Japan Looks to China

...Yet historic as that event was, it has been overshadowed by the sudden emergence of the China issue, promising to make 1972 the year of China...

...Both the LDP and the opposition parties recognize that little can be done while he is still in office...

...among those still barred from China are the Mitsubishi and Mitsui groups...

...in foreign policy as well as trade...

...In contrast to the seeming abrupt-ness of the American move, the Japanese decision-making process is deliberatively slow...

...One immediate consequence was its new cognizance of its Chinese neighbor...

...Frances M. Foland, a Fellow of the Institute of Current World Affairs, is traveling in the Far East...

...Significantly, much of the business community supports the opposition's demand for a complete break with Nationalist China, including the repeal of Japan's peace treaty with Taiwan, a prerequisite to any renewal of diplomatic relations with the People's Republic...

...MIXING BUSINESS AND POLITICS Japan Looks to China by FRANCES M. FOLAND Tokyo It is not surprising that during their two-day meeting in San Clemente early this month, President Nixon and Premier Ei-saku Sato focused on two topics: future trade relations between Japan and the U.S., and their separate policies toward the People's Republic of China...

...Economically, this involved the international monetary crisis and the currency revaluation...

...Upon his return from Peking in November, Yoshizano Iwasa, chairman of the Fiji Bank, observed that China "seeks a stable development and does not try to hasten it by rashly borrowing funds from foreign countries...

...A second delegation of Japanese businessmen, this one representing Tokyo, visited Peking in December...

...And the second Nixon shock made the cultivation of this outlet for Japanese products doubly attractive by dramatizing the need for Japan's exporters, now heavily dependent on U.S...

...Nonetheless, in a speech to the influential organization's board of counselors after returning home, Keidanren's president broke precedent by calling for normalization of Sino-Japanese relations...

...That is why they are saying that the development of natural resources might take 20 years before they become useful to Japan...

...By year's end, two more Japanese trading houses had accepted Chou's "principles," with only four of the 10 largest firms refusing to capitulate...

...Tokyo has always believed in "separating politics from economics," but Peking insists on mixing the two and lately has toughened its terms...

...Japan now felt itself thrust into a new phase of "forced independence," requiring a reassessment of its economic and political affairs...

...Indeed, President Nixon's July 15 announcement of his pending visit to Peking initiated a process here whose outlines are only beginning to be seen...

...In fact, by redirecting alignments among the major powers here as elsewhere in the world, China is becoming the loadstone of the future...

...The final result is a gradually worked-out consensus that does not give anyone all he wants but partially meets the demands of everyone...

...The businessmen accurately reflect the shifting world scene and the changing attitudes of their own countrymen...

...and Europe...

...What China seeks from Japan is industrial technology...

...1," as the July 15 announcement is called here, was like the first revelation of the infidelity of a spouse: It may be forgiven, but it will never be forgotten????particularly because of what is considered the humiliating manner in which the President proclaimed his new policy...

...supporter, it has eschewed any unilateral action that might adversely affect this relationship, despite the cultural pull and physical proximity of the People's Republic of China...

...Before normalization can be achieved, several domestic obstacles must be cleared away...

...In China, agriculture will always remain the key, and the nation is now shifting slowly and steadily from light to heavy industry...

...Chou impressed upon the delegation that business and politics must go hand in hand, and that normalization will be possible only after Premier Sato leaves office...

...Meanwhile, trade is expected to expand slowly...

...In late December, the powerful Ministry of International Trade and Industry began a comprehensive review of Japan's commercial policies against the backdrop of the upward revaluation of the yen...

...The recession that has plagued the country for over two years was just beginning to decline when the import surcharge and subsequent yen revaluation stunted the recovery...

...Politically, the major achievement was the accord reached with the U.S...

...Until this issue is resolved, Japan's domestic politics will remain in disarray and its foreign policy in confusion...

...by 0.1 per cent as the "nation with which Japan should maintain the most friendly ties...

...In the rivalry, Japan will obviously enjoy a decided geographical advantage...

...From 1962-69, business between the two countries increased 750 per cent...

...The Japanese anticipate that Peking will use its leverage as a major importer to play off the U.S., Japan, and Europe against each other...

...Thus "Nixon Shock No...

...for Okinawa's restitution to Japan after a quarter-century of American occupation...

...Even before the government issued these recommendations, Japanese businessmen were wooing Peking...

...One of them is Sato, who will be retiring soon...

...Opposition leaders welcomed the joint communique, but government spokesmen contend that China's insistence on abrogation of the Taiwan treaty lessens prospects for normalization talks...

...Indicative of the rapidly evolving opinion here, a national survey in October showed 54.2 per cent expecting Japanese-American relations to continue as usual and 16.3 per cent believing that they would become more competitive...

...Last September a top-level delegation of Kansai executives, representing interests in Western Japan and headed by the President of Osaka's Chamber of Commerce and Industry, became the first such group to penetrate the Bamboo Curtain since the Cultural Revolution...

...Essentially, Chou requires that any Japanese company trading with China adhere to the following conditions: 1) that it have no close relations with Taiwan or South Korea...

...And in the mutual misunderstandings that have marked this transition over the past six months, each nation has often failed to take into account the internal problems of the other...

