Growing Interdependency Between China and Japan: Trade, Investment, Tourism, and Education
In the next chapter, Fan Ying examines the deepening of trade, investment, tourism , and educational exchange between China and Japan. She argues: “…interdependency of their economies is a necessary but not sufficient condition for overall good bilateral
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Growing Interdependency Between China and Japan: Trade, Investment, Tourism, and Education Fan Ying
Economic interdependency is the central axis of Sino–Japanese relations and a key incentive for both sides to avoid armed conflict. Their industrial division of labor in East Asia in recent decades is both vertical and complementary. China’s export to Japan mainly consists of labor-intensive and low value-added goods, while Japan’s export to China focuses more on capital-intensive and technology-intensive items which are high value-added. Japan, with its massive direct investment, is the third largest source of foreign capital in China. And China is the largest trading partner of Japan. Though the economic pattern in East Asia has shifted from the Japan-led flying geese model of economic development to the Asian production network (with intermediate parts sourced from many East Asian countries with final assembly in China), in the twenty-first century the economic bond between the Chinese mainland and Japan continues
Fan Ying (*) School of International Economics, China Foreign Affairs University, Beijing, China
© The Author(s) 2017 Lam Peng Er (ed.), China-Japan Relations in the 21st Century, DOI 10.1007/978-981-10-4373-4_3
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to be market-driven and remains indispensable. Indeed, their bilateral economic relationship is mutually beneficial. This chapter first reviews the growing economic interdependency and rising educational and social exchanges between China and Japan over the past decade. It also analyzes the main causes of these trends and examines challenges to stronger Sino–Japanese economic relations. Finally, argues that China and Japan should seek a breakthrough of mutual trust through deepening economic and trade cooperation and make collective efforts to build a new type of cooperative relations between great powers based on reciprocity and mutual benefits. My central argument is that increasing economic interdependency of China and Japan mitigates their disputes over history and territorial sovereignty. The caveat is that the interdependency of their economies is a necessary but not a sufficient condition for overall good bilateral relations. While economic interdependency and cultural exchanges underpin Sino–Japanese relations, political wisdom and goodwill of leaders on both sides are critical for China and Japan to anchor their bilateral relations. Indeed, economic interdependency between the Chinese mainland and Japan is poised to deepen, but it is not inconceivable that prolonged political turbulence over sovereignty disputes and conflicting historical narratives may undermine this crucial economic relationship.1 In this regard, China and Japan should aim to deepen their comprehensive relationship beyond economics to mitigate their political antagonism. From January to September 2014, Japanese foreign direct investment (FDI) in China had fallen 43%, over the same period of 2013, largely due to rising labor costs in China and its economic slowdown. Apparently, the Nippon Keidanren
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