Japan should be happy; research from Pew Research Centre (2019) found that most Asian-Pacific countries believe that Abe is the best regional leader for doing the right thing, more than China.

The Japanese public continue to have negative attitudes towards the Chinese (Kanaya, 2019), but see a stronger Chinese economy as a good thing; a stronger China makes a stronger trade partner (Pew Research Poll, 2019). Japan has the second largest expeditionary navy in the world (Zeihan, 2019b). Like South Korea, Japan caved to everything the Americans wanted to keep them involved in the area, as South Korea, Mexico, and Canadians had already signed deals, and so Japan signed for everything the U.S. wants, and Trump still slapped them with tariffs on steel and aluminium later (Zeihan, 2019c).

China, who is struggling to find close allies with increasing pressure on human rights, has sent Wang QiShan to Japan. After an anti-Chinese government movement internationally during 1989, China turned to Japan for economic alliances and to escape international isolation. We see it now happening again, as Wang hopes to help China build economic ties with Japan, one of the largest economies in the world (despite being the sick man of Asia).

You may recognise Wang as Xi’s bulldog during the Tiger and Flies campaign, who hunted and persecuted many of the corrupted officials who opposed Xi during his rise as President; not a member of the Politburo, but often seen sitting with them. Known as the 8th Politburo member.

The history between China and Japan is spotty. There are debates about the Daio’yu Islands/Sengoku Islands that led to anti-Japanese riots in China (Nakazawa, 2019). I don’t need to mention the Japanese occupation of China, including the Rape of Nanjing or the horrific treatment of Chinese citizens during the Sino-Qing war in Japanese captured territory near the end of the 19th Century.

In more recent history, Japan accused China of launching the Shandong aircraft carrier to try and threaten neighbours to obey Chinese maritime laws, and a source close to the government stated that it was also deployed in Sanya to deter independent groups in Taiwan, as well as intimidate other nearby neighbours such as the Philippines and Vietnam. It will certainly be based in Sanya rather than QIngdao, due to the sensitivity of the area (Chan and Zheng, 2019). However, even the naming of Shandong is suspect; an aircraft carrier built to hold the Chinese sea border, named after a province that has a long history of Japanese occupation (Encyclopaedia Britannica, 2019). They may as well have named it the Nanjing.

In other news, Japan has recently signed a free trade deal with the European Union, and the United States, showing that Japan sits firmly in the Western sphere of influence, and shows that the E.U. is accessing the Japanese market like they always wanted to in China, but never could. Perhaps we’ll see a movement in the West away from China more and more? Certainly, more precious meat exports that China could have taken have now gone to Japan, leaving China in a tighter food space (European Commission, 2019).

Not only that, but Japan has begun investing in local countries such as the Philippines, with their own infrastructural transport investment plans (Philippine Daily Inquirer, 2019). It seems that there is a new One Belt One Road alternative potentially coming from Japan.

Opportunity of South Korea and Japanese Splitting

Peter Zeihan (2019a) states that South Korea and Japan are not friends; they’re only friends because the U.S. forces them to work together as part of an alliance against the Communists, and as the United States has become more insular under President Trump, we can see that the underlying dislike between the countries has risen to the fore once again.

The recent issues regarding comfort women and Japanese war crime denial has led to increasing issues between the two countries, with Japanese sentiment towards South Korea at a 41 year low (Kanaya, 2019). There was the suspension of a bilateral trade deal between Japan and South Korea during this time (Yoshida and Sugiyama, 2019).

The South Koreans blinked first; originally they claimed Japan owed the South Korean ‘comfort women’ compensation, but in the face of increasing political fractures, the South Koreans chose to back down from demanding Japan pay, but instead said they’ll fund it through donations. This has some good (brings the U.S. allies back in line) and downsides (President Moon looks weak inside his own country and will face political turmoil) (Onchi, 2019).

Not only that, but South Korea choose to continue General Security of Military Information Agreement (GSOMIA) with Japan, rather than let it end. This means that South Korea is not yet ready to leave the U.S.-Japan-Korea Asian pact, even with such aggressive rhetoric. Of course, there was a demand from Washington that Seoul continue the pact, and the U.S. is the only thing that stops Kim Jung Un from flattening Seoul in a day, or Xi from simply making South Korea an economic or literal vassal state (Yoshida and Sugiyama, 2019). However, we can see growing anger from the South Korean population regarding this increase in payment to the U.S., with 96% of the Korean people opposing this payment rise (Ryall, 2019).

China is certainly taking the opportunity; Chengdu in China will host a trilateral meeting between President Xi, President Abe, and President Moon, to discuss issues such as trade, North Korea, denuclearisation; this has led to some blowback in Japan who dislike Xi and his handling of the protest issues (Reuters, 2019c).

South Korea

This isn’t the first time that South Korea blinked; when President Trump was first elected, it was President Moon quickly capitulated to U.S. demands (as well as paying $5 billion annually to the U.S.) to keep U.S. trade, protections, and troops in South Korea to protect them from the Chinese (whose out-populates S.K. by 20:1), North Koreans (aiming cannons at Seoul) and Japanese (who out-populates S.K. by over 2:1); as an import heavy country, South Korea needs the U.S. to guarantee free trade zones and safe shipping (Zeihan, 2019b).

