DEVIN STEWART: I'm Devin Stewart here at Carnegie Council.

Today I'm speaking with Richard McGregor. He is a journalist and author specializing in East Asia. He has written a very well-received book about the Chinese Communist Party called The Party: The Secret World of China's Communist Rulers. He is working on a new book that is about to come out on East Asian politics called Three Tigers, One Mountain: China, Japan, and America in the Asian Century. [Editor's note: The title of this book has been changed to Asia's Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century.]

Richard, great to have you here at Carnegie Council.

RICHARD McGREGOR: Thanks very much for having me.

DEVIN STEWART: Let's talk about your new book, Three Tigers, One Mountain. What is that a reference to?

RICHARD McGREGOR: Well, I basically tried to write a book about modern Sino-Japanese relations and to explain—most people have an idea that the reason why China and Japan have poor relations is because Japan did bad stuff in the war and they never apologized and China is still angry about it. But it's a much more complex story. I don't think you can write about China and Japan without writing also about the United States, which has basically been the sort of hegemon, if you like, in East Asia since the war.

What I've tried to do is give a narrative account of the domestic NGO politics of China and Japan, looking at the role of China in Japanese domestic politics and of Japan in Chinese domestic politics—in other words, get inside the systems—and to try and give you a really good explanation of their poor relationship. Many people think, "Oh gosh, that's an important relationship." But I think we underestimate it really.

If we talk about ISIS (Islamic State of Iraq and Syria) these days, for example, one thing we don't care about in a war with ISIS, quote/unquote, is the impact on the caliphate's GDP. These days, with the world awash in energy, we don't even care about the impact on oil prices anymore.

But China and Japan, if there were to be a conflict there, that's the entire global economy going through that part of the world. It involves Taiwan; it would get caught up in supply chains in South Korea and Southeast Asia. So any shot fired in anger between China and Japan is absolutely calamitous for the global economy—instantaneously.

Now, I haven't written one of those books, "the coming war between China and Japan"—they're a dime a dozen—but I think what I've tried to do is illustrate the fundamental disconnect and fundamental problems in the bilateral relationship and what it means for the United States.

DEVIN STEWART: So you were interviewing diplomats and policymakers and getting a sense of their attitudes; is that how you approach this?

RICHARD McGREGOR: I have used a number of ways. I've had about three or four trips to Japan just for research for this book, three or four trips to China just for research for this book. I've interviewed past officials, scholars, serving officials. I've spent a lot of time in the archives, particularly in the United States, where the archives are most open and the like. In a book like this, particularly as a journalist—I guess we write faster and our research is a little bit more will-o'-the-wisp—I've just pulled facts in from wherever I can to try and create a narrative to illustrate the broader things.

DEVIN STEWART: You said "disconnect." Can you explain, give some detail?

RICHARD McGREGOR: The funny thing about Japan and China is they have both craved and demanded, quite rightly, respect from the West. Both of them basically had their countries opened at the point of a barrel of a gun from Western powers. Japan coped, as we all know, incredibly with that and made itself strong. China crumbled. The tables in some respects are being turned right now.

But while they have always demanded respect from Western countries, they have never managed to treat each other as equals. I mean if you look back into the early Ming and Tang dynasties and the like, I think China probably regarded Japan, inasmuch as it thought about it, as a sort of subsidiary part of the greater Sinosphere.

When Japan became very strong in a major revolution in the late 19th century, they very quickly came to look down upon China. Later, in the 20th century, of course they invaded and occupied China and were the major power in inflicting damage on that country.

Those days it was sort of the pupil surpassed the master. Now I think the master—that is China, historically the dominant power in Asia—is getting back on top. Once again, their views of each other are completely out of kilter for all sorts of reasons and they can't seem to treat each other as equals. That's a real problem.

DEVIN STEWART: Do you subscribe to the perspective that it is always one of the two—it's either Japan or China—dominating East Asia and it never could be sort of on an equal footing?

RICHARD McGREGOR: Well, it has certainly been like that, and they haven't been on an equal footing. Japan has dominated China in many respects for a very long time. Of course, post-war Japan didn't dominate much except the economic landscape because they basically outsourced foreign policy to the United States. But Japan has been more successful than China, a more unified country than China, for a long, long time.

So I think it's a shock and Japan is having trouble getting used to China being on top—and for good reason as well, because China is so hostile toward Japan.

DEVIN STEWART: So it's this kind of lack of mutual respect that is fostering a—what would you call it, a lack of stability or equilibrium?

RICHARD McGREGOR: I think the war and memories of the war, and of course manipulation of memories of the war and the politicization of memories of the war are all poured into one big toxic brew.

It's fascinating, if you go back to the 1950s when Japan was a U.S. protectorate, and then allowed to become independent by the United States without any real military of its own, Japan was very friendly towards China at that time. Japan and China actually had quite good relations. Japan and China, over the objections of the United States, almost established diplomatic ties, until the United States brought down the gavel on that. Right through the 1950s, 1960s, and 1970s those two countries I think really wanted to get together and have their own independent relationship.

