A new week, a new stage in the island battle simmering in the East China Sea: Japan’s prime minister looks likely to give the cold shoulder to a proposed Chinese free-trade pact, favoring one with the U.S. instead. The WSJ has the story:
Lawmakers of the ruling Democratic Party of Japan expect Mr. Noda to announce his decision to participate in the U.S.-led Trans-Pacific Partnership free-trade initiative after an expected cabinet reshuffle as early as this month, following his re-election as party leader Friday…Japan’s trade negotiators admit that trade talks with China are unlikely to move forward this year and that refocusing on the TPP is becoming an option. But they stress they haven’t made any formal determination on the prospects of trade talks with China or how to go about other trade negotiations.
Last week Via Meadia noted China’s strategy of using its economic clout to punish the neighbors in particularly heated disputes. First it was the banana war with the Philippines; now a China-Japan trade war looms. China has made the customs process for Japanese companies increasingly onerous. Japanese companies and economic policymakers are firing back, putting a long-discussed free trade agreement on the line. The Japanese prime minister warned China, via the WSJ:
China should be developing through the various foreign investments it receives. . . . I hope for its levelheaded and rational understanding that anything to discourage that is a disservice to itself.Recent delays in customs and visa issuance are of concern. . . . Damaging our ties over such things would be bad for not just the two countries’ economies, but for the global economy.
Separately, Chinese ships entered Japanese waters, leading to a formal protest from Tokyo. The ships were on a “rights defense” mission, according to Chinese state media.The spats over the islands could have long-term repercussions for economic relations between the world’s second- and third-largest economies, and indeed, according to reports, South Korea and Taiwan are not standing on the sidelines; they’re joining in the fray as well.Preoccupied by the Middle East meltdown, the Obama administration is going to have to walk and chew gum at the same time. The Middle East is in flames — and Asia is boiling.Welcome to the New World Disorder.