throughout the region. China's Xinhua news service frequently editorializes on the "lingering memory of Asia's bitter past." As an alternative to Japanese leadership, Beijing has proposed a "new order" in Asia centered on cooperation with China. Of course, China cannot muster the financial resources to compete with Japan's foreign-aid budget, and it certainly cannot match the economic benefits offered by direct Japanese investment in the region. Instead, Beijing has pursued a carrot and stick approach, combining the economic promise of access to China's huge market with a hefty dose of intimidation directed at uncooperative nations.

Chinese delegates to ASEAN meetings and other regional forums are famous for promises of lucrative trade relations and support, but lingering behind such overtures is a reminder of how formidable China could be as a foe. Not long ago, for example, Beijing published a map in which it claimed for itself huge ocean tracts and islands, some of which are claimed by Brunei, the Philippines, Vietnam, and Thailand, and all of which are potentially rich in oil. The implication was clear: if Asian nations want the benefits of these resources, they must cooperate with Beijing. China has driven this point home with direct military action as well. In a recent demonstration, Beijing seized an area claimed by the Philippines in the Spratley Islands and then essentially challenged Manila to do something about it. The lesson in relative power was clear: China still holds control.

Other Asian states have effectively spurred Beijing to greater efforts by promoting Japan as a counterweight to China's regional dominance. Lee Kuan Yew, the long-- time prime minister of Singapore, has been particularly vocal. His desire for a Japanese presence is notable in light of his well-known anti-Japanese feelings. His words spoke volumes about changing Asian realities when he encouraged Japan to "carry more of its own defense, which will eventually include the protection of sea lanes beyond a thousand nautical miles" of Japan's home islands. Reinforcing this plea, Malaysian Prime Minister Mohammed Mahathir has challenged Japan to stop "hiding behind" the United States and take on a more active military role.

Inflaming Beijing still further is the growing link between Japan and Russia. These two former enemies have bridged historical enmity and suspicions to establish defense and trade links that one British diplomat has described as Japan's "widest ongoing security accord with any nation apart from.. the United States." As a symbol of this Russo-Japanese rapprochement, Russia invited Japan, but not China, to celebrations of the 300th anniversary of the Russian navy when Tokyo was failing to gratify Beijing with assurances on Taiwan. The scene of the Japanese fleet sailing into Vladivostok for the first time since 1895-when it entered victorious after the Russo-Japanese war-must have inspired Chinese recollections and fears of past Japanese triumphs at China's expense.

China is also aware that Japan has quietly developed an impressive military capability. Although the Chinese armed forces are many times larger than Japan's, Tokyo's self-defense forces are far better armed and technologically more advanced than China's. According to Susan Willett, senior research fellow at the University of London's Center for Defense Studies, Japan's military equipment and systems are among the most modern in the world, and superior to China's. The 13 divisions of Japan's ground self-defense force field an impressive array of surface-to-air missiles and are backed by over one thousand state-of-the-art tanks. The air self-defense force has recently expanded its radius of operations with the new F-2 long-range fighter. The plane is more than a match for China's recently acquired Russian MiG-31 fighter interceptors and SU-27 long-range fighters. Against China's navy of 18 destroyers, 52 fast frigates, and 52 submarines, Japan's maritime self-defense force can float only eight destroyers, 35 fast frigates, and 18 submarines, but each Japanese vessel is far superior to its Chinese counterparts. Further, Japan is acquiring Airborne Early Warning and Control Aircraft from the United States, which will further enhance its offensive capability, as will Tokyo's recent decision to launch its own constellation of spy satellites for around-the-clock operations. It is no less unsettling to China that Tokyo recently has also centralized its intelligence-gathering agencies in a kind of Japanese version of the US Central Intelligence Agency.

From China's perspective,Japan has produced this comparable force with relatively little effort. Tokyo has built and maintained its armed forces by spending only 1.0 percent of its gross domestic product on defense each year, which contrasts with the 3.5 percent spent by the United States until very recently, 3.5 percent by Britain and France, 3.0 percent by Germany, and an estimated 5.0-6.0 percent by China. The implication is that with sufficient will, Japan could double or triple its military effort without incurring the economic strain that China already faces. It is apparent, especially in Beijing, that Japan would hold almost all the cards if it came to an arms race.

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PACIFIC TITANS

Without some means to buffer China from Japan and vice versa, an arms race will almost surely gain momentum. Adding to the tension, a Sino-Japanese rivalry would ultimately force other Asian powers to ally themselves with either China or Japan. The Koreas would almost certainly side with China because, as former Japanese colonies, both North and South have strong historical animosity toward Japan. Furthermore, the Koreas need Beijing's assistance in their rapprochement. Taiwan would lean toward Japan since Beijing threatens its very existence. Like Korea, it was once a Japanese colony and retains anti-Japanese sentiment, but Beijing is a much greater threat. Vietnam too faces direct threats from China and consequently would align with Japan. It is less clear how other Asian states might choose. Singapore has hinted at a preference for Japan over China. Malaysia, Indonesia, the Philippines, and Thailand will be concerned by dominance from either Tokyo or Beijing, and each has much to gain and lose from both alternatives.

