Modi's Visit to Tokyo: A Snapshot of Japan-India Relations

Posted on Thursday, October 30, 2014 by Kota Takahashi

(Image Source: AP)


By Kota Takahashi

Japanese Prime Minister Shinzo Abe has been working fervently to strengthen ties with countries outside of its direct neighborhood while relations with China and South Korea remain cool. A recent highlight of his diplomacy is newly-elected Indian Prime Minister Narendra Modi’s five-day visit to Japan from 30 August to 3 September. This visit was significant in multiple ways. Not only was it the longest visit by an Indian leader to Japan in years, but it was Modi’s first visit to states outside of its direct neighborhood since his elevation to Prime Minister in May. Prior to his visit, Modi’s official Twitter account even tweeted in eloquent Japanese, which received warm responses from the Japanese public. These episodes symbolize India’s willingness to reach out to Japan and underscore the mutually beneficial relationship between the two countries. However, a closer look at what came out of Modi’s visit shows that the reality is not so simple; there is a significant gap in the extent of bilateral cooperation in economics and security.

Modi’s visit brought about important outcomes to facilitate the underdeveloped economic relationship between Tokyo and New Delhi. According to the Japan External Trade Organization, bilateral trade between Japan and India amounted to only about 5% of that between Japan and China, and Japanese direct investment to India was only about one-fifth of that to China.  Abe’s announcement of his intention to pour in a total of USD$32.4 million in public and private investment and financing to India in the next five years was targeted to boost this lagging interaction.  Another important accomplishment in the economic dimension is investment projects directed to Indian infrastructure. India’s poor infrastructure—in which half of all roads are unpaved and 300 million people (roughly the same size as the U.S. population) live without access to electricity—is estimated to cost India as much as 2% of its GDP annually. On the flipside, accelerating the export of infrastructure has been the central agenda of Japan’s economic growth strategy, as seen in its ambitious goal of tripling infrastructure export totals by 2020. This match of supply and demand resulted in the agreement in which Japan will transfer USD$463.3 million to the India Infrastructure Finance Company Limited, along with around USD$144.6 million for the Guwahati Sewerage Project in Assam.

Compared to these accomplishments in the economic sector, progress in the strategic and security dimensions remained at best symbolic. Though its negotiation was reignited in May last year, a nuclear cooperation deal between Japan and India is still yet to be signed. The bilateral framework between Japanese and Indian foreign and defense ministers (2+2) was not elevated to the ministerial level from the current vice-ministerial level. After months of prolonged negotiations—one Indian media source reported that “Japan is close to signing an agreement to supply amphibious planes to India” as early as May last year—talks about the Indian purchase of ShinMaywa US-2 amphibious aircraft from Japan remain inconclusive.

One of the rationales behind this is the difference between the two states in their relations with China. Japan’s relationship with China has been rocky due to territorial rivalry and historical animosity, so much so that their heads of state have not had a summit since they both came to power about two years ago. On the other hand, despite Modi’s swipe at China prior to meeting with Abe, New Delhi has few reasons to frustrate Beijing by forming an anti-Chinese coalition with its regional rival. Beijing was quick to grasp the opportunity to improve China-India relations, sending its Foreign Minister to India promptly after Modi’s electoral victory. Though India and China had a border spat in the same region last year, their relationship was relatively stable at the time of Modi’s trip to Japan. There has been little development in the Chinese “String of Pearls” strategy that some in the defense industry argue is intended to militarily encircle India. And most significantly, since Japan cannot unilaterally satisfy all of India’s investment demands, India needs stronger ties with China to accelerate economic development further. In short, there is a significant disparity between the two countries in how they assess the Chinese threat and its economic power.

Of course, this does not mean that Japan and India cannot cooperate to achieve their national interests or that their ties are insignificant. There are numerous issues where the goals of both countries overlap and there is no doubt that Modi’s visit was a positive development. But the fact that both countries share certain values and interests does not directly translate into a strong political coalition between Japan and India, especially on critical and sensitive issues such as their relations with China. In this context, the recent standoff between India and China in the disputed region near Aksai Chin could work as a catalyst for bolstering Japan-India relations, but it remains to be seen how that will play out. 