...When they broached their belief that "the Sino-Japanese relationship is now at a stage of practice rather than theorizing," the visitors found their hosts somewhat less than enthusiastic...

...Bound by certain obligations to Chiang Kai-shek, mindful that at the moment its business dealings with Taiwan exceed those with the mainland, and concerned about retaining close relations with the U.S., Japan even agreed to cosponsor the resolution that would have preserved Nationalist China's UN seat...

...Yet neither could this Asian power long ignore China's turn from isolationism to cautious internationalism...

...Although Tokyo has no diplomatic relations with Peking, economic ties have existed for years...

...Being a nation devoted to tradition, formality and decision by consensus, Japan does not alter its course lightly...

...Chou, of course, must seek the technology and products of advanced nations if his country is to become industrialized...

...Commerce is carried on ex officio by large Japanese companies that annually negotiate one-year trade agreements with the Chinese government...

...diplomatic tactics...

...After Sato steps down, this advantage, and the shocks administered by Washington, will almost certainly prompt Tokyo to assert a new independence from the U.S...

...business...

...3) that it supply no goods to South Vietnam's war effort...

...All parties concerned are consulted, with differences resolved by negotiation and compromise...

...by November those expecting "the present relationship" to continue had dropped almost a fifth, to 34.7 per cent, and those predicting more competition rose to 47 per cent...

...For the immediate future China's greatest demands will be in the areas of communications, transportation, energy production, chemicals, and heavy machinery????All included in its current Five-Year Plan (1971-75...

...As for the man in the street, a November poll of two major urban centers, Tokyo and Osaka, had China edging out the U.S...

...In this country of deep esthetic traditions, style is of consummate importance and atam-goshi, meaning "over-the-head," has become the Japanese expression for U.S...

...Similarly, Japan's External Trade Organization urged companies to open additional markets in Latin America, the Communist bloc, and elsewhere outside the U.S...

...the four opposition parties tend to favor recognizing the mainland and severing relations with Taiwan...

...Despite a long tradition of economic and diplomatic cooperation, Tokyo and Washington seem to be entering into increasing competition in both areas...

...In what could be called "diplomatic lag," Japan held to its traditional postwar "Two-Chinas" policy at the General Assembly session in the fall...

...When it was defeated, the doves back home ????especially members of opposition parties in the Diet—jumped to their feet, applauding...

...The new era, however, does not constitute a complete about-face...

...consumers, to find new customers...

...With a national economy geared to exports and an industrial plant operating at surplus capacity, Japan is addicted to expanding foreign markets...

...Taiwan is an integral part of China and has already been returned to China...

...2) that it be free of capital ties with U.S...

...Tempered by their closeness to the government and their respect for Japan's Federation of Economic Organizations (Keidanren), which includes many pro-Taiwan members, these financial leaders were more modest in their aims than the Kansai group...

...The way had now been fully cleared for the new era of Japanese diplomacy...

...Looking back on the kaleidoscopic succession of economic and political developments that filled 1971, Sato reflected shortly before his departure: "I thought it was going to be a year of domestic affairs, but it turned out to be a year of foreign affairs...

...Among other things, it advised financial leaders to do more business with Communist countries...

...The present Japanese leadership is unacceptable to the Peking regime because of its long-term advocacy of a Two-Chinas Policy, its political conservatism, and its alleged malfeasance in postwar reparations...

...Cast in the role of U.S...

...Japanese firms, eager to solidify and enlarge their lead position in this potentially large market, have submitted to Chou En-lai's demands, prompting one Tokyo newspaper to editorialize about "kowtowing to Peking" and "complete subservience to the Peking line...

...Chou En-lai's accession to the Number Two spot in Peking, following the recent disappearance of Lin Piao, has reinforced a pragmatic policy of economic development, rapprochement with the world community, and belligerent anti-Sovietism...

...by 1970 it comprised almost 20 per cent of China's foreign trade, or more than double that conducted with the next largest non-Communist rival, Hong Kong...

...The most explicit statement of this position is contained in the latest annual Memorandum Trade Agreement between Tokyo and Peking, signed December 21 by the Japanese companies doing business with the mainland: "There is only one China and that is the People's Republic of China, whose government is the only legitimate government representing the Chinese people...

...As Rodney E. Armstrong, executive director of the Japan Society of New York, recently noted, "The Japanese process just doesn't . . . permit them to make a sudden 180-degree turn...

...Although trade with China now represents only about 2.5 per cent of its total exports, Japan fully appreciates the potential of a developing market of 800 million people...

...Clearly, therefore, an already tense situation was made still more volatile with the delivery on August 15 of "Nixon Shock No...

...2": the 10 per cent surcharge on imports and suspension of the dollar's convertibility into gold...

...The first Nixon shock, itself a response to China's newly opened door, freed Japan's hand vis-a-vis its giant neighbor...

...Among the established political organizations, Japan's dominant Liberal Democratic party (LDP) is divided between hawks and doves...

...Since World War II, Japan has maintained a passive stance toward Mao Tse-tung's regime, largely in deference to Washington...

...The so-called Japan-Taiwan Peace Treaty is clearly illegal, null and void, and should be abolished...