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Fishing in troubled waters: Japanese trade and the Sino-Soviet economic schism, 1960–64

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Abstract

Mid-July 1960 marked a turning point in Japan’s economic relations with the Sino-Soviet bloc. The selection of former Finance Ministry bureaucrat and Yoshida protégé, Ikeda Hayato as prime minister coincided with Moscow notifying Beijing of its intention to terminate virtually all forms of economic cooperation. The Sino-Soviet economic schism was out in the open. On 16 July, the Soviets recalled all of their 1,390 experts from China and breached more than three hundred agreements, leaving innumerable projects incomplete. Coming amidst the ruins of Mao Zedong’s ‘Great Leap Forward’ and a series of climatic disasters, this was a heavy blow indeed.

Keywords

Bilateral Trade Japanese Government Foreign Minister Free World China Policy 
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Notes

  1. 1.
    Asahi Shimbun (20 July 1960) cited in John Welfield, Empire in Eclipse (1988) London: 175.Google Scholar
  2. 2.
    During their two-week stay, they met with Matsumura Kenzö and Takasaki Tatsunosuke. Official contact with the delegates was supposedly avoided, however, and an application to extend their visas was politely rejected. Chugoku nenkan (1961): 55–6; Gordon Chang, Friends and Enemies (1990) Stanford: 82; and Kurt Radtke, Chinas Relations with Japan, 1945–1983 (1990) Manchester: 133.Google Scholar
  3. 3.
    See Appendix 2 for a list of members. Chu Shao-hsien, ‘The Evolution of Japan’s Peiping Policy’ Issues and Studies (Dec. 1971): 21; Fukui Haruhiro, Party in Power (1970) Berkeley: 243 (n.13).Google Scholar
  4. 4.
    MacArthur to DOS, 27 July 1960; Herter to MacArthur, 18 July 1960, FRUS, 1958–60 XVIII: 387–8, 391.Google Scholar
  5. 7.
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  6. 8.
    Initially, only 11 small companies received the necessary recommendation from the JCTPA, JITPA, the Japan-China Friendship Association, or the JSP. However, their number grew rapidly: late 1960 (50 firms); March 1961 (67); January 1962 (108); late 1963 (300); and late 1964 (350). This included many ‘dummy firms’ set up by various Japanese industrial giants. Ogata Sadako, Normalization with China (1989) Berkeley: 11; Chae-Jin Lee, Japan Faces China (1976) Baltimore: 142; R.K. Jain, China and Japan, 1949–1980 (1981 [A]) Oxford: 65; J.S. Hoadley and Hasegawa Sukehiro, ‘Sino-Japanese Relations 1950–70’ International Studies Quarterly (June 1971): 142.Google Scholar
  7. 10.
    Asahi Jdnaru, for example, dismissed the view that ‘agricultural failure and the recent deterioration of relations with Moscow’ were responsible for this ‘tuming point in China’s Japan policy’, preferring to give it a‘more positive meaning.’ ‘Chugoku no tai Nichi taido kawaru’ Asahi Jdnaru (11 Sept. 1960): 78. Hozumi Shichiro, a JSP Diet member and leader of the Japan—China Friendship Association mission, also categorically denied any such linkage. The Japan Times meanwhile suggested a ‘possible desire to affect the Japanese elections’. JT (5 Sept. 1960). Much later, Suzuki Kazuo confirmed that after finding all of the Soviet engineers gone, he had concluded that the Sino-Soviet rift was responsible for China’s change of attitude. Suzuki Kazuo, ‘Shin dankai no NitChu boeki’ Ekonomisuto (17 Sept. 1963): 44.Google Scholar
  8. 11.
    RC, Endo and Lewis, 19 Sept. 1960, A9564, 227/10/1, NAA; Kuroda Mizuo (first secretary at the Japanese Embassy in London) made the latter comment to Henderson (FED) on 31 August. Minute by Henderson, 31 Aug. 1960, FO 371/ 150589, PRO. Matsumura Kenzo expressed an identical view on 3 September. Radtke (1990): 134.Google Scholar
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    When asked why China wanted a resumption of trade, Deputy Director Uryu of MITI’s Bureau of International Trade replied vaguely that “‘some people” think they need to trade with Japan.’ RC, Endo and Lewis, 19 Sept. 1960, A9564, 227/10/1, NAA. Remarkably, as late as June 1962, Foreign Minister Kosaka was still unsure ‘whether the withdrawal of Soviet technicians was due to ideological differences or had been decided on because there was nothing for the technicians to do.’ Barwick (MEA) to Acting PM, 14 June 1962, A1838, 3103/7/2/1, NAA.Google Scholar
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    ‘First White House Meeting with Prime Minister Ikeda—Talking Paper’, n.d., DDRS (1995): 1505; ‘Attachment 2—A Strategy for the Ikeda Visit’, n.d., DDRS (1995): 1506. Robert Johnston noted that the Japanese favoured ‘a much more overt “two Chinas” policy’. He recommended that the US ‘accept the possibility of Sino-Japanese trade much more forthrightly’, especially as ‘The potential for trade does not seem great’. Johnson to Rostow, 19 Jan. 1961, DDRS (1995): 1489.Google Scholar
