Japan-China Trade Agreements Brings Both Countries Together


Though China has recently been in the news for its trade policies, it had agreed to a new set of trade deals from an unlikely partner in Japan on Friday October 26th, 2018. According to the Independent and Japan Times, the two nations signed 500 agreements, including a currency swap deal (where 200 billion yuan was traded for 3.4 trillion yen to allow for easier financial transactions), search and rescue operations over each others’ respective waters and future plans on working together in other economic markets. Furthermore, Chinese Premier Li Keqiang said the total value of the deals is worth $2.6 billion, and both nations have confirmed cooperation to help denuclearize North Korea.

This is in a similar vein to the Regional Comprehensive Economic Partnership (RCEP), a proposed free trade agreement between 16 nations that constitute 30% of the world’s GDP, including 10 members of the Association of Southeast Asian Nations (ASEAN). According to the Economic Times, the proposed agreement aims to unify norms and reduce import tariffs to increase cooperation, boost trade and protect intellectual property rights. The Independent reports that both nations will seek to make greater attempts at regional free trade agreements.

The scope and size of this agreement may come as a shock considering the two nation’s patchy history with one another. According to CNN and Japan Times, the two were on thin ice due to disagreements over territory and jurisdiction over ownership of the Diaoyu/Senkaku islands in the East China Sea just 4 years ago. However, it seems that due to economic pressure by the U.S. on both nations, an unlikely friendship between the historical rivals blossomed. According to Reuters, 1 out of 3 Japanese companies feel they are affected by the U.S.-China trade war, many of whom considering contingency measures like shifting production and diversifying production chains.

According to the Sydney Morning Herald, Japanese Prime Minister Shinzo Abe signaled a willingness for greater joint projects between Japan and China so long as China meets international standards of transparency and economic viability.

“From competition to co-operation, the Japan-China relationship is shifting to a new phase now,” said Abe after meeting with representative Li Keqiang. “We are neighbours; we’re partners who will co-operate with each other, rather than be a threat to each other.”

In response, Li said “This indicates our cooperation has great potential and a promising prospect…as countries with great influence in the region and the world, we should safeguard free trade.”

While trade policies are not diplomatic policies, the two are highly correlated. A more interconnected world makes the costs of war and conflict a higher burden for one another. Perhaps the costs of a nation reliant on trade are equal to an autarkic nation, but it’s much more difficult to pinpoint concrete effects of war in the present for autarkic nations, as war seems so detached from reality.

Both these nations are formidable in military strength. According to CNN, China has spent $215 billion for its military in 2016. And while Japan is constitutionally prohibited from having a military, CNN reports that analysts estimate the Japanese Self Defense Force may have the fifth most powerful military in the world. While the scope of the defense force was intended for the nation’s defense, it has since expanded to protect Japan’s allies as well.

Though both these nations aren’t likely to engage in direct warfare, it is evident that tense situations have arisen, both over territory and over their allies, specifically North Korea.  And though full out combat might not be likely, military action has been used in the region in the past, resulting in the death and danger of military personnel.

These new trade policies signal shifts in diplomatic changes, which creating new allegiances and relations within the region.  Hopefully, this is a sign of cordial relations to come.