China’s Economic Leverage in Hong Kong a Warning for Taiwan

Posted on Monday, October 27, 2014 by David Gitter

(Image Source: AP Photo/Xinhua, Rao Aimin)

By David Gitter

China’s position that Taiwan’s economic future lies with the Mainland is crystal clear, and has been a consistent message throughout recent years. In the run-up to Taiwan’s 2012 presidential election, Beijing leveraged a minority of Taiwanese pro-unification groups and think tank scholars to supplement its own assertion that Ma Ying-jeou’s plan for a “Golden Decade” was inseparable from the Mainland’s development, and specifically in line with the economic measures of Beijing’s 12th Five-Year Plan. This year on the sidelines of the Boao Forum for Asia (BFA) Annual Conference, Chinese Premier Li Keqiang publically called on Taiwan to take full advantage of China’s economic growth, and offered Taipei first privileges to the Mainland’s development opportunities. Likewise, President Xi Jinping has stated that cross-strait economic integration will bring about mutually beneficial win-win results that should not be impeded.

Both Ma Ying-jeou and top Mainland officials have reiterated their support for an “economics first, politics later” approach to cross-strait relations, but the difference in perception of what the ultimate end-goal is makes economic integration a dangerous game for Taipei. Top Chinese Communist Party (CPP) leaders have cited the Economic Cooperation Framework Agreement (ECFA) as one of many ways to develop cross-strait relations with peaceful reunification as the target objective. Such integration is viewed by Mainland Chinese in terms of laying a larger foundation for the step-by-step process towards achieving China’s reunification. At the CCP 18th Party Congress in November 2012, Hu Jintao stated that under the one country two systems rubric, both sides of the strait should deepen economic cooperation to increase common interests.

However, this may prove to be a problem for Taiwan if Beijing tries to leverage these common interests to achieve its own political ends which Taipei does not share. Taiwan’s leaders undoubtedly understand this danger, but they see a lack of alternative options for fear of being left out of Asia’s economic integration. This has created a convenient lever for Beijing, as Chinese leaders try to make Taiwan’s regional economic integration contingent upon furthering the cross-strait economic merger.  Even so, it is obvious that by playing along Taipei has secured some dividends. President Ma correctly notes that after signing ECFA, sudden progress was made in other bilateral trade deals with Singapore, New Zealand, Japan, and the European Union.

Despite these breakthroughs, Taipei must fully prepare for how Beijing may use the growing cross-strait economic lever to pressure Taiwan into political concessions. Taiwanese scholars have pointed to how CCP leaders are using economic ties to garner influence in Hong Kong, drawing cogent parallels between the 2003 Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) and the more recent cross-strait service trade agreement. CEPA allowed the Mainland to become Hong Kong’s largest trading partner. As economic dependency on the Mainland grew, Beijing fostered considerable informal control through contacts with business leaders in the special administrative region. The CCP has long called for “using business people to pressure politicians.” Notably, Hong Kong business tycoons were rewarded with membership and honorary titles in the CCP’s comprehensive united front entity, the Chinese People’s Political Consultative Conference (CPPCC). Now as foreign governments and the United Nations Human Rights Committee voice their support for Hong Kong protesters’ demand for free elections, many of the city’s own business magnets with vested interests have publically opposed the movement as disruptive to the territory’s prosperity following a closed-door meeting with Xi Jinping in Beijing. Given the CCP’s consistent use of united front tactics such as “aligning friendly forces” in the push for national reunification, it is only logical to assume that when Beijing feels its economic leverage is sufficient, Chinese leaders may increasingly call upon Taiwan’s business moguls to parrot its cause.

Hong Kong’s example demonstrates that Taipei must guard against China’s strategy of utilizing cross-strait economic manipulation to achieve political goals. In order to protect itself, Taipei must ramp up a considerable economic reform agenda that includes aggressively pursuing regional free trade agreements. In addition to helping diversify Taiwan’s economic partners, the Trans-Pacific Partnership (TPP) would be instrumental in driving domestic economic reform and have a positive impact on productivity and competitiveness. Taipei should also recognize growing evidence that China’s economy may be headed for future troubles similar to Japan’s financial crisis in the 1990s, making diversification all the more important. As the Mainland’s neighbors become disillusioned with Beijing’s coercive foreign policy and seek to minimize their own economic dependence on China, new opportunities may take shape for Taiwan with other Asian states. Taiwan should seek to capitalize on these favorable circumstances, and build new lucrative relations independent from cross-strait integration. 

After Hong Kong, Macau?

Posted on Wednesday, October 15, 2014 by David Gitter

After Hong Kong, Macau?
(Image Source: Macau via Shutterstock.com)



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