Abstract
The dispute over these small and uninhabited islands may appear paradoxical. China is the world’s most populous country and the third largest in land area. Japan is the world’s second largest economy and one of the largest maritime countries. Furthermore, the two East Asian giants have forged closer economic ties since their diplomatic rapprochement in 1972, currently making them one of the most important economic partners for each other.3 Certainly a pragmatic consideration of national interests would suggest more cooperative behavior.
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- 1.
This chapter is a revised version of the author’s published article entitled “The Senkaku/Diaoyu Dispute and Sino–Japanese Political Economic Relations: Cold Politics and Hot Economics?” (The Pacific Review, Vol. 22, No. 2, May 2009, pp. 205–232).
- 2.
The Japanese name of the Senkaku Islands is relatively new, dating back to 1900 when a study tour of the islands was conducted under private initiative. Although the name of the main island, Diaoyutai, dates back to the early fiftieth century according to an existing Chinese record, the collective use of the name to denote the entire group began with the advent of the controversy between Japan and Taiwan in 1970 (Park 1973: 248–9).
- 3.
Bilateral trade has increased dramatically with the total value rising from $1 billion in 1972 to $211 billion in 2006. In addition, both private and public investments and capital flows have boomed. Aside from its investment in Hong Kong, the cumulative total of Japan’s foreign direct investment (FDI) in China was $66.6 billion as of 2004. Until the fiscal year 2004, the cumulative total of Japanese loans, grants, and technical cooperation to China was ¥3,133.1 billion, ¥145.7 billion, and ¥150.5 billion, respectively, (Ministry of Foreign Affairs of Japan 2006).
- 4.
The 1951 San Francisco Peace Treaty included a renunciation of all Japanese rights, title, and claim to “Formosa (Taiwan) and the Pescadores (Penghu)” in Article 2. However, neither China nor Taiwan was seated at the San Francisco conference; neither signed the treaty. Yet the 1952 Treaty of Peace between Taiwan and Japan cited Article 2 of the 1951 San Francisco Treaty. It reiterated “Japan has renounced all right, title and claim to Taiwan and Penghu as well as the Spratly and Paracel Islands.” It also recognized “all treaties, conventions and agreements concluded before December 9, 1941, between China and Japan have become null and void as a consequence of the war.” The 1972 Joint Communiqué between China and Japan mentioned that Japan “adheres to its stand of complying with Article 8 of the Potsdam Proclamation” (Cheng 1974: 248–60; Li 1975: 151–3). The 1978 Peace and Friendship Treaty between China and Japan merely confirmed their Joint Communiqué.
- 5.
The dispute was one of the first occasions when popular protest had been tolerated under Chiang Kai-shek’s authoritarian regime in Taiwan. Although initially inspired by the Chiang government, the Protect the Diaoyu Movement soon gained a popular momentum of its own and developed into a major intellectual movement that addressed the broader questions of Taiwan’s status and political circumstances (Long 1991; Deans 1996). This movement landed on mainland China in the late 1990s and has gained new political and organizational support since then.
- 6.
On December 20, an editorial entitled “Resolutely Do Not Tolerate Attempts by American and Japanese Revisionists to Rob Our Country’s Submarine Resources,” suddenly made its appearance in Beijing’s authoritative People’s Daily. The editorial stressed: “American and Japanese revisionists are now playing up this development cooperation through the United Oceanic Development Company to grab our country’s submarine resources…Taiwan Province and the islets appertaining to it, which includes the Diaoyutai, constitute China’s sacred territory. The oceans surrounding these islands and the Chinese coast and the submarine resources containing therein all belongs to China, which would resolutely not allow others to lay their dirty fingers on them. Only China has the right to explore and develop the submarine resources of this region” (Quoted in Chung 2004: 33).
- 7.
Official pronouncements suggest that Taipei certainly wanted to stress its sovereign rights to explore and develop the continental shelf surrounding the Senkaku Islands, but they were conspicuously silent or evasive on the issue of the sovereignty of the islands itself. Faced with the imminent Sino–U.S. normalization of relations and the loss of its seat in the UN, Taiwan did its best to play down the island dispute, thus allowing the Japanese ownership claim to the islands itself to go unchallenged (Chung 2004: 35).
- 8.
