China vs. Japan: the steps to detente

As the dispute between China and Japan escalates, it is time to start looking to solutions to this serious issue making waves in East Asia.

Today marks the first time that a major Chinese political figure has stepped forward to comment on the increasingly dangerous strains splitting China and Japan. Today in a statement Chinese Premier Wen Jiabao said that "Tokyo bears full responsibility for the situation, and it will bear all consequences". And "Further Action" has not been ruled out by the Chinese leadership in the situation either.

Meanwhile, Japan is trying all it can (short of releasing the Chinese captain) to cool down the Chinese. But they just don't seem interested in listening to the Japanese. Whether China is using this situation as an excuse to seize control of the Diaoyu Islands is not clear, but in this humble Journalist's opinion, it seems a little extreme to be reacting in this way to the seizure of one of their citizens.

So how does this serious contention between these two countries get solved? The first thing that could happen to cool this down is Japan's release of the Chinese captain. Since that doesn't seem likely, at least for another 10 days, we'll put that aside. The second thing that could happen is that China could calm down and listen to Japan's claims. That however, seems near-impossible as China is escalating the dispute.

That leaves our third choice: bringing in a third party to help settle the dispute. And while the UN does wonderful work, I'm not talking about them. I'm talking about Australia.

It makes a lot of sense for Australia to step into the ring in this dispute for all three parties. First, Australia is a trade partner with ASEAN, which China also trades with, so they aren't unfamiliar with each other. Also, in 2007 Australia signed a security pact with Japan, making the two countries strong allies in the region.

Second, Kevin Rudd, former Prime Minister and current Foreign Minister of Australia speaks Chinese and has a deep knowledge of China through his studies both in China and Australia.

Third, this situation gives Julia Gilliard, the newly elected Prime Minister, a great chance not only to assert herself as a leader in the world, but assert Australia as a strong country in the region. And since Kevin Rudd is now the Foreign Minister, it allows for them to work together under the auspices of regional security, while strengthening her new position.

And China and Japan have absolutely nothing to lose by Australia stepping in. Instead of bringing an agenda, like the United States or UN might, they are simply interested in bringing peace to the region. And since Australia has strong ties to both countries, there should not be claims of favoritism to either China or Japan. The situation can be resolved and relations in Southeast Asia can return to the status quo.

So I call upon Australia to step forward and seize this perfect opportunity to bring themselves forward in the regional and international arena. The benefits are numerous and the risks few. Allowing this dispute to continue could have serious repercussions in the region that could very negatively affect Australia and it's interests, let alone China and Japan. If this dispute comes to blows, however unlikely that may be, the waves of unrest in East Asia will roll upon the shores of countries the world over.

So step forward and take charge, Australia! The world is counting on you.

BBC Article

Kevin Rudd

Exchange Rate Standoff

A story today found on Foxbusiness.com illustrates the complexity of the situation surrounding the Chinese Yuan.

The story discusses Treasury Secretary Timothy Geithner's criticism of China's monetary policy pegging the Yuan to the value of the Dollar. For years China has been using this system to artificially devalue their currency, an important part of their economy. If their currency was allowed to float with the dollar and the Euro, China would be in serious trouble. The reason for this has everything to do with exports.

China is an export-based economy. Without the massive amount of exports leaving their country, the main pillar of their economy fails, and the rest of the economy around it (presumably). This facilitates the need for a low-value currency. The United States is experiencing the effects of a low-value currency right now with increases in exports.

But the under-valued Yuan creates problems for those who trade with China. For example, in 2009 the U.S. trade deficit with China was over 226 million dollars. This year the deficit is at 145 million as of July. Last year in July, that number was 123 million. This shows that even though the U.S. economy has been suffering this past year, imports from China have only increased. In fact, if we look 10 years back to the year 2000, our trade deficit with China was 83 million for the year.

Secretary Geithner has a difficult road ahead of him if he hope to control the trade deficit with China. But the solution will not lie with the Chinese.

Fox Article

Trade Numbers

Boiling the East China Sea

A week after a Chinese trawler had a run in with two Japanese patrol vessels, the dispute that surfaced between the two countries has intensified.

The main question is what this is really about: a detained Chinese fishing captain, or the Senkaku Islands? China is saying that "various reasons" have caused Li Jianguo, The Vice-chair of the Standing Committee of the National People's Congress, to delay a trip that had been planned in conjunction with Japan's lower house of parliament. But it all comes down to the detention of one of their citizens.

The situation is a little strange, because Japan has released the other 14 members of the vessel's crew yesterday. Keeping the captain detained seems to be a much more political move. The dispute over the islands where the incident occurred has been brought to light once again, a constant sore between China and Japan: The Senkaku Islands.

Also known to the Chinese as the Diaoyu Islands, they are claimed by both countries, a dispute which leads back to the late 19th century, when Japan defeated China in the Sino-Japanese War of 1895. Among many concessions the Chinese made after their defeat were the Diaoyu Islands. China has always felt a sore spot when remembering their defeat at the hands of the Japanese then, and developed a strong dislike of them after the events at Nanjing, when the Japanese massacred untold thousands of people in their invasion of Manchuria.

Although relations between the two have stabilized in recent years, tempers were known to flare when previous Japanese Prime Ministers, especially Ichiro Koizumi, would visit the Yasukuni Shrine, a memorial to Japanese war heroes of WWII.

According to BBC News, the Japanese have been increasing their presence around the islands in recent years due to growth in both Chinese and Taiwanese regional strength

Link to the BBC Article

Tensions between China and Japan

An article featured in the September 9th issue of the Financial Times highlights the ongoing territorial disputes between China and Japan.

The dispute centers around a group of islands, known as the Senkaku to the Japanese and the Diaoyu to the Chinese. The pretext is the seizure of a Chinese fishing vessel and the subsequent arrest of its captain.

A number of protesters appeared outside the Japanese embassy in Beijing calling for the release of the captain.

The issue comes down to who was operating where. The Japanese claim that the fishing vessel was operating illegally in Japanese waters and collided with Coast Guard vessels during their attempt to stop the ship. The Chinese dispute whether the real case is reversed, and the Japanese coast guard vessels were operating illegally when they stopped the vessel.

Whether China's naval growth and the dispute over the group of islands will cause further tensions between the Asian neighbors is yet to be seen, but it can be said that more attention should be paid to the relations between them.


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