assessments

May 13, 2019 | 09:00 GMT

9 mins read

Japan Woos a Region Caught Between the U.S. and China

This photo shows Japanese prime minister Shinzo Abe and his wife, Akie
(TOMOHIRO OHSUMI - Pool/Getty Images)
Highlights
  • Japan is expected to take on greater responsibilities in U.S-led security, infrastructure and economic initiatives in the Indo-Pacific region, which will advance Tokyo's goal of helping counterbalance China and its regional ambitions.
  • Japan's ample capital, expertise and benign image make Tokyo a favorable third force among countries in South Asia and Southeast Asia, many of which feel as if they have few options but to choose between one of the two great powers.
  • Tokyo will leverage its strategic value to enhance U.S. security and economic initiatives in ways that avoid excessively provoking Beijing.

Years after the rise of China pushed it out of the spotlight in the Asia-Pacific region, Japan is making a comeback. Japanese foreign investment in Southeast Asia has increased dramatically since 2013, particularly in emerging economies such as Vietnam, Thailand, the Philippines and Indonesia. Japan's increasing financial outlay has gone hand-in-hand with its efforts to become more proactive on regional security and diplomatic cooperation with individual states. Tokyo has become more involved in the South China Sea by stepping up defense cooperation with littoral states like Vietnam, the Philippines, Malaysia and Indonesia, while it has also pursued closer bilateral defense ties with Australia and India.

These overtures have ultimately given Japan a leading role in two regional mechanisms: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — a regional free trade agreement that Japan pushed after the United States withdrew from talks in 2017 — and the U.S.-led Quadrilateral Security Dialogue, an initiative bringing together Japan, the United States, Australia and India to counterbalance China.

For regional powers and smaller states in the Indo-Pacific that are caught between a mercurial and protectionist United States and an expansionist China, Tokyo is re-emerging as a reliable third power. But as Japan assumes greater responsibilities in U.S.-led security and economic initiatives as part of both countries' mutual interest in counterbalancing China, Tokyo will take care to avoid directly provoking Beijing, choosing instead to leverage its strengths to China to maximize its own interests around the Pacific Rim.

The Big Picture

The Indo-Pacific region stands on the threshold of a major shift amid China's rise, greater U.S. attention and American efforts to counterbalance and contain Beijing. Japan is siding with U.S.-led regional initiatives, building on the country's security alliance while artfully treading a balanced path between engaging and hedging against China. Tokyo has emerged as a reliable third-party partner for most regional powers and smaller states, which further bolsters its position between the United States and China in the region.

A Favorable Third Power

To be sure, Japan has always maintained engagement with the wider region. It played a role in stabilizing regional currencies in the aftermath of the 1997 Asian financial crisis and has long championed multilateral economic and security platforms. It has extensive investments in most countries in the region, particularly Thailand, Indonesia, and Vietnam — in fact, the country still has higher investment stock in Southeast Asia than China does, thanks in part to its deeply integrated regional supply chains. What's more, it remains Southeast Asia's top aid donor and wields a great deal of soft power that helps offset its limited overseas security presence.

Indeed, although Japan's wartime legacy in both China and the two Koreas continues to haunt the country, its adoption of a pacifist doctrine after World War II has earned it a favorable image in South Asia and Southeast Asia — particularly as states in these regions find themselves constantly attempting to fend off the United States or China. And while political expediency might force countries in these two regions to side with either of the bigger powers, public opinion in their countries frequently ranks Japan as one of the most trustworthy countries in the world.

 

This graphic shows Japanese political and economic volatility since 1991
Nevertheless, China has pursued an ever-larger role around the Pacific Rim over the past two decades, developing trade, investment and infrastructure links and expanding its military footprint, thereby upsetting the status quo. While many have cited China's rise as a factor that has decreased Japan's regional role, practical considerations also forced Tokyo to step aside. Before the 2000s, South Asia and Southeast Asia were top destinations for Japanese overseas development assistance, but it has halved its total since the mid-2000s alongside a parallel global reduction in foreign aid. On other fronts, too, Japan faded from central importance after the turn of the millennium, in part because of its declining economic strength, continued limits on overseas security operations, lack of coherent regional vision — as well as the United States' pivot to the counterterrorism fight after 9/11.

Idle No More

Following the end of the Cold War, Japan banked on the continuation of the liberal international order and U.S. hegemony around the Pacific Rim as a guarantee of its national interests — a stance that allowed Tokyo to remain a relatively passive player in terms of regional and global diplomatic activity. But given China's ability to challenge the liberal, rules-based system with its state-led economic structure and authoritarian political system, Japan finds itself unable to sit idly by if it wishes to remain prosperous and retain influence beyond its shores.