This first beacon was nothing more than a simple electric light bulb hanging from an iron pipe. Although Seirankai’s application to the Ministry of Transportation to have its proposed lighthouse registered in the navigational chart was approved, the Ministry of Foreign Affairs did not want to create another clash with China and vetoed the proposal, and the lighthouse was not authorized for construction. Seirankai nonetheless went ahead with its construction (Chung 2004: 41).
- 9.
In October 1978, Deng reaffirmed that both the Chinese and Japanese governments had agreed to shelve the islands issue in 1972 and that this was still the policy of both governments: “It is true that the two sides maintain different views on this question…It does not matter if this question is shelved for some time, say, ten years. Our generation is not wise enough to find common language on this question. Our next generation will certainly be wiser. They will certainly find a solution acceptable to all” (Quoted in Lo 1989: 171-2).
- 10.
Although Seirankai’s membership was only about 3,000 at its peak, it certainly exerted an influence much beyond its limited size to the highest corridors of power, for in its heyday it counted fourteen members of the Fukuda faction and ten of the Nakasone faction in its ranks. By 1990, the political grouping with the strongest organizing and financial power was Nihon Seinensha. Its founder was Kusuo Kobayashi, a one-time vice president of the gangster group Sumiyoshikai. After Kobayashi’s death in January 1990, leadership of Nihon Seinensha fell to Eto Toyohisa, a one-time Seirankai activist who had made Japan’s claim to the Senkaku Islands his life-long cause. It was he who, along with half a dozen associates, erected the first lighthouse on Uotsuri Island in August 1978, and with another six colleagues built the second one on Kitakoji Island in July 1996. The Japanese government estimates that there are about 120,000 right-wing sympathizers in the country, although not all of them are involved with the Senkaku issue (Chung 2004: 45–6).
- 11.
In an attempt to downplay the issue, the Taiwanese government stated that it would not protect individuals going to the islands unless they applied for government permission in advance. To a large extent, Taipei was in no position to continue massive anti-Japan campaigns any longer because its diplomatic isolation deepened at the turn of the 1990s (Bong 2002: 33).
- 12.
Between 1991 and 1992, unfriendly encounters between China and Japan continued near the Senkaku Islands, but both governments exercised a great deal of caution in dealing with such encounters. On December 6, 1991, for example, when Chinese vessels fired warning shots at a Japanese ship near the islands, the Chinese government immediately contacted the Japanese Foreign Ministry to deliver its regrets over the mistaken fire shots. It was the first official acknowledgment by Chinese authority of Japanese claims over at least 16 incidents alleged to have occurred since March of the same year in which Japanese vessels came under fire or were inspected by Chinese patrol boats (Kyodo News, July 21, 1992). In the meantime, the passage of China’s new Territorial Waters Law in February 1992 posed an immediate challenge to the status quo of the island issue. Expanding the realm of China’s sovereign waters, the Law categorically stipulated as indigenous Chinese territory those islands over which China had been consistently engaged in disputes with its neighbors. The Law also permitted the Chinese armed forces to engage in “hot pursuit” of foreign vessels intruding into its broadly defined “territorial waters.” At the same time, however, political leaders in both China and Japan quickly marshaled efforts to maintain the fragile balance in the East China Sea (Xinhua News, February 25, 1992). For more details about the internal debate between the People’s Liberation Army (PLA) and the Chinese Foreign Ministry regarding the adoption of the Territorial Waters Law, see Greenfield (1992). 13
- 13.
In a symbolic gesture to emphasize the pragmatic management of the island issue, the Japanese government granted approval of a joint-development plan with China near the islands in November 1992. Chinese patrol boats occasionally fired on Japanese fishing boats near Senkakus, but both governments remained low-key in their response (Bong 2002: 49–50).
- 14.
Arguing that the building of the lighthouse violated Taiwan’s rights over the islands, the Ministry of Foreign Affairs of Taiwan reiterated that Taipei would “continue to consult with Japan over the disputed islands” (BBC Summary of World Broadcasts, Asia-Pacific, July 18, 1996). In attempts to present itself as a “true” protector of China’s territorial rights, Taipei invited Beijing to join its efforts to safeguard the islands. As long as China and Taiwan eyed each other with suspicion, however, it was impossible for them to coordinate a joint sovereignty other than by separately reaffirming Chinese sovereignty over the islands (Bong 2002: 71-2; Chung 2004: 52).
- 15.
