[First Section] Keynote Address

Ending the adversity in Japan-China relations

The first speaker was Professor Li in the Faculty of Law, Chuo University. Professor Li's lecture was entitled Issues and Outlooks on Japan-China Relations--Consideration and Recommendations from the Perspective of China-Japan Relations. He discussed current conditions in China and future methods for better relations between the two countries.

Actually, 2012 marked the 40th anniversary of normalization of diplomatic relations between Japan and China. Major commemorative events were scheduled to be held throughout Japan and China. However, almost all of those events were cancelled due to confrontation between Japan and China regarding territorial disputes. "This was most unfortunate," lamented Professor Li. "However, such conflicts between Japan and China are nothing new." Professor Li explained that there have been a variety of incidents in history between Japan and China. Each of these incidents has been solved through the wisdom of politicians and citizens. Professor Li says that we should be proud of and never forget such successful resolutions.

However, conditions today differ greatly from 40 years ago. Professor Li pointed out the following three reasons for those differences. The first is that issues of historical perception are constantly transformed into political issues. The second reason is that past issues are linked to current issues when holding discussions. The third is that there is a tendency for simple, individual issues to be transformed into fundamental issues. "Great care must be taken regarding these points," warned Professor Li.

How should such conditions be remedied in the future? "It is important to accept the facts of confrontation and work towards a solution," recommended Professor Li." At the same time, we must exercise caution regarding the irresponsible reporting of mass media." He also stated the need to hold meetings between top Japanese and Chinese officials in order to reconfirm the foundation and principles of Japan-China relations. In the future, there is a need for a new age of equality and partnership between Japan and China. Professor Li concluded his lecture by emphasizing the importance of a Japan-China partnership for realizing a major partnership in Asia and international society.

Need for economic reform through new systems of Xi Jinping

Next, Professor Chen in the Graduate School of Economics, the Fudan University, gave a lecture entitled Economic Policy by China's New Leadership and China-Japan Relations. Professor Chen explained economic issues which must be addressed by the new systems of Xi Jinping which started last November.

Modern China boasts a high economic growth rate and national income. China's total GDP in 2012 ranked 2nd in the world. However, it has been pointed out that the productivity of industry is decreasing.

Professor Chin discussed the following 9 reasons for the decline in productivity. First, there is an income gap between large cities and inland areas, as well as between different social classes. Second, there are constraints on resources (several years ago, China switched from an exporter of coal to a net-importer). Third, there are constraints on the environment (currently, atmospheric pollution is a major issue in China and requires swift action). Fourth, losses are being incurred by nationally-owned corporations (in order to make up for losses at nationally-owned corporations, the Chinese government is injecting large amounts of funding, thus placing pressure on private corporations). Fifth, there is excess production capability (in addition to excess production facilities, there is also excessive infrastructure funding in the steel, cement and automobile industries). Sixth, there is excess funding and a lack of efficient domestic investment. Seventh, external imbalances have expanded (trade friction has increased rapidly due to a trade surplus towards Europe and America, and foreign currency reserves also increasing rapidly). Eighth, foreign corporation are entering the Chinese market (in recent years, foreign corporations are prioritizing M&A with Chinese corporations; if things continue at this pace, an oligopolistic position in the Chinese market will be invoked by foreign corporations). Ninth, foreign trade and terms of trade are disadvantageous to China.

"Economic reform through the new systems of Xi Jinping is the most important theme to be addressed," pointed out Professor Chin when discussing solutions for the issues listed above. "China must seek economic growth through innovation, not growth based on increased quantity," emphasized Professor Chin. "Also, China must reduce its excess production capability."

Localization is a keyword for improving Japan-China relations

The final keynote address was given by Professor Kenji Hattori from Chuo University Business School. Under the theme of New Aspects in Japan-China Economic Relations and Response by Japanese Corporations, Professor Hattori discussed the direction of future Japan-China relations from the perspective of management strategy.

According to Professor Hattori, Japan-China relations have progressed significantly during the past 40 years. The impetus for such progress is more than simply geographical proximity. The Japanese ODA, municipalities, corporations and economic groups have built a relationship of trust with China in accordance with the policy of openness by the Chinese government.

However, the anti-Japan demonstrations which occurred last September have caused Japan-China economic relations to stop progressing. Despite such conditions, Professor Hattori insists that Japanese corporations must not withdraw from China. Chinese officials and employees are paying close attention to the earnestness and commitment of Japanese businesspeople. Therefore, there is now a need to remain in China and work hard.

In the future, what is the proper corporate strategy for Japanese corporations to take when faced with these conditions? Professor Hattori raises the keyword of localization. In other words, it is important for Japanese corporations to shift authority from headquarters to offices in China and to strengthen the authority of local subsidiaries. It is also essential to analyze the Chinese market, which contains a huge number of consumers.

Of course, it is always necessary to consider China risks such as anti-Japan demonstrations and extra-legal withdrawal. "The ability to predict a variety of risks is essential for Japanese corporations," advises Professor Hattori. "Also, it is important for corporations to be able to deal with such risks when they arise. Corporations must dynamically analyze such abilities." China's communist government and individual relations in corporations must be viewed as completely separate entities, and Japanese corporations must continue to value relationships of trust which have been built.