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The Future of China as an Economic Power and Japan

Satoshi Amako
Professor, Graduate School of Asia-Pacific Studies; President, Waseda Institute of Contemporary Chinese Studies, Waseda University

In January, the National Bureau of Statistics of China announced that China's GDP for 2010 had increased by 10.3% year on year. The U.S. dollar value of the GDP was approximately 5878.6 billion dollars. On the other hand, the Cabinet Office of Japan announced on February 14th that Japan's GDP for the same year was about 5474.2 billion dollars, which means that China has finally become the second largest economy in the world. What is more, the world-famous economist Hu Angang, a Professor at Tsinghua University, wrote an article entitled "How Should China Catch Up with and Overtake the United States?" in the first volume of Outlook Weekly in 2011, in which he presents a strong expectation that China will surpass the U.S. in terms of GDP by 2020.

Apparently, China is strengthening its presence as the factory of the world as foreign direct investment toward China is kept at a high level and distribution infrastructure-such as high-speed railways, highways, and air transportation-is rapidly improved especially in the inland region, whereas various problems have recently been identified, including widening disparity and serious environmental issues. Furthermore, China has also steadily achieved sufficient performance as the market of the world, unlike developed economies that have been stagnant since the world financial crisis triggered by the Lehman Shock in the summer of 2008. Having reigned over the world as the superpower, the United States is now facing a sluggish economy and is forced to seek correction of the trade imbalance with China through revaluation of the renminbi and improvement of the huge trade deficit. When Hu Jintao visited the U.S. in January 2011, they could not condemn human rights issues and military expansion of China very strongly, with large business proposals amounting to nearly 4 trillion yen dangled under their noses. This fact illustrates China's influence today.

As shown in Hu's article mentioned above―though it is controversial even within the country―China has started realistically and steadily pursuing the grand strategy of catching up with the U.S. First, China is exercising their initiative to advance regional integration incrementally. Following the FTA between ASEAN and China coming into force in 2010, the ECFA between China and Taiwan, which is virtually an FTA framework, became effective in 2011. These agreements incorporate political implications with special consideration toward the counterparties. These could be followed by major advancements in negotiation for the FTA between China and Korea under the administration of President Lee Myung-Bak. Moreover, there is a sign of advancing economic cooperation with Russia and some central Asian countries through the so-called Shanghai Cooperation Organization (SCO). In particular, cooperation for energy resources is of strategic importance. While the renminbi has been used more and more for payments in Thailand and some other countries, if this trend would extend to those nations, regional integration centered on China, i.e., the formation of the renminbi bloc, would become realistic in the future.

Probably, the current long-term basic strategy of the Chinese leadership would be to come to terms with the U.S. while deepening cooperation with those neighboring regions to enhance Chinese influence. As for the relationship with Japan, they initially seemed to consider it within the context of developing a framework for eastern Asian regional integration among ASEAN, Japan, China, and Korea. As a result of the friction and confrontation between Japan and China since last fall, however, Japan is explicitly approaching the U.S.

The expansion of China as a superpower is not limited to economy, needless to say. They are also enhancing their military capability extremely rapidly. Their military expenditures announced from 1990 to 2009, for example, continued incredible double-digit increase year on year. Those expenditures were used for enhancing high-tech weapons and weapons of mass-destruction as well as long-range and short-range missiles, and they dramatically enhanced their naval capability, through the deployment of nuclear submarines and the construction of airplane carriers. Today, their military power is also regarded as the second largest in the world after the U.S.

Possibly as a result of these developments, Chinese diplomacy made an important transition between the beginning of 2009 and 2010. Specifically, the basic Chinese position on diplomacy up to that time had been Taoguangyanghui―to conceal one's strengths and bide one's time―advocated by Deng Xiaoping immediately after the end of the Cold War. Today, it has shifted to Jijiyousuozuowei―to strike out actively. The long-standing Chinese claim to a large portion of the South China Sea as the core interest is now being asserted more and more aggressively, resulting in growing friction with neighboring south-eastern Asian nations. When dissident author Liu Xiaobo was awarded the Nobel Peace Prize, the Chinese government exerted considerable pressure on countries concerned behind the scene to demand cancellation of the award or prevent those countries from attending the award ceremony. Restrictions on Google and other media are also severe.

These belligerent stances of Chinese authorities have not always been effective, however. There are unofficial reports that the top leadership of the Communist Party rigorously reviewed the hard line that they had followed in diplomacy, including the deteriorated relationship with Japan, at the end of last year. Hard and soft liners within the Chinese leadership also might be at odds over foreign policy. This would be directly and deeply related to the establishment of a new leadership framework by Xi Jinping, who won the position of successor to Hu Jintao. Xi should not be perceived through the simplistic scheme of <a supporter of the Jiang Zemin group―a representative Crown Prince Party member―well connected to the military leadership-conservative―a diplomatic hard―liner.>

Furthermore, if this critical evaluation of foreign policy is true, the policy toward Japan must also have been revised, and strategies toward Japan might be reviewed further. The direction China will take is still obscure, whether toward a sunshine policy, with Japan in a friendly relationship again, or toward active efforts to cooperate with the U.S. as well as to reinforce the cooperative relationship with neighboring regions while temporarily excluding Japan―which is vigorously approaching the U.S., as mentioned above. In this situation, Japan's high-level strategic judgment will be tested regarding what principles to adopt in re-building the Japan-China relationship.

Satoshi Amako
Professor, Graduate School of Asia-Pacific Studies; President, Waseda Institute of Contemporary Chinese Studies, Waseda University

[Brief biography]
Professor Amako was born in Okayama Prefecture in 1947. He graduated from the School of Education at Waseda University, completing the Master's Course at Tokyo Metropolitan University, and the Doctoral Program at Hitotsubashi University. Since 1981, he has been an Associate Professor for University of the Ryukyus, a Professor for Kyoritsu Women's University, a Professor for Aoyama Gakuin University, among other positions. He has also been a Foreign Ministry researcher at the Japanese Embassy in Beijing, etc. before assuming his current positions of book review committee member for Asahi Shimbun Newspaper, president for Waseda Institute of Contemporary Chinese Studies, the regional leader for the Global COE Program (Global Institute for Asian Regional Integration), and Professor at the Graduate School of Asia-Pacific Studies at Waseda University.

[Major publications]
China and Taiwan [Chugoku, Taiwan] (World Politics Library [Sekai Seiji Sosho] Vol. 8) (Minerva Shobo, 2008)
China, Asia, and Japan: Is the Expanding "Giant Dragon" a Threat? [Chugoku, Ajia, Nippon: Taikokuka suru Kyoryu wa Kyoi ka] (Chikuma Shobo, 2006)
How Do Japanese People See China? (In Chinese, Social Science Academic Press China, 2006)