15 Early that year, Ikeda had already created a diplomatic battlefield between South Korea and Japan over the Dokdo issue by stating that Takeshima is a part of Japanese territory from the view point of international law and history. See Chapter 4 of this book for more details.
- 16.
From August 28 to September 18, 1996, there were daily protests and demonstrations in Hong Kong. The biggest anti-Japanese protest march drew 20,000 people, and provided great opportunity for Hong Kongers of all political stripes to demonstrate their allegiance to the motherland in anticipation of Hong Kong’s return to China in less than a year’s time. These events were led by the same prodemocracy activists who had been campaigning against Chinese plans to replace the partially elected colonial legislature with a provisional one. These activists were apparently hoping not only to tap into a genuinely popular cause for political support, but also to prepare the ground for future demands that would be difficult for China to resist (Chung 2004: 46).
- 17.
In a commentary, the official People’s Daily accused the Japanese government of “leading Sino-Japanese relations astray” by “conniving” with the right-wingers, and wondered whether their activities “have the government’s tacit support and whether there are ulterior motives for stirring up these incident” (People’s Daily, September 21, 1996). The Liberation Army Daily bellowed “it would rather sustain a heavy economic cost than lose an inch of soil” (Time International Magazine, October 7, 1996).
- 18.
The PLA conducted two large-scale military exercises, one naval exercise in the East China Sea and one air force exercise in the Gobi Desert. These military exercises, the goal of which was allegedly to “safeguard China’s independence, sovereignty, and territorial integrity,” were believed to be not only targeted at Japan but also at influencing CCP leaders and the Foreign Ministry to toughen their stances (Downs and Saunders 1998/1999: 138–42).
- 19.
On October 8, 1996, about 40 ships carrying approximately 300 protesters and media crews succeeded in entering the waters near the Senkaku Islands, with surprising ease. Seven Chinese activists from Hong Kong remained on Uotsuri Island for approximately 15 minutes, during which time they hoisted Chinese and Taiwanese national flags. Despite this disruption, reactions from the Japanese government remained noticeably restrained and Prime Minister Hashimoto pleaded for calm (Bong 2002: 84).
- 20.
Because the EEZ delimitation was closely intertwined with the renewal of their bilateral fishery accord, neither China nor Japan was able to afford flexibility on the Senkaku issue. Preparing to ratify the UNCLOS, the Japanese government submitted in 1995 the preliminary version of its domestic laws, which deliberately exempted the area west of 135° eastern longitude from the 200 nm zone where the Senkaku Islands are located (Kyodo News, December 16, 1995). The preliminary proposal angered the Japanese fishery industry, which had been putting immense pressure on the Hashimoto cabinet to aggressively advocate its interests in negotiating for the EEZ in the East China Sea and led to a public rally in Tokyo in which approximately 6,000 Japanese fishermen participated – the largest demonstration in Tokyo in 20 years (The Nikkei Weekly, March 4, 1996). With the October 1996 Lower House election looming large, Japanese politicians quickly exhibited sympathetic gestures, criticizing the Foreign Ministry for the alleged exceptions in the delineation and ruled out the possibility that Japan would exclude the waters around the disputed Senkaku Islands in establishing the new EEZ (Bong 2002: 62–3). The election saw Hashimoto retain the premiership, more seats for the LDP, and the Japan Socialist Party being replaced as the main opposition party by the New Frontier Party (Shinseito), a new political party formed in 1993 whose main differences with the LDP were over domestic issues rather than foreign policy. Together, both conservative parties controlled 80% of the seats in the Japanese Diet after the 1996 general election, with the LDP and Shinseito winning 251 and 156 of the 500 seats, respectively, (Chung 2004: 44).
- 21.
From late January through February, 1996, the PLA mobilized more than 100,000 troops in Fujian province, a coastal area facing Taiwan. In the third round of exercises in March, the PLA conducted surface-to-surface missile tests, and air and naval exercises with live ammunition in waters near Taiwan. Taiwan held its own military maneuvers, strengthening its resistance to the mainland’s “anti-Taiwan struggle” (Ross 2000: 107). Accusing China of being “reckless” and “provocative,” Washington sent the Independence battle group from Okinawa to the waters east of Taiwan; the Nimitz carrier group was ordered from the Persian Gulf to the Philippine Sea (Bong 2002: 58–9).
- 22.