Without the U.S., South Korea ceases to exist as it does not; it is either a wasteland by Korean cannons, a Chinese vassal state (circa Qing Dynasty), or Japanese vassal state (circa post WW1).

China is South Korea’s largest trading partner (Zeihan, 2019b); however, the South Koreans are split on whether China’s economic growth is a good or a bad thing (Pew Research Polls, 2019). With increasing U.S. demands for payment for soldiers, South Korea has now signed a defence agreement with China (Ryall, 2019), a sign showing perhaps the Koreans are considering moving away from the U.S. led order of Asia, but has an upside of a potential reunion of North and South Korea if both countries move closer via China.

Reconciliation with America and Phase One Trade Deal…Number Two

I remind you again; a deal to be signed is not a signed deal. Do not assume that the Chinese and Americans will sign a Phase One Trade Deal! This isn’t the first time this year alone they’ve promised to do so. The trade deal they want will change the entire Chinese economy, and Xi has no real reason to change so much (Zeihan, 2019d). But I believe that they will sign this phase one deal.

Due to the recent backlash across the world against China, and the potentially weakening Chinese economy leading a weakening economy, we find that China is beginning to look to find new allies nearby, and to patch up with old allies. Let’s begin with the U.S.

We have discussed the previous phase one deal (which collapsed after the article). We have also discussed the underlying Sino-U.S. differences and aggressions, and long-term relationships via economies and demographies. One small difference; John Bolton has been removed from Trump’s staff, and now I am not surprised to see Trump slowly warming to a trade deal with China.

The Chinese have promised the major thing (and only this one thing, really) that Trump needs; food imports from the U.S. I have explained before how China is struggling to feed it’s population, with pork prices now inflated beyond 100% beyond the normal price in a single year, for example (Palmer, 2019). This gives Trumps the mid-U.S. farming votes he needs to be re-elected, and Xi gets to keep the Chinese population fed and happy, and both remain in power. I also wrote in ‘More than Money’ that this is the easiest thing for the Chinese to promise, and it’s the main thing the Chinese promised. This means that now, both parties have a good reason to sign the trade deal, a trade deal that outlines nothing important, and perhaps most importantly, this time, the Chinese and Americans actually have a trade deal that has been written on paper before agreeing (Reuters, 2019a).

The paper revealed by the Chinese government mentions structural reform; a demand by the U.S. government for a trade deal, but one that I laid out in the ‘More Than Money’ article as being unlikely for many reasons; losing face to a foreign power, weakening Xi’s allies and their financial circumstances may in turn lead to Xi facing a power struggle, etc. However, it seems they are now making motions towards it. Don’t count on it though; the Chinese have made a lot of promises for reformation (Xi himself was elected as a reformer, which looks humorous in hindsight), but having it in a government document is interesting.

People are excited about the idea of China promising to stop forced technology transfers; please remember it said as much in 2001 when joining the WTO, and denied it was even happening over 2017-2018 (Palmer, 2019). Don’t get excited until it actually becomes law tested in a Chinese court and still works as understood.

The trade deal also promises no more tariffs on both sides; this I believe will happen. Coming into the 2020 election, Trump does not want additional downward pressure on his market. He has the best economy in a long time, and he wants that to be the headlines, rather than ‘Unpopular Man Also Sucks At Economics”. Meanwhile, Xi can’t threaten tariffs with an economy that is sick and coughing (Palmer, 2019). A trade deal also means that China is unlikely to try and sink him via financial tricks before the election.

There is discussion of more financial services in China from the U.S., more open data from Chinese companies (likely to be manipulated even if given), and it seems that U.S. Trade Representative Lighthizer got his enforcement clause into the trade deal (Rueters, 2019b); if the trade deal collapses again (and it may; the Americans want a lot, China promises a lot, and then the Americans get angry China doesn’t do anything), it will likely be because of this enforcement clause, or an issue regarding U.S. and Chinese internal issues.

It is worth remembering that the U.S. does not really need the Chinese, but the Chinese do need the U.S.; the U.S. produces food that China needs, the U.S. now produces oil, and China is consuming oil at a rate that the U.S. has never done. Combine that with an American Navy that could blockade all of China with a quarter of what it has, and the fact that Chinese allies are either weak, poor, or unreliable and prone to rebellion and revolutions, and the Chinese are hoping that Trump is replaced by someone more pro-Chinese like Biden in 2020 (Zeihan, 2019d).

In terms of oil, we’ve seen Russia and China open a pipeline between the two countries, seeing China continue to try and wean itself off of U.S. dependence, and build relations with Russia for both defensive and economic reasons, and so the One Belt One Road project can get to the much richer Europe; as the Chinese said, Europe is a top priority (Shao, 2019).

Summary

To summarise, we can see that Chinese diplomacy among these powers seems to slowly be working on South Korea, but Japan and China continue to act as competitors, and the United States seems to be winding down to focus on the elections, but is likely to begin again as soon as the voting paper is dry.

Chinese Diplomacy Articles

We have discussed the following countries in a series of articles to outline the good and bad of Chinese diplomacy in the modern era: