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What will be the repercussions when two giants clash? China, the world's number two economic power, and Japan, which had until recently held the number two position, are on a collision course and the intricacies of the disputes and their ramifications make one wonder whether a new bipolar world, similar to the one that had existed for some five decades after World War II is, emerging.
In recent week, China and Japan have been trading barbs over an incident that took place near an island in the seas that lie east of China and West of Japan. The two countries are also exchanging harsh words over China's currency, the yuan. In both these issues, Japan is supported by the United States. Japan and the United States are also concerned about China's growing military strength and its strong military presence in seas which were once dominated by the US. Even India has expressed similar concerns and shared notes with Japan and the United States.
China is not isolated. Pakistan, North Korea and several other developing countries have close military and economic ties with China. Together with Russia, China is a frontline member of the Shanghai Cooperation Organisation — a security alliance for Central Asia.
Against this backdrop, the dispute between Japan and China over an island chain has caused major ripples in world politics.
Last week's World Watch column which dealt with some aspects of the Indo-China cold war drew a protest from the Japanese embassy over the use of the word 'disputed' in reference to the island which is known as Senkaku in Japan and Diaoyu in China. The ground reality is that the oil-and-gas-rich island chain — about 210 square km in extent — is controlled by Japan, but is also claimed by China and Taiwan. The island chain comes within the Exclusive Economic Zones claimed by both China and Japan.
The latest dispute between the two countries arose when on September 7, Japan arrested the captain of a Chinese fishing vessel after it collided with two Japanese patrol craft.
Last week, a Japanese court extended the detention of the captain despite China's request for his immediate release. Japan's action angered China. Nationalistic fervour rose to high pitch in China with several protests being held in main cities last Saturday. The protests also coincided with the day on which China commemorates Imperial Japan's invasion of Manchuria in 1931. Every year, the Chinese remember atrocities committed by the imperial Japanese forces in Manchuria with frequent calls on Tokyo to apologise. This year, they had more demands — the immediate release of the captain and the return of the island chain to China. The demonstrations prompted Japanese leaders to warn China that uncontrolled nationalistic feelings could harm relations between the two countries.
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Angered by the extension of the detention by the Japanese court, China's foreign ministry spokesman Ma Zhaoxu said: "If Japan insists on making one mistake after another, the Chinese side will take strong countermeasures, and all the consequences should be borne by the Japanese side."
China also suspended all high-level contacts with Japan and cancelled a scheduled meeting between Premier Wen Jiabao and Japanese Prime Minister Naoto Kan this week in New York on the sidelines of the UN General Assembly sessions.
The two countries also threaten to suspend an agreement that enables them to jointly exploit oil and natural gas in the disputed area. Japan warned China that if it carries out unilateral drilling in the area, it would also do so. Japanese aircraft now regularly patrol the area which holds nearly 17.5 trillion cubic feet of natural gas, according to Chinese estimates.
So far it is only a war of words. The good news for the peace loving world is that the war of words will not develop into a serious armed conflict, however provocative the actions of either party are. The bad news for Japan and the United States is that they cannot check China's growing economic power or its increasing military strength. China will go from strength to strength. It has a slow but a definite plan to re-annex Taiwan. The only factor that keeps China from using military means to regain Taiwan is the latter's defence pact with the United States. Washington is bound to come to Taiwan's rescue in the event it faces an external attack. Last year, the United States sold more than $6 billion worth of advanced weaponry to Taiwan despite China's protests. China believes that reunification could be achieved through a people's movement in Taiwan, which became a separate political entity after the Nationalists, fleeing from mainland China during the communist takeover in 1949, shifted their base there.
Similarly, the Chinese could wrest control of the Senkaku/Diaoyu island by military means. What probably prevents it from doing so is again the United States' defence agreement with Japan. Besides oil and natural gas, the island chain in the East China Seas assumes strategic importance for other reasons. One such reason is that it overlooks the Japanese island of Okinawa where the United States maintains a military base from which it keeps an eye on China's manoeuvres in the East China Sea.
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For China, the US base in Okinawa is a security irritant. Beijing, probably, pins its hopes on protests from the Japanese people who are opposed to the Marine base. However, the task is not that easy. The United States has a big stake in Japan's politics and the region. It fears that its departure will make China the sole superpower in the region. The US apparently knows how to protect its presence in Japan and the region. Take, for instance, what happened to Yikio Hatoyama.
When Hatoyama, leader of the Democratic Party of Japan (DPJ), became prime minister in 2009, he wanted to fulfill his campaign promise — dismantle the US base in Okinawa. Under pressure from the US on the one hand and the anti-base Japanese people on the other, he found a compromise. Hatoyama decided to relocate the base to another island to the disappointment of the people who voted for him. However, he soon found himself engulfed in some allegations relating to unaccounted campaign donations. Eventually, he was forced to resign in June this year. He said his inability to fulfill his campaign promise to dismantle the US base was the main reason for his resignation.
His resignation paved the way for the anti-China and pro-US faction of the DPJ to take control of the party with a socialist past.
During the tussle for the premiership in Japan this month, Washington preferred Naoto Kan to Ichiro Ozawa, because the latter, like Hatoyama, was opposed to the Okinawa base and had promoted closer relations with China. Prime Minister Kan's new foreign minister Seiji Maehara is another US point man. He is said to have advocated a proactive military role for Japan in world politics and described China's military expansion as a "very real concern".
The crisis has also spread to the monetary field between the two economic giants. Japan has not only criticized China for deliberately keeping the value of yuan low but also devalued its own currency to challenge China's global trade dominance.
Usually such yen devaluation draws US criticism. But this time Washington is not only silent but is also threatening to bring about a congressional motion to penalize China for artificially keeping the value of the yuan low. US President Barack Obama said on Monday that China had not done enough to raise the value of the yuan.
Chinese Prime Minister Wen, who was scheduled to meet Obama yesterday said the congressional move would be counter-productive and asked the United States not to blame China for its economic woes.
China today has the largest foreign currency reserves — $2.4 trillion at the end of December last year. Every year, 265 billion dollars are added to China's reserves because of the huge surplus in its trade with the US. In addition, China is number one investor in US bonds. If the US tries to punish China, it is the US that will be hurt. In retaliation, all that China has to do is to release some dollars into the market or encash the bonds.
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