Nevertheless, Chinese mistrust of Japan in the economic realm persisted in the public’s mind. In the China Youth Daily poll of 1996, for example, 96.3% of respondents believed that the aim of Japanese investment in China was to occupy the market and seek profit, 50.7% thought it was to control China economically, and 45.3% thought it was to dump outmoded facilities, with only 9.5% believing it was to help Chinese economic development (Quoted in He 2007: 11).
- 23.
Such a contradiction indicates that the official trade statistics of Japan and China have huge discrepancies. Of all the economic issues between Japan and China, none has the potential for greater confusion than the bilateral trade deficit. It is often assumed that corresponding export and import data between partner countries should be consistent. That is, the exports from Country A to B should be equal to the imports of Country B from A, after taking into account the insurance and freight costs under the generally observed case that Country B imports are valued on a c.i.f. (Cost, Insurance, and Freight) basis. Notwithstanding the inclusion of insurance and freight in imports c.i.f., there often exist several complications that can cause inconsistency between exports to a partner and the partner’s recorded imports f.o.b (Freight on Board), or between imports f.o.b. from a partner and the partner’s recorded exports. The principal reasons for the inconsistent statistics on destination and origin of a given shipment are differences in classification concepts and detail, time of recording, valuation, and coverage, as well as processing errors (IMF, Direction of Trade Statistics Yearbook, 2004: xi–xii). Yet the discrepancies of Sino–Japanese trade statistics appear much greater than the standard error terms might warrant. In fact, much of the difference is due to, among other things, the different treatment of Hong Kong’s entrepôt trade by the two sides. Since 1993, the Chinese customs authorities have attempted to determine the final destination for goods exported to Hong Kong with greater accuracy, so as to improve its reported trade statistics. It is still the case, however, that many of the goods bound for either Japan or China via Hong Kong are not recorded as such. For a similar concern about the discrepancies in U.S.–China trade statistics, see Feenstra et al. (1998).
- 24.
During Hashimoto’s visit, the Fiscal Year 1997 portion of a ¥580 billion loan package for 1996–98, to which Tokyo and Beijing initially agreed upon in December 1994, was finalized. The Ex-Im Bank of Japan, which had already provided ¥243 billion in “semi-commercial” financing to support trade and investment in China during 1996, endorsed another agreement with Chinese authorities in 1997 on a $220 million package of united loans for social infrastructure (Bong 2002: 90–1).
- 25.
Under the new pact, the two countries agreed on establishing a jointly controlled provisional zone in the East China Sea, between 30° 40’ and 27° north latitude excluding areas up to 52 nm from both countries’ shores, while continuing talks to establish their respective 200 nm EEZs. The two sides also agreed to mutually set fishing quotas in their future EEZs and apply the “coastal country” principle to control illegal fishing (Bong 2002: 90). Yet it was not until February 2000 that the two countries reached an agreement on fishing quotas and fishing conditions in each other’s EEZ, and on the fishing order in the waters to the north of the provisional zone. Japan and Taiwan also reached an accord that would ensure the fishing activities of Taiwanese boats in a triangular zone between Taiwan, the Senkaku Islands, and Yoan, which had been traditionally recognized as a common fishing zone between the two since Japan’s Sowa period (BBC Summary of World Broadcasts, Asia-Pacific, July 11, 1997).
- 26.
For more details about China’s military actions in the South China Sea, see Chapter 6 of this book.
- 27.
Mainland activists first boarded Hong Kong protest boats to go the islands in 1998, and attempted their expeditions from 2000. The Chinese activists’ landing on Uotsuri Island marked their fourth attempt in the previous nine months. Prior attempts had all failed, although they almost succeeded in mid-January 2004 when two boats carrying Chinese activists were deterred at the last moment by a water cannon shot by the Japan Coast Guard (BBC News, World Edition, January 16, 2004).
- 28.
Prior to the landing incident, the diplomatic temperature between Japan and China already dropped to near freezing levels, thanks to the 2002 Shenyang incident to which Japan reacted emotionally, accusing Chinese police of infringing on Japanese sovereignty by dragging out North Korean asylum seekers from the Japanese Consulate-General in Shenyang without permission (Wan 2003). On top of this, on the day before the 2004 island incident, a 24-year-old former Chinese student pleaded guilty to brutally murdering a family of four in June 2003 for about $350, subsequently dumping their bodies in the local bay. The callous nature of the murders shocked ordinary Japanese, creating intense anti-Chinese sentiments (Asia Times Online, March 26, 2004).
