China to Consider Scrapping Policy of Separation of Politics and Economy With Japan

It was reported on April 19 that China is considering scrapping its Japan policy, which is known as “separation of politics and economy.”

China has so far maintained the principle of separation of politics and economy to avoid its economic cooperation with Japan from being negatively affected by issues like distorted history textbooks and territorial disputes.

Feng Huang TV of Hong Kong quoted Chinese sources as saying that Chinese government think tanks have submitted reports suggesting changes in the principle on several occasions amid recent flare-ups of anti-Japanese demonstrations in the country, and that the government leadership is deliberating on them.

The reports pointed out, “While continuing abrupt remarks and behavior such as distorting history textbooks, claiming territorial rights over Diaoyu Island, intervening in the Taiwan issue and expanding its military forces, Japanese rightists say that Japan will not suffer any economic damage thanks to China’s principle of separation of politics and economy.”

They went on to say, “China needs to take tough measures to lead Japanese rightists to realize such ideas are wrong.”

In particular, the reports said, “A large number of large Japanese companies steer rightist forces further to the right by giving them political funds,” stressing, “We should give a lesson to those companies one way or another.”

The report also argued, “China should scrap the principle of separation of politics and economy in its relations with Japan. The principle marginalizes moderate forces in Japan that uphold improvements in bilateral relations by reducing their say and influence, while strengthening right-leaning conservatives and the large corporations that support them.”

Chinese sources said that some think tanks believed that the recent recovery of the Japanese economy is driven by the increased demand thanks to China’s rapid economic growth, adding, “Japan will be the hardest hit by the scrapping of the principle, while China is likely suffer to a degree.”

The sources explained that over 90 percent of Japanese businesses consider China as the primary investment destination and that China elbowed out the U.S. last year to become the largest importer of Japanese goods for the first time. They also added Japan’s economic dependence on China is ever-increasing, as evident in the fact that more than 80 percent of some 30,000 Japanese businesses in China are profitable.

The sources also said, on the other hand, that China’s dependence on Japan is decreasing, reducing Japan, once its largest trading partner, to third place following the EU and the U.S., and that China’s fast economic growth has caused a rapid inflow of alternative economic forces that can replace Japanese ones.

Yoo-Seong Hwang yshwang@donga.com