With Washington's blessing, Tokyo has been steadily working to bolster its military strength within the U.S-led security framework. As part of these efforts, Japan has broadened the scope of its self-defense force's activities and begun taking a greater role in overseas operations, pursuing new policy directions that became possible after the government altered some aspects of the country's pacifist constitution and broke its self-imposed defense spending limit of 1 percent of gross domestic product. But Prime Minister Shinzo Abe faces a serious backlash in his push for a constitutional revision to the constitution's Article 9, which outlaws war as a means to resolve international disputes, especially as his term ends in 2021. Indeed, as the United States seeks to re-engage in great power competition to balance against China, in part by pushing allies to assume greater regional responsibilities, there's no time like the present for Tokyo to shift toward a more assertive security policy.

 

Closer relations between Japan and regional states could increase Tokyo's strategic value in Washington's eyes.

Japan has demonstrated its ability to rapidly adjust to the changing geopolitical climate, as evidenced when it stepped into the breach to spearhead the CPTPP after Washington abruptly withdrew from the talks. Japan has also proved itself to be a credible and proactive partner on U.S.-led regional security and infrastructure initiatives, harnessing its transparency, vast capital and business acumen for Washington's use. Japan, in fact, has adapted to the White House's inconsistent policies, trade protectionism and cajoling for regional allies to shoulder more of the burden of defense much better than have other U.S. allies. Indeed, Abe has cultivated better relations with U.S. President Donald Trump than almost any other ally; as a reward, the U.S. leader granted his Japanese counterpart a reprieve from high-stake trade talks, strengthening Abe's hand ahead of upper house elections in July (albeit perhaps at the cost of casting the prime minister as a subordinate leader). Abe has also been proactive elsewhere in the region, reaching out to Russian President Vladimir Putin in a bid to sign a peace treaty between their countries and agreeing to pursue dialogue with North Korean leader Kim Jong Un without first demanding that Pyongyang account for the abduction of Japanese citizens during the Cold War.

Between the Great Powers

The expanding importance of manufacturing in the Indo-Pacific region as some industries relocate from China, coupled with the growth of a middle class and solid investment returns, present fertile ground for Japanese companies. The regions renewal as the center of U.S. focus as Washington pursues its rivalry with Beijing, will present a mixed bag of risks and opportunities for Tokyo.

 

This chart traces Japanese foreign direct investment in the Indo-Pacific over the past two decades

With the great power rivalry set to escalate, regional states, which constantly balance between the United States and China (and may, one day, be forced to choose between them) could turn increasingly toward Japan. Indeed, Malaysian Prime Minister Mahathir Mohamad has visited Japan three times since his election last May, underscoring Tokyo's role in the Southeast Asian country's manufacturing development and financing at a time when Kuala Lumpur has approached China's debt-financing on big-ticket projects with greater caution. Similarly, while Philippine President Rodrigo Duterte is now plotting a course more toward China, he has retained Japan as a close partner for his multifaceted economic and security priorities.

Naturally, however, Tokyo will face difficulties. For one, the prospect of regional conflict in the South China Sea or the Taiwan Strait  as a result of the great power competition could threaten Japan's maritime security. At the same time, the standoff between Beijing and Washington could transform Japan into a front-line state that would bear the bulk of the costs of any fight against China, particularly if the United States requests that the country cooperate on security with Taiwan — a sensitive matter for Beijing — or participate in freedom of navigation operations in the South China Sea. What's more, some of Japan's problems on the home front, including its struggle to fend off economic and wage stagnation and arrest its population decline, will impinge on the country's ability to project greater power overseas.

Nonetheless, closer relations between Japan and regional states could increase Tokyo's strategic value in Washington's eyes, assisting in U.S. security and infrastructure initiatives in the region while helping Japan fulfill one of its main objectives, namely, offsetting China's regional clout. In so doing, however, Tokyo will steer clear of ever challenging Beijing directly, preferring instead to artfully hedge against China while also engaging with it. Japan's latest rapprochement with China is a classic example. While Beijing has sought to bring peripheral countries into its orbit amid U.S. forays into the region, Tokyo is amending ties with its giant neighbor, reducing their territorial disagreements in the East China Sea while deflecting the impact of the United States' protectionist turn. Similarly, by jointly cooperating with Beijing on China's Belt and Road Initiative in third countries, Tokyo is gaining a foothold in places that it wouldn't have otherwise entered due to China's strength in such areas.

Ultimately, the Pacific Rim is essential to Japan's national interest, as its engagement with the region is critical if it is to maintain maritime links and access to energy, raw materials and export markets. But the rapid shifts in the region — due mostly to China's rise — have compelled Japan to come out of its shell and engage more proactively with the countries of the Indo-Pacific. In so doing, a resurgent Japan offers local countries a chance to team with a trusted partner, instead of choosing between the United States or China. And while preventing Chinese hegemony in the region will remain Japan's overriding objective, such a goal won't preclude Tokyo from strategic cooperation with Beijing in places where the island country stands to benefit.

 

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