- 29.
In Japan, the growing emotional tensions with China were crystallized in a survey conducted by Japan’s Cabinet Office in October 2004. According to the survey, the percentage of respondents who said they felt friendly towards China fell by 10.3% from a year ago to 37.6%, the lowest level since the survey began in 1975. The percentage of respondents who said they did not feel friendliness towards China rose to 58.2% while those who thought that relations between Japan and China were good fell nearly 19 percentage points to 28.1% (Kyodo News, December 20, 2004). In a similar vein, a Chinese Academy of Social Sciences survey shows that only 5.9% of Chinese felt friendly towards the Japanese, compared to 43.3% who did not feel so (The Straits Times, August 14, 2004).
- 30.
Interview with Japan’s Ministry of Foreign Affairs (MOFA) officials conducted in Tokyo in June 2004.
- 31.
Japan’s chronic economic stagnation during the “lost decade” has promoted anti-foreign, particularly anti-Chinese, sentiments in Japan. Anxious to jettison postwar constraints on its remilitarization and international activism, Japanese nationalism has seriously collided with Chinese popular nationalism that tends to view Japan’s current behaviors through the lens of bitter memories of its past aggression. For Japan, revising the guidelines for U.S.–Japan military cooperation, embracing joint research and development on missile defense, strengthening Japan–South Korea military coordination, planning for a more autonomous satellite reconnaissance capability, and initiating an open debate about Japan’s military-security needs and international role, all of these efforts were directly linked to the troubling actions of the North Koreans during the 1990s. But these efforts simultaneously prepared Japan for an East Asian future in which its most worrisome military planning contingency may be China (Goldstein 2003: 188).
- 32.
Japanese ownership claims over the island group are multilayered. Privately-held Kuba-jima Island and the Islands of Uotsuri, Kita-kojima, and Minami-kojima have allegedly been rented out to the Japanese government since 1972 and 2002, respectively, while Taisho-jima Island has always been owned by the Japanese government. For more details, see Urano (2005: 206–7).
- 33.
These Chinese protests were inflamed by the Japanese government’s authorization of history textbooks in early April that have reinforced Japan’s territorial claim to the islands as well as glossing over its wartime atrocities. The Japanese campaign for a permanent UN Security Council seat was also a target of Chinese public anger.
- 34.
It does not necessarily indicate that the Sino–Japanese commercial ties are becoming symmetric, however. Currently China’s trade dependence on Japan, which reached double digits (10.17%) for the first time in 2004, tends to grow slightly faster than Japan’s trade dependence on China. It should also be noted that the official trade statistics of Japan and China have huge discrepancies, as mentioned earlier in footnote 23 of this chapter. According to their respective official statistics, both countries have had trade deficits against each other and the gaps are widening. The gap has been widening since the early 1980s, reaching the widest in 2004. In 2004, according to the Japanese official statistics, Japan’s trade deficit against China amounted to $20.4 billion, while according to the Chinese official statistics China’s trade deficit against Japan reached $20.8 billion. Despite these huge discrepancies in individual import and export figures, each country’s sum of exports and imports falls within similar range. The average discrepancy in total trade figures during the period of 1985–2004 is $492 million, which is marginal in comparison to the total trade volumes. Therefore, the trade dependence scores calculated from each country’s export and import figures continue to serve their basic conceptual purposes.
- 35.
According to Japanese statistics, FDI from Japan increased between 2000 and 2003 by an average of 41%, but China has absorbed FDI from elsewhere faster than that. As a result, Japanese capital does not secure its share in the total FDI inflows to China. Only 7.9% of foreign capital actually used by China was from Japan in 2002, compared to 14.4% in 1990. Also, Japan slashed its government aid to China. Yen loans, a pillar of this package, amounted to ¥214.4 billion in 2000. But the sharp reduction squeezed the figure to ¥96.7 billion, only 45.1% of that in 2000, in 2001 (People’s Daily, July 15, 2004). All this may point to the erosion of Japan’s economic influence on China.
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(2010). The Island and Maritime Disputes in the East China Sea. In: Island Disputes and Maritime Regime Building in East Asia. The Political Economy of the Asia Pacific. Springer, New York, NY. https://doi.org/10.1007/978-0-387-89670-0_5
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