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    Jain (1981 B): 69; P. Langer, ‘Moscow, Peking and Tokyo’, Unity and Contradiction, K. London (ed.) (1962) NY: 223.Google Scholar
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    DOS, IR 8481 (1961); William Ballis, ‘A Decade of Soviet–Japan Relations’ Studies on the Soviet Union (1964): 148–50.Google Scholar
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    KOno complained that, ‘Despite the fact that conditions for Soviet trade are better than those for Communist China, we lean towards the latter.’ Köno IchirO, ‘NisSo kbryu ni tsuite kokumin ni uttaeru’ Chuo Koron (July 1962): 195–6.Google Scholar
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    There were also problems with participants from the steel industry because of the importance of the US market, and the fertilizer industry, which had strong ties to Taiwan and South Korea. Takasaki was eventually accompanied by a delegation of some 23 businessmen and three LDP Diet members. McIntyre (Tokyo) to Barwick, 12 Feb. 1963, A1838, 3103/10/1, NAA.Google Scholar
  16. 92.
    Jamieson (Tokyo) to SEA, 7 Dec. 1962, A1838, 766/3/4, NAA. Ohira reinforced his premier’s message, claiming that because Japan’s ties to the US were strong ‘there will be no problems at all even if Japan, to a degree not inimical to these relations, sorts out her affairs with Communist China, conducts trade, establishes cultural and economic ties. This is the Government’s view and there will be no need to change it in the future.’ Asahi Shimbun (12 Dec. 1962).Google Scholar
  17. 95.
    JTW (24 Aug. 1963); Noguchi YuichirO, ‘Keizai nashonarizumu ron’ Sekai (Jan. 1965) 229: 56; Hill to Loveday, 16 Jan. 1963, A1838, 3103/11/161, NAA.Google Scholar
  18. 96.
    Kohler (Moscow) to Rusk, 10 Jan. 1963, John F. Kennedy, National Security Files, USSR and Eastern Europe, 1961–63 (1993) Bethesda.Google Scholar
  19. 99.
    Cities such as Tsuruga, Niigata and Sakata had even organised a Japan–Soviet Trade and Fisheries Promotion Council. JTW (9 Mar. 1963); Jain (1981 B): 39; Murthy (1965): 14–15.Google Scholar
  20. 103.
    Led by Kitamura Tokutaro it comprised representatives of 18 trading companies. The mission toured Siberia and the Ukraine for two weeks and received a very enthusiastic reception. Several contracts representing a massive expansion in coastal trade were signed. JTW (27 July 1963).Google Scholar
  21. 104.
    The other two visitors were Suzuki Kazuo (JCTPA), who signed a protocol formalising the ‘friendship trade’ channel and Hiratsuka Tsunejiro (Japan–China Fishery Association), who signed a fishing agreement. Jain (1981 A): 67, 76; Soeya (1998): 64–5.Google Scholar
  22. 110.
    ‘Administrative Policy Speech by PM Ikeda before 43rd Ordinary Session of the Diet’ GaimushO Press Releases (1963): 3–14.Google Scholar
  23. 111.
    JTW (6 Apr. 1963). The following month, Roger Hilsman (assistant secretary of state for Far Eastern affairs) repeated the message. Describing deferred payments to China as equivalent to providing aid to the ‘enemy’, he still publicly maintained that this was a matter for Japan alone to decide. Asahi Shimbun (17 Apr. 1963, evening); Lee (1976): 232 (n.37).Google Scholar
  24. 116.
    The ‘change’ was to raise the interest rate on the $20 million, five-year credit from 4.5 to 6 per cent, so that it was no more favourable than that charged to non-Communist countries, but the price was then reduced to compensate. Soeya (1998): 95–6; Jain (1981 A): 68.Google Scholar
  25. 120.
    MOFA also recommended that ‘Japan should increase her economic aid to Southeast Asia as a means of ensuring its stability’ in the face of China’s likely advance into the region. Asahi Shimbun (2 Sept. 1963).Google Scholar
  26. 122.
    Discussion between Ikeda and Holyoake, 4 Oct. 1963, ABHS 950, W4627, 268/3/1, New Zealand Archives, Wellington. In Ottawa, meanwhile, Vice-Foreign Minister Shima also directly linked the deterioration in Sino-Soviet relations with their both having ‘shown a more conciliatory attitude towards Japan in recent months.’ Rogers to Canadian Embassy, Tokyo, 11 Oct. 1963, 20–1–2—JPN-I, Canadian Archives, Ottawa.Google Scholar
  27. 125.
    Murakami Kimitaka (director, Japan External Trade Organisation) and Owada Yuji (secretary-general, Japan—China Export—Import Association) were allowed to join four LDP Diet members (Furui Yoshimi, Matsumoto Shunichi, Takeyama Yutaro and Hisano Tadaharu) and 19 industry representatives on the mission. Lalima Varma, The Making ofJapans China Policy (1991) Delhi: 137.Google Scholar
