China-Japan ties hit a new low
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China-Japan ties hit a new low

At the Munich Security Conference last month, Chinese Vice Foreign Minister Fu Ying said the China-Japan relationship is "at its worst". But that’s not the most colourful statement explaining China-Japan tensions of late.

At Davos, a member of the Chinese delegation referred to Shinzo Abe and Kim Jong Un as "troublemakers", lumping the Japanese prime minister together with the volatile young leader of a regime shunned by the international community. Mr Abe, in turn, painted China as militaristic and overly aggressive, explaining how — like Germany and Britain on the cusp of World War I  — China and Japan are economically integrated, but strategically divorced. Even J K Rowling has played her part in recent weeks, with China’s and Japan’s ambassadors to Britain each referring to the other country as a villain from Harry Potter.

Of course, actions speak louder than words — and there’s been no shortage of provocative moves on either side. In November, Beijing declared an East Asian Air Defence Identification Zone (ADIZ) — which requires all aircraft to follow instructions issued by Chinese authorities, even over contested territory, which pushed tensions to new highs. The following month, Mr Abe visited the Yasukuni Shrine — a site associated with Japanese World War militarism that makes it an automatic lightning rod for anti-Japanese sentiment among Japan’s neighbours.

But despite the clashes and growing conflict, it remains exceedingly unlikely that China-Japan fallout will escalate into military engagement. China won’t completely undermine economic relations with Japan; at the provincial level, Chinese officials are much more interested in attracting Japanese investment. And Japan still sees the success of its businesses in the vast Chinese market as an essential part of efforts to revive its own domestic economy, even if its companies are actively hedging their bets by shifting investment away from China. The relationship is unlikely to reach a boiling point. Rather, we are more likely to see sustained cycles of tension.

So if both sides intend to limit the potential for conflict, how concerned should we be? Even if military engagement is highly unlikely, China-Japan is still the world’s most geopolitically dangerous bilateral relationship and that will remain the case. There are a number of reasons why.

First and foremost, there’s always the chance, even if it’s remote, for miscalculation with major consequences. When fighter jets are routinely being scrambled to deal with Chinese "incursions" into what the Japanese consider to be their territory, the potential for a mistake looms large. And given the frigid relations between these two countries, if there is a mistake, China and Japan are going to assume the worst of the other side’s intentions.

On top of this, the sheer size and integration of the economies — China and Japan are the world’s second- and third-largest economies, respectively — makes the relationship hard to ignore.

Japan has 23,000 companies operating in China, with 10 million Chinese workers on their payrolls. But Japanese companies are actively diversifying away from China now, with foreign direct investment waning and Japan shifting to Southeast Asia in particular.

China-South Korea trade is fast approaching the levels of China-Japan trade as a result of fallout from tensions between Tokyo and Beijing. If the Chinese and Japanese start thinking their economic relationship is deteriorating, the potential for confrontation grows.

Furthermore, the size and duration of the conflict makes it a crucial global risk: the tensions are rooted in historical animosity with no viable solution. There’s no diplomatic outreach going on between China and Japan — and neither the United States nor any other foreign power is doing enough to help facilitate that relationship.

There is no one in China trying to see the world from Japan’s perspective, and vice versa. According to a recent Pew Research poll, just 6% of Chinese had a favourable view of Japan, and only 5% of Japanese view China favourably. Both sides may be well aware that a full-fledged conflict is not in the other’s best interest — but that only gives them more reason to push the envelope. As a senior Chinese official recently explained to me, the Chinese aren’t worried about pushing Japan (they "don’t want war" and the Japanese "don’t dare").

And although it’s in both China’s and Japan’s interest to stop short of military conflict, both countries have motives for drawing out the tensions. They can benefit back home from the perception of an unyielding stance to a historical enemy. Beijing continues to use Tokyo as a release valve for nationalistic pressures as it softens foreign policy on other fronts — particularly with US relations, where the charm offensive is motivated, in part, by an effort to drive a wedge between the US and Japan. In Japan, Shinzo Abe views China’s rise as a longer-term threat to Japan’s standing in the region, and he’s intent on pushing back.

So what can we expect this year? Rather than military conflict, the overall result will likely be an aggravation of already inflamed public opinion and a deterioration of the business climate in both countries. Mr Abe will push to reinterpret — and even rewrite — constitutional prohibitions on Japan’s right to use force in international disputes, and he will likely visit Yasukuni again.

But perhaps more worrisome than the near-term risks — there is no solution in sight.

Ian Bremmer is a Reuters columnist. He is the president of Eurasia Group, the leading global political risk research and consulting firm.

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