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  • China-Japan sign three-year FX swap deal to strengthen financial stability, business activity

    China-Japan sign three-year FX swap deal to strengthen financial stability, business activity | Photo: Reuters FILE

Published 26 October 2018
Opinion

Multiple disputes emerged between both countries over Japan laying claim to several islands located in the East China Sea.

Japanese Prime Minister (PM) Shinzo Abe embarked on a four-day visit to China with the aim of warming relations with its neighbor. Abe traveled with a contingent of foreign and trade ministers as well as 500 business representatives.

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On Friday, Chinese and Japanese leaders signed a wide range of agreements in the areas of finance, trade, innovation and securities listings, aimed to bolster cooperation between both nations through creating more fruitful economic interdependence.  

In recent years, multiple disputes emerged between both countries over Japan laying claim to several islands located in the East China Sea. The action led Chinese citizens to boycott trading goods and businesses and causing several Japanese corporations to close their firms in China.

The issues prompted Abe to seek to improve relations with its neighbor. For its part, China can also benefit from improving relations with Japan. “They [China and Japan] need to improve relations as a response to the uncertainty brought about by Trump in Asia. This is a good thing — better than a deterioration," according to Yu Tiejun, a professor from Peking University.

In recent years, China has sought to expand its leadership in the region and in the world, through a variety of strategies, such as exerting territorial claims over nearby islands, which offer access to potential off-shore gas and oil resources, launching its Asian Infrastructure Development Bank (AIDB). At a global level, China is promoting the Belt and Road projects — an ambitious scheme of infrastructure investment which also targets Latin America — and, most recently, conducting maritime drills with neighboring Association of Southeast Asian Nations (ASEAN) countries.

These actions have not been well received by the traditional world powers, namely the United States and its main allies in the region, particularly Japan, as it threatens a long-standing western hegemony over the Asian continent.

The Trump Administration has been reluctant to respect its own allies and multilateral agreements promoted by previous administrations, which has not been overlooked by PM Abe, who is looking out for Japan’s own interests in approaching China.

According to the New York Times, [Abe] is well aware of the President’s treatment of American Allies and also wants to cover its bets. Currently, the United States and China are engaged in a trade war led by the Trump Administration, as part of his “America First” protectionist rhetoric.

Partly due to this — as well as fears of Chinese expansionism in the Asia-Pacific region, which undermines U.S. hegemony in a key geopolitical area — any warming of relations between China and Japan, which could strengthen China’s leadership position, is seen with distrust in Washington.

 

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