Examples for Spillovers of Political Shocks

Abstract

Although spillovers of political shocks onto Sino-Japanese economic relations have mostly been prevented by constraining economic or political factors, there were three shocks which have caused spillovers onto the economic relationship between the end of the New Thinking in 2005 and Xi Jinping coming to power at the end of 2012. Changes of the Sino-Japanese political and economic environment, such as the shift of economic interdepedence to Japan’s disadvantage from the 1980s to 2005 because of its declining importance as Chinese trading partner and a change in bilateral trade pattern, allowed for three shocks to spill over onto economic relations. The first one of them resulted from the textbook discussion in 2005; the other two were caused by the territorial dispute over the Senkaku Islands in 2010 and 2012.