Enhancing China-Japan trade


Beijing and Tokyo issued in 1972 the China-Japan Joint Statement announcing the normalization of diplomatic relations. To improve the ties and consolidate the foundation for cooperation, the two sides signed and issued the Treaty of Peace and Friendship in 1978, the China-Japan Joint Declaration in 1998, and a joint statement on advancing strategic, mutually beneficial relations in 2008. 

In 1978, China launched its reform and opening-up policy, further driving China-Japan trade. Over the 50 years since the normalization of diplomatic relations, economic and trade ties have fluctuated due to changes in the political landscape in Japan and the international environment, but they still registered stable and sound development. However, Japan has joined the “Indo-Pacific Economic Framework” that was recently initiated by the United States, leading to the cooperation between China and Japan to face challenges.

Economic and trade ties between China and Japan have seen great improvement over the past five decades. Bilateral trade totaled $1.04 billion in 1972 when the two countries normalized diplomatic relations, and it reached $371.4 billion in 2021. After China joined the World Trade Organization in 2001, trade between the two countries exceeded $100 billion for the first time. 

Japanese companies’ investment in China has kept growing, playing an active role in China’s foreign trade and economic development, as well as in bilateral economic and trade relations.

China and Japan are each other’s major trading partners, and trade has played a key role in promoting their mutual economic development. However, Japan’s nationalization of China’s Diaoyu Islands in 2012 and its distortion of wartime issues have affected economic and trade cooperation between the two countries. 

In 2017, China-Japan relations were restored, creating a favorable environment for further cooperation and improving the economic and trade ties. Despite the impacts of the COVID-19 pandemic, bilateral trade grew remarkably in 2021 to reach $371.4 billion, a year-on-year increase of 17.1 percent.

While the economic and trade relations between China and Japan have continued to improve, cooperation has been expanded to more fields, especially in regional economic cooperation. After years of negotiations, the Association of Southeast Asian Nations, China, Japan, the Republic of Korea, Australia and New Zealand signed the Regional Comprehensive Economic Partnership in November 2020, which came into effect on Jan 1 this year. 

The launch of the agreement created the world’s largest free trade bloc. As one of the world’s most important bilateral relations, China-Japan relations involve a free trade agreement for the first time under the RCEP.

However, China-Japan economic and trade cooperation has not been all smooth sailing. In recent years, the US has regarded China as a strategic competitor and sought to contain it. The Joe Biden administration is seeking allies to participate in this strategy. As an important ally of the US, Japan hopes to use US power to contain China, but it also wants to share the benefits of China’s economic development through economic and trade relations. 

Japan is increasingly following the US strategy and constraining exchanges with China in many fields. Participation in the “Indo-Pacific Economic Framework for Prosperity” shows its strategic intention.

There is still much room for growth in the economic and trade cooperation between China and Japan, but tapping the potential calls for the joint efforts by the two countries.

A healthy political environment is important for economic and trade relations, for which external influences should be kept at bay. The past five decades show that stable and sound political relations can help improve economic and trade ties between China and Japan.

As an ally of the US, Japan’s economic and trade relations with China will be affected more as it is involved in Washington’s “Indo-Pacific strategy”, which is aimed at decoupling from the industry chains in China and excluding China from the regional trade system.

Economic and trade relations between the two countries have great room for growth, and the RCEP can further advance the cooperation. Meanwhile, China has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, of which Japan is a key member. Cooperation under these agreements has great potential.

Since the normalization of diplomatic relations between China and Japan, the two sides maintained close cooperation while not signing a common free trade agreement until the RCEP, which affected economic and trade ties between the two countries. 

Under the RCEP, China-Japan trade can make leapfrog progress, providing new opportunities and unleashing the potential for economic cooperation between the two countries. 

China and Japan need to implement the commitments of the RCEP, which will promote economic and trade relations between the two countries, drive the success of the world’s largest free trade bloc, further economic globalization and counter anti-globalization, unilateralism and trade protectionism.

The author is director of the Institute of Asian Studies at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. The author contributed this article to China Watch, a think tank powered by China Daily. 

The views do not necessarily reflect those of China Daily.