A Necessary Challenge: Japanese Response to China’s Economic Rise and America’s Retreat

Ziyu He*

Edmund A. Walsh School of Foreign Service, Georgetown University, 3700 O St. NW, Washington, DC, USA. E-mail zh133@georgetown.edu


Dependent on China economically and reliant on the US for national security, Japan has frequently been portrayed as a waning economic power squeezed between two major powers with few policy options, save from cautiously striking for a balance in between. From this perspective, growing competition and even confrontation between China and the US exacerbate Japan’s dilemma, increasing the risk of Tokyo’s China
policy, be it leaning toward engagement or balancing. This paper, however, challenges this popular perception. Building upon the argument that China’s growing assertiveness and America’s relative decline have awakened Japan from a reactive participant to a proactive ally, this paper examines how these critical challenges have compelled Japan to adapt, innovate, and experiment with new strategies and foreign economic policies. I argue that the rapidly changing geopolitical environment presents Japan with a unique opportunity to stand out as a leader and significant power. For Japan, China’s rapid rise was an unprecedented new experience since the modern nation’s founding in the nineteenth century. For much of the past one and a half centuries, Japan was the only modern and powerful state in East Asia on par with the Western powers that created and dominated the world (Hoshino & Satoh, 2012). Even after its utter defeat in 1945, Japan’s miraculous economic recovery with US assistance elevated it to the East Asian flying geese model leader. However, China’s emergence since the early 1990s is creating a new regional paradigm that challenges Japan’s historical position and confidence. When China entered a period of high-speed economic growth in the early 1990s, Japan’s economy stagnated after the asset price bubble burst. Since 2010, China’s strong economic performance following the 2008 financial crisis and Chinese leaders’ perception of waning US power and influence emboldened Beijing to pursue more assertive foreign policies that further challenged Tokyo’s economic, political, and security interests. Gradual changes in the balance of power in Asia has fostered a popular portrayal of Japan as a waning power squeezed between China and the US and a pessimistic view of Japan’s future as the tension between China and the US escalates. However, this paper argues that China’s growing assertiveness and uncertain US commitment to Asia-Pacific have benefited Japan. In response to China’s growing assertiveness and fear of America’s retreat, Japan is adopting a more proactive economic foreign policy, including reassessments of bilateral trade relations with China, reconfigurations of investment and aid strategies to developing nations, and further engagements with like-minded allies and partners in the Indo-Pacific and beyond. In doing so, Tokyo is doubling down on its commitment to the liberal rules-based order and positioning itself as a significant participant and leader. Moreover, this paper argues that as much as the ongoing Covid-19 pandemic and rapid changes in geopolitics in the Asia-Pacific are challenging to navigate, these challenges also present Japan with unique new opportunities. Growing suspicion from Western countries on China’s advanced technologies such as 5G offers Japan a chance to take the leadership role in telecommunication. Reconfigurations in the global value chain as companies move their production plants from China to Southeast countries will also benefit Japan given its close relationship with ASEAN nations and its long-running developmental assistance. Finally, as the relationship between China and Western democracies further strained following the imposition of national security laws on Hong Kong and Beijing’s growing military pressure on Taipei, Japan will find opportunities to bridge China and the West. We should thus envision Japan’s future as a new leader in the Indo-Pacific, and a linchpin between China and the West rather than a waning power squeezed uncomfortably between China and the US. This paper will first discuss in details Japan’s dilemma, then analyse how China’s rise and overstep concurrent with the US retreat from the Indo-Pacific have benefited Japan and awoken it to new economic opportunities, and finally explore how the rapid changes inthe regional and international order offer Tokyo a unique window to become an active participant and leader in the post-pandemic world.

Keywords Japan . Japanese foreign policy . China-Japan relations . Alliance politics . Foreign economic policy .