  28. 129.
    The Japan Economic Research Council was a joint research body established in 1962 by Keidanren, the Japan Foreign Trade Council, and others. It was headed by Uemura Kogoro (vice-president of Keidanren), Nagano Shigeo (vice-president of Nissho) and Professor Emeritus Nakayama IchirO.Google Scholar
  29. 131.
    ‘Attitude of Business toward Japan—China Trade’ Japan Socialist Review (1 Dec. 1963): 24–7.Google Scholar
  30. 133.
    Nearly 600 Japanese companies participated and 1.2 million Chinese visited during its 25-day run. Ishibashi Tanzan, as president of the sponsoring organisation, headed a list of more than 1000 Japanese visiting the exhibition. Welfield (1988): 182; Lee (1976): 232.Google Scholar
  31. 136.
    Fukuda’s declaration was probably influenced by his recent North American tour, where he heard US Commerce Secretary Hodges concede that ‘the US should take a fresh look at trade with the Communist bloc.’ He also learnt that the US planned to export surplus grain to the Soviet Union, and that Canada had already signed contracts to supply large quantities of wheat to Moscow and Beijing. JTW (12 Oct. 1963); Varma (1991): 52.Google Scholar
  32. 144.
    Utsunomiya Tokuma and Maeda Masao reportedly clashed head-on at a meeting of the FARC China Problem Sub-Committee. Fukui (1970): 259.Google Scholar
  33. 147.
    Record of the Third Meeting of the Joint US—Japan Committee on Trade and Economic Affairs, Tokyo, 27 Jan. 1964, Country Files, Japan Cables, I, 11/63–4/64, LBJ. Google Scholar
  34. 159.
    Gaimusho, NitChu kankei kihon shiryoshu (1970): 231–2; JTW (14 Mar. 1964); Chu (1971): 22–3; Welfield (1988): 188. See also Chapter 3.Google Scholar
  35. 160.
    Canadian Embassy (Tokyo) to DEA (Ottawa), Enc. in Home (DEA, Canberra) to AusEmbTok, 11 May 1964, A9564, 227/10/1, NAA.Google Scholar
  36. 161.
    In retrospect, the participants dated Beijing’s reversion to a ‘soft attitude toward Japan’ to Matsumura KenzO’s autumn 1960 visit (sic). The Chinese motivation for ‘the strengthening of trade relations and promotion of personal interchange’ was clearly identified as its need ‘to offset the deteriorated Sino-Soviet economic relations (sic)’. Cortazzi (Tokyo) to Bently, 17 Apr. 1964, FO 371/17600, PRO.Google Scholar
  37. 162.
    In January 1964, Matsumura had again written of the importance of the Sino-Soviet rift to the positive development of Sino-Japanese relations: ‘where trade just as much as normalization of relations is concerned’ the dispute was ‘fundamental to the problem.’ Matsumura Kenzo, ‘Bridging the Gap to China’ Japan Quarterly (Jan./Mar. 1964): 27.Google Scholar
  38. 166.
    People like Mizukami TatsuzO (president, Mitsui), Usami Makoto (president, Mitsubishi Bank), and Inayama Yoshihiro (president, Yawata Iron and Steel) seemed willing to take China trade seriously for the first time. Toyo Keizai Shimpo (25 Apr. 1964).Google Scholar
  39. 167.
    JT (19 Aug. 1964). The CIA believed that Sato was using the issue to force a showdown on China policy hoping to divide the LDP along ‘former-bureaucrat’ versus ‘professional politician’ lines, and thereby undermine the Ikeda—Kono relationship. CIA Special Report, ‘The China Problem in Japanese Politics’, DDRS (1964(77)): 22H.Google Scholar
  40. 172.
    George Jan, ‘Japan’s Trade with Communist China’ Asian Survey (Dec. 1969): 914; Jain (1981 B): 72.Google Scholar
  41. 173.
    Soviet oil exports to China had peaked in 1959, thereafter experiencing a steady decline. Meanwhile, Japanese imports of Soviet oil rose from near zero in 1959 to overtake Chinese imports by 1961 and continued increasing until 1967. Mathieson (1979): 86; William Griffith, The Sino-Soviet Rift (1964) London: 236 (n.10).Google Scholar
  42. 174.
    The managing director of Sumitomo Trading, for example, told Mikoyan that in future it would trade directly with the Soviets rather than through a‘dummy’ corporation as previously. A sour note was sounded, however, by MOFA and MITI. They decided to officially investigate complaints from some Japanese traders that since early 1963, the Soviet Machinoimport Corporation had been insisting on compensatory exports offsetting 30 to 100 per cent of the value of any Japanese imports. JTW (30 May; 13 June 1964).Google Scholar
  43. 175.
    D.I. Hitchcock, ‘Joint Development of Siberia’ Asian Survey (Mar. 1971): 282; JTW (6, 13 June 1964).Google Scholar

Copyright information

© C. W. Braddick 2004

Authors and Affiliations

  1. 1.Musashi UniversityTokyoJapan

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