Entrepreneurs seek better economic bonds despite diplomatic deadlock

More than 100 influential Japanese entrepreneurs are visiting China in search of business opportunities brought about by Chinese economic reforms, and they appear to be increasing pressure on the hard-line Japanese prime minister to rein in his government's hostility toward China.

Abenomics, an economic stimulus package proposed by Japanese Prime Minister Shinzo Abe, is being challenged by sluggish demand from outside Japan, and mending strained ties with Beijing is a pragmatic choice for those seeking to boost the economy, observers said.

"Promoting the healthy and stable development of the China-Japan relationship conforms to the interests of the two peoples," Vice-Premier Wang Yang told the visiting delegation on Tuesday.

Wang expressed his hopes for deeper cooperation on economic and trade dimensions and urged Tokyo to "face up to and properly handle relevant major issues".

In a trip spanning from Monday to Sunday, the group is led by Fujio Cho, chairman of the Japan-China Economic Association and honorary chairman of Toyota Motor Corporation.

The Japanese entrepreneurs have come to "seek a turnaround of the China-Japan relationship and bring an end to the already lose-lose situation", said Zhang Jifeng, from the Institute of Japan Studies at the Chinese Academy of Social Sciences.

Ties between the world's second and third-largest economies have been strained for more than 14 months, ever since the Japanese government unilaterally announced that it had "nationalized" part of China's Diaoyu islands last September.

"Bilateral trade is still far from returning to normal, despite the positive signals sent out by the latest statistics and economic indicators," Zhang said.

Foreign direct investment from Japan in the Chinese mainland gained 6.31 percent year-on-year in the period from January to October, according to the Ministry of Commerce.

Yet ministry spokesman Shen Danyang also said that China's trade with Japan has declined by 7 percent in the first 10 months this year in comparison with the same period last year.

"The year 2012 witnessed an annual drop in bilateral trade of 3.9 percent, and the figure this year may rise to more than 7 percent. The annual FDI growth from Japan this year is also drastically shrinking, because the figure in 2011 was close to 50 percent," Zhang said.

Jiang Ruiping, an expert on the Japanese economy and vice-president of China Foreign Affairs University, said Japanese businessmen demonstrated a willingness to thaw the relationship when the political deadlock started, but Abe and key cabinet members have continued their aggressive posturing toward China.

Hiromasa Yonekura, chairman of the Japan Business Federation and a member of the visiting delegation, described the efforts at exploring the future of the bilateral relationship as "indispensable".

Yet during his trip to Cambodia and Laos last weekend, Abe called for maritime cooperation with the clear aim of "containing China's maritime presence", Japanese media commented.

"The big shots of Japanese industry are visiting China on such a large scale to increase pressure on the Abe Cabinet to refrain from provocations. But we cannot place too much hope in the subsequent lobbying in Tokyo because the politicians are now acting quite independently from the business advisors," Jiang said.

Beijing outlined a blueprint for future reforms, with more than 300 reform measures adopted unanimously at the Third Plenary Session of the 18th Communist Party of China Central Committee on Nov 12.

China has sent a clear signal of its intention to expand economic reforms in the following decade, and the visiting delegation has clearly made up its mind to seek policy interpretations from Chinese leaders, Jiang said.

"The Japanese industrial players do not want to lose out on a piece of China's economic cake and they are wondering where China is heading," he said.

One of the aims of the Japanese visit is to encourage demand from China, because the Japanese economy has suffered "an increasing trade deficit", while at the same time the Japanese yen continues to depreciate, said Xu Changwen, a research scholar with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

"The right-wing mentality is spreading within Japanese domestic politics, and Japan has worsened its relations with its neighbors due to historical and territorial issues, which further impacts on the economic indicators," Xu said.

According to Zhang, a major improvement in relations with Tokyo in the near future is unlikely and Japan should implement an economic stimulus package by coordinating politics and diplomacy efforts.

"Unfortunately, the Abe Cabinet is doing the opposite," he said.

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