I think there are a number of turning points. I think in many respects the turning point, which I have gone into in some detail about in the book, is in 1972, when they normalized relations. Now, this happened in a rush, after the Kissinger-Nixon trips, which caught Japan at odds. Of course, Japan has never forgiven the United States for that to this day, for surprising them on China.

Japan after that rushed to establish to establish relations itself with China. In the process of that trip by then-Prime Minister Tanaka, who met Chairman Mao and Zhou Enlai, they didn't really discuss the war at all; they didn't come to terms with it in any sense. China at that stage—people forget, and the Chinese don't like to be reminded about this—never insisted on an apology from Japan at that time. They never insisted on reparations. This was the official Chinese policy. They were much more interested in the broader geopolitical issues—undermining the American embargo in the 1950s, undermining the Soviet Union in the 1970s and 1980s. Japan, of course, giving an apology and reparations were sensitive for them, the hardcore conservatives, so they didn't really want to get involved in that as well.

So at that time they basically sort of papered over the issue. I think the inability to resolve that issue was poisoned at the well by the way they handled it at the start.

DEVIN STEWART: So you're saying that to this day, coming to the present now, that these views and tensions have been inherited from their predecessors?

RICHARD McGREGOR: We get a lot of terrible Chinese propaganda in the world these days about how wonderful the Chinese Communist Party is, about how they are the true owners of the South China Sea, etc., etc. Chinese propaganda about Japanese wartime atrocities works very well because it's actually based on real events. They're not making up the Nanjing Massacre and things like that.

So once the Chinese started to get more powerful, once the Communist Party realized they needed the history issue for their legitimacy, once they ramped up patriotic history education in the early 1990s, once they decided they were ready for their close-up, if you like, and to become a dominant power again, they turned up the history issue.

I think Japan has struggled to cope with that, because you get Japan making an apology; and then, a few months later, they'll sort of un-apologize as somebody undermines it. So we're in this sort of vicious cycle now where China says, "Apologize," and Japan says, "We already did; what's the point of apologizing, etc., etc.," to the point where the respective public views of each other in Japan and China are quite toxic and very difficult to unwind, and in fact strengthen the hardliners in both countries.

DEVIN STEWART: You're saying that the public views are as antagonistic as the problems in the official level?

RICHARD McGREGOR: Yes. I think 80−90 percent of people in Japan and in China have a negative view of each other. I think the governments are basically going along for the ride now. In fact, it's very difficult to turn down.

Within China, internally in Chinese politics, it's very difficult for any Chinese leader to stand up and say: "No. Let's be nice to Japan. Asian brotherhood"—this, that, and the other—because that can be used against you internally in Communist Party politics quite viciously. We've seen that on a number of occasions. Nothing can change in China until we get change at the top, and even then it's risky for a leader.

I think the same has become true—less so—in Japan. But it's much easier in Japan, particularly in the ruling party, to give China a good kick, because that's popular amongst conservatives.

So all domestic politics actually feeds into this mutual antagonism.

DEVIN STEWART: So you're saying that it's basically a vicious cycle between the public and the officials sort of feeding each other?

RICHARD McGREGOR: Yes. The Chinese thought, "Well, we were very kind not to ask for an apology back then. What did we get in return?" And Japan says, "We gave China lots of aid and we apologized. What did we get in return? Nothing."

I think the other part of this narrative which is often overlooked is the United States, actually. The United States really wasn't interested in history after the war. They of course famously kept Emperor Hirohito on; they wouldn't allow him to be tried in the war crimes trials. Japan became a bulwark in the anti-communist front in the Cold War. The United States had no interest in opening up history issues. They had no interest in getting involved in history issues between Japan and China and Japan and South Korea.

It is only, I think, the Obama administration which has belatedly recognized that these history issues are a huge strategic impediment for the United States in East Asia and have been extremely damaging for its strategic position. We got to the point in recent years where Japan and South Korea couldn't even talk to each other, and the history issue was driving that.

Japan and China almost came to blows of some kind in 2012, and history was driving the emotional, sort of patriotic, feelings behind that.

The United States had never done anything. George W. Bush thought about doing something in public, but he didn't. Obama actually is the first president who has. But I think it's probably too late in many respects.

DEVIN STEWART: If I understand you, you are basically saying the United States has to play the role of mediator for a type of reconciliation?

RICHARD McGREGOR: Well, they can never be mediator, and they never wanted to be mediator, but they could have perhaps done much more earlier to push Japan to get this issue solved or to manage this issue much better. I think that's what Obama has tried to do with Shinzō Abe, the Japanese prime minister, to stop him making comments about the comfort women and the like, and to try and get the conservative wing of his party, who are real ultra-conservatives, to stop raising and relitigating history issues, because these days that's very damaging for the United States.

Of course, the U.S. position these days is the United States doesn't really want to be a mediator between Japan and China because the United States is on Japan's side as a strategic treaty ally. And so they want that alliance to be strong, they want Japan to have a good relationship with South Korea, because if that all falls away then the U.S. position in East Asia would disintegrate.

