By Charles F. Moreira, Editor
An important consequence of the Trump Administration’s trade war against both China as well as Japan is a diplomatic and economic meeting in Beijing in late October 2018 between Japan’s Prime Minister Shinzo Abe and China’s President Xi Jinping. Shortly after his return to Japan, Abe met with India’s Prime Minister Narendra Modi in Tokyo.
In an article in New Eastern Outlook on 9 November 2018, strategic risk consultant and lecturer, F. William Engdahl reckons that this rapprochement between these two economic powers, coming seven years after a territorial dispute between them over a group of islands in the East China Sea, could suggest that a new political and economic strategy could be emerging across Asia’s economic sphere. Japan is the world’s third largest industrial economy after the United States and China.
Engdahl asked rhetorically, “Does this all foreshadow a new flank in an emerging multi-polar world or merely shrewd politics by Abe?”
Accompanying Abe was a delegation of around 1,000 top Japanese businessmen and China’s Prime Minister Li Keqiang announced that deals worth US$18 billion had been signed during their talks.
China and Japan also agreed to resume US$29 billion worth of currency swaps in the event of future currency crises. Both leaders also agreed to set up a hotline between them to quickly communicate to resolve any possible future tensions between their two countries, and Abe invited Xi to visit Japan in 2019.
Enhancing the credibility of China’s currency, Japan agreed to include China’s Renminbi in her foreign exchange reserves, whilst China would allow the Bank of Japan to invest directly in China’s government bonds.
In a move which would further bilateral ties between the two countries, Japan’s Emperor Akihito conveyed through Abe, his desire to visit China before he abdicates in April 2019, to formally apologise to the Chinese people for Japan’s invasion of China in the 1930s.
At the same time, Abe extended Emperor Akhito invitation to Xi to visit Japan before the Emperor abdicates. Xi accepted the invitation, regardless of whether or not the Emperor visits China.
In a notable move, Prime Minister Li invited Japan to reconsider its participation in China’s ambitious Belt and Road Initiative to collaboratively build economic belts, land and sea transport infrastructure between China and many countries across the Eurasian land mass and with Africa.
China’s belt and Road Initiative has come under fire, especially from the United States and the European Union, over allegations that the initiative has financially indebted some countries to China and also allegations that China had refused to fully regard local considerations, and here Enghdahl believes that China’s talks with Japan suggest that China had learned quickly from whatever mistakes she may have made in her dealings with partner countries.
During the talks, Prime Minister Abe used the words, “from competition to cooperation”, whilst President Xi declared that “bilateral relations have been put back on the right track and positive moves are gaining momentum”.
Where previously, Japan and China had fiercely competed for infrastructure projects in Thailand, India and in other countries, in a major advancement, Abe asked Beijing to cooperate on investments in infrastructure in third countries.
Abe and Li also agreed to begin “innovation dialogue” on cutting-edge technologies and intellectual property rights, whilst China and Japan both agreed to collaborate on a number of Belt and Road projects.
At the same time, both countries expressed their mutual desire to work towards de-nuclearisation of North and South Korea.
Looking towards India & Russia
According to Engdahl, the above step by Abe had been in careful preparation for some months and was a notable move by Japan, especially since the end of World War II, citing Zbigniew Brzezinski , former counsellor to US President Lyndon B. Johnson from 1966 to 1968 and former National Security Advisor to President Jimmy Carter from 1977 to 1981, as having revealed that Japan was US
During the US dollar crisis, US Treasury Secretary James Baker pressured Japan to agree to the Plaza Accord in 1985.
Signed jointly on 22 September 1985 at New York’s by the governments of major industrial nations France, West Germany, Japan, the United States and the United Kingdom, the Plaza Accord aimed to depreciate the US dollar in relation to the Japanese Yen and the Deutsche Mark by intervening in currency markets.
As a result of this currency manipulation, the US dollar depreciated by over 50% within two years, which resulted in Japan’s asset bubble which collapsed in 1990, the effects of which Japan has not fully recovered from until today.
Until today, Japan dutifully continues to buy US Treasury securities and some months ago, Japan had agreed to let the US station its Terminal High Altitude Area Defense (THAAD) anti-ballistic missile defense system on Japanese soil, and aimed at both China and Russia, a move which angered China.
However, Enghdahl believes that these recent moves at rapprochement between China and Japan have huge potential.
“Both countries have a major stake in the emerging moves between the two Koreas to re-establish economic and political ties amid de-nuclearisation”, wrote Engdahl.
“Since the end of the Cold War the US has manipulated the situation on the Korean Peninsula to repeated crises in order, as one former US Ambassador to Beijing told in a discussion in the late 1990s with this author, to have an excuse to keep the US naval fleet in the Sea of Japan not only for North Korea, but also China and potentially Japan he noted.”
Japan – India – China cooperation
Upon his return from Beijing, Abe and India’s Modi met in Tokyo and agreed that their defence and foreign ministers should engage in regular dialogue.
They also agreed that India and Japan would jointly cooperate on infrastructure projects in Bangladesh, Myanmar and Sri Lanka, countries where China and the Belt and Road Initiative had been active.
Engdahl believes that this could be a critical test of the “cooperation not competition” declaration between China and Japan and if Japan and India include China and the relevant countries in constructive cooperation dialogue, it could give a huge boost to the Belt and Road Initiative, and demonstrate that it is not a fixed “Made in China” blueprint, but a dynamic outline to be negotiated by all relevant parties.
As with China, Japan also signed a bilateral currency swap agreement with the Indian central bank for US $75 billion.
“Clearly Japan anticipates new financial storms ahead as well as the risk of US economic tariffs and sanctions”, wrote Engdahl.
Japan is already funding 80% of a Mumbai-Ahmedabad bullet train project through soft loans at an interest rate of 0.1% over 50 years and a moratorium period of 15 years. Both countries also agreed to back a diplomacy of a denuclearized Korean Peninsula.
“In light of the amicable talks with Abe and Xi only days before, the clear aim of this meeting with Modi is to insure that Japan is fully engaged with the two economic giants—China and India—in a way that can insure a more effective development for all Asia, something clearly unwelcome in Washington”, wrote Engdahl.
At the same time as it deepens cooperation with China and India, Japan is increasingly engaged with Russia, which wants to open the eastern part of that vast country to economic development.
Japan had also announced it will conduct logistics tests using the existing Trans-Siberian Railway and a ferry line to connect Russia, China, Japan and South Korea in a freight corridor. This ferry line will connect China’s Jilin Province to Russia’s Vladivistock, Donghae in South Korea and Sakaiminato in Japan.
This could give a significant boost to Japan-Russian trade and provide support for the ongoing upgrade of the current Trans-Siberian line that stretches 5,772 miles across Russia’s vast expanse. It could dramatically cut the current 62 days ship routing and reduce transport costs an estimated 40%.
“All these initiatives suggest the enormous potential for constructive engagement among the powers and nations of Asia if left to their own, without Washington’s interference”, wrote Enghdal.
“Yet the mind-set in Washington continues to be a stone age one of ‘might makes right’ and Washington Über Alles. Lt. General Ben Hodges, commander of United States Army Europe (USAREUR) until he retired last year, gave a recent speech to the Warsaw Security Forum in which he stated, ‘I think in 15 years — it’s not inevitable — but it is a very strong likelihood that we will be at war with China’. He didn’t elaborate.
“In January 2018 the Pentagon released its new Pentagon National Defense Strategy. It named China and Russia as the greatest potential threats facing the USA going forward. How this dramatic turn of events since 2014 has emerged has nothing to do with what we are being repeatedly told by NATO-controlled mainstream Western media. It has to do with the future of Washington as sole superpower, even if it takes war.
“That’s pretty crass and ultimately very foolish. What about the idea of helping America become a great economic nation again by joining with the unprecedented Asian growth initiatives as one among many? Better than another damn war, or?”, Engdahl concluded.