The most dramatic and dangerous potential alliance is between India and Japan. Opposite China, these two nations make natural allies. India has obvious reasons to fear and distrust China, as border incidents occur frequently and often involve exchanges of fire. The two nations even went to war over a border dispute in the early 1960s. Furthermore, both India and Japan have a common interest in protecting open sea lanes, especially for the flow of oil from the Persian Gulf. The alliance also recommends itself on strategic military grounds; since Japan and India flank China, an alliance would force Beijing to spread its forces. Furthermore, Japan and India complement each other well: India has a large population, land, nuclear capability, and a prominent army with considerable experience, some of it against the Chinese, while Japan has wealth, technology, and tremendous naval potential. Because the demise of the Soviet Union has deprived India of its strategic counterbalance to China, India might pursue the link even more avidly than Japan. Whichever nation promotes an alliance, however, China's obvious anxiety over it would heighten the tension in an already strained environment.

The United States' Burden

All nations, including the United States, have a keen interest in finding an antidote to such a tense mix of rivalries and alliances. Only the United States has the strength and stature to buffer these nations from one another and prevent the rivalry from escalating.

Since the end of the Cold War, US assurances have softened Japanese fears of China, thus reducing Tokyo's temptation to build a more complete military counterweight, and they have relieved China of a need to go too far in countering Japanese strengths. While such buffers have sufficed to date, they will fail to disarm the situation in the future as the rivalry intensifies. With the demise of Russian influence in China and Japan's increasing diplomatic assertiveness, the United States will have to find other ways to relieve tension in the region.

Rather than rely exclusively on its own power, probably an impossible task in the face of a more independent Japan and an ambitious China, the United States can best achieve this objective through the promotion of multilateral structures in Asia. If the United States were to use its unilateral power and position to foster collective security arrangements-if not necessarily collective defense treaties-with other nations in the region, then it could provide Asia with a relatively secure means to resolve disputes. Such an arrangement may relieve each potential rival of the need to counterbalance the other completely or at least may relieve the danger of forcing other Asian powers to choose sides in a bipolar conflict. Because the US presence could block confrontations and attempts at building hegemony, such arrangements may also dissuade Japan and China from pursuing the rivalry as actively as they otherwise might.

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Ready to Spark: Tanks from Japan's Ground Self-- Defense Force proceed under smoke curtain during a firing drill last September.

The specific institutional structure of such a multilateral arrangement is problematic. At the very least, it would have to secure US power in Asia. Beyond this, the arrangements would need as much of a specifically Asian flavor as possible, with membership as broad and structured as possible. A Pacific version of NATO would fit the need well but is impossible in Asia's present political climate. Still, something more substantive and more useful than the loose character of present Asian associations may be drawn from a Pacific NATO.

Even with strong US support, significant hurdles stand in the way of such a cohesive Asian multilateral device. Unlike Europe, Asia has been reluctant to enter broad international arrangements. With the exception of basic economic forums, interests in the region have been too fragmented to form a coalition of any breadth.

Despite Asia's history of jealousy and competing interests, there are recent, although tentative, signs of greater multilateral cooperation. First, in 1984 ASEAN formalized meetings between foreign ministers of the ASEAN nations and those of the United States, Japan, Canada, Australia, New Zealand, the European Community, and later South Korea. This arrangement was strengthened in the 1990s, as the Asian nations began to develop postCold War insecurities and recognized the increased potential for a Sino-Japanese rivalry.

In 1994, with the additional participation of China and North Korea, this arrangement was renamed the ASEAN Regional Forum (ARF), and it developed a more regular schedule of formal meetings. Though still primarily a loose association without much of a charter, this group holds promise. If US support can enable the ARF to work with the US-sponsored Asia-Pacific Economic Cooperation Forum, the organization might form the basis of a critical new multilateral arrangement.

Whatever the genesis of Asian multilateral arrangements and however high the hurdles to establishing them appear today, the potential danger of a Sino-Japanese rivalry warrants the effort to build cooperation, even to demand it. The alternative is a less stable and potentially more violent Asia, which is not in the interest of Asian powers or the United States.

SIDEBAR

As an alternative to Japanese leadership, Beijing has proposed a "new order" in Asia centered on cooperation with China.

SIDEBAR

With sufficient will, Japan could double or triple its military effort without incurring the economic strain that China already faces. It is apparent, especially in Beijing, that Japan would hold almost all the cards if it came to an arms race.

AUTHOR_AFFILIATION

MILTON EZRATI is Senior Economist and Strategist for Lord, Abbett, & Co. and the author of Kawari: How Japan's Economic and Cultural Transformation Will Alter the Balance of Power Among Nations (Perseus Press, 2000).