DEVIN STEWART: When you get toward the end of this book project, do you come with some sense of what is going to happen next in the region, in East Asia, or do you offer some advice?

RICHARD McGREGOR: You know, I haven't written the final bit yet. I don't know what advice I can offer.

I would certainly say don't underestimate the history. History is not just history. It's also politics; it's at the heart of East Asian politics. I think that's important and under-recognized. I think we should be very wary. There is a lot of blame to go around on this issue and a lot of blame in Japan to go around on this issue, because the Japanese have serially mishandled this issue.

But by the same token, we shouldn't underestimate how the Chinese system—which is much more closed, opaque, unified—has manipulated the history issue as well. I think it's quite well known that China is indignant about the Japanese handling of the history of the invasion of China and the like. But by the same token, China won't brook any criticism internally of the Communist Party's own history. I mean it's deeply hypocritical in the Chinese case.

I think Japan has to handle this issue properly. The United States has an interest in Japan getting history right, because otherwise China can make all sorts of mischief on the issue—and, frankly, they have.

DEVIN STEWART: Did you come across any surprises in your research?

RICHARD McGREGOR: I guess two things. These aren't real surprises.

The U.S.-Japan alliance is quite remarkable, for two very different countries, one which crushed the other in the war, have now had an alliance for about 70 years. One of the benefits of Donald Trump is he wakes people up and says, "What on Earth is the United States still doing there, 70 years later, in a very rich country?" That's one thing. You've got to go back to first principles on that.

The second thing is I think people in the United States really don't understand how even amongst the strongest supporters of the alliance with the United States in Japan they are deeply resentful of America. It goes all the way back to losing the war, having the United States write the Japanese constitution, having troops in their country still, going behind their back to China. The Japanese really rely on America but also, naturally, resent it as well. That's a very important thing to think about when you talk about Japan to U.S. leaders.

I think the other issue is we generally think of the United States and Japan as a very solid alliance lined up against China. It hasn't always been like that. In the 1970s, when Kissinger saw Zhou Enlai, one of the ways he handled Zhou Enlai was to say, "Oh gosh, aren't the Japanese terrible? You better have American military in East Asia because we're here to keep the Japanese under control."

These days, of course, the United States tells Japan, "We better stay here because we are keeping China under control."

Now, at the time I think both statements were true in many respects. But these relationships are dynamic, I think.

One other point I'd make. I think Japan also has been China's greatest diplomatic failing in this respect. If you were a Chinese strategist and you wanted to screw the United States in East Asia, which I think the Chinese do, quite naturally—they want to dominate the region; why wouldn't they?—if you were a Chinese strategist, you would try to pull Japan away from the United States.

They have had lots of chances to do that since the 1990s, but each time they can't bring themselves to do it. It's kind of like Japan is the bone in China's throat, because it's such a volatile issue internally that they can't get the system together to seduce the Japanese. In the process they have made implacable enemies of them.

DEVIN STEWART: Before we go, Richard, can you give us a sense about the title you chose for your forthcoming book, The Three Tigers and One Mountain? What is that a reference to?

RICHARD McGREGOR: I might say when I was working as a journalist in China, any foreign journalist who wrote a book with the word "dragon" in the title or "tiger" in the title was automatically excommunicated. So I'll take that on the chin. But there's a wonderful old Chinese saying, "Two tigers cannot exist on one mountain"—in other words, we're going to have one hegemon in the region, if you like.

I think it's very important, with the United States and China, and with China and Japan—you've got to triangulate the relationship. So I wanted to give the sense that it's not just about a bilateral relationship; it's about a three-way relationship which is fundamental to U.S. interests.

DEVIN STEWART: Do you think that's an appropriate analogy for the region?

RICHARD McGREGOR: In a way. But I also think it sounds catchy.

DEVIN STEWART: Just to tease you a bit further, you end the subtitle with "China, Japan and America in the Asian Century." That's a loaded proposition there. Before we go, give me a sense: Are we entering or are we in the Asian century? I'm skeptical, but I'd like to hear—

RICHARD McGREGOR: Yes, I think we are. I think, even if China grows at 4 percent instead of 6 percent, China will be the largest economy in the world. It may not be a prosperous economy or a happy country, but it will be the big regional power.

There is the argument of course that all these East Asian countries—South Korea, Taiwan, China, Japan—all have shocking demographics and you can make the argument they have peaked. But they have peaked in a very powerful and fundamental way. About 10 years ago I used to tell people China was just getting started. Now they are well on the way. But I still think that China is going to be a much larger, much bigger player in global politics, regional politics, the global economy. So we'd all better get used to that.

DEVIN STEWART: Thanks so much, Richard. We look forward to seeing your book.

RICHARD McGREGOR: Thank you very much.

DEVIN STEWART: When will the book be out, Richard?

RICHARD McGREGOR: I'm due to see my publisher in New York today. Hopefully next year.

DEVIN STEWART: And that publisher is?

RICHARD McGREGOR: It's Viking, which is part of Penguin Random House.

DEVIN STEWART: Great. Congratulations.

RICHARD McGREGOR: Thank you.

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