APEC Summit: Will It Matter for Northeast Asia?

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The post-Cold War geopolitical balance in

Northeast Asia has been askew for the last two
years. While most students of foreign policy
would attribute this imbalance to a more
nationalistic and assertive Japan, particularly
since Prime Minister Shinzo Abe came to power in December 2012, that is only part of the reason
for the recent drift away from Japan. Economics and security are beginning to reassert
themselves in the regional calculus, which has begun pushing relationships in unexpected
directions.
Abe will attempt to use this years APEC Leaders Summit to reset relations with several of Japans
neighbors. While a photo opportunity and a vague public commitment to improve relations may
provide a mild form of short-term relief, it will do little to address the underlying issues that have
been gradually transforming the region. Japans relationship with each of its Northeast Asian
neighbors will not be dramatically altered by one meeting, however hard Abe has been lobbying
over the past few months. Nevertheless, the summit provides an opportunity to see the
transformation the region is currently undergoing.
Japan and China have for the last few decades enjoyed an improving bilateral relationship,
underwritten by an economic symbiosis between heavy Japanese investment in China, and cheap
Chinese labor for Japanese companies. Unfortunately for their relationship, the fundamentals of
this relationship are beginning to change. While the shift in Japanese investment from China to
Southeast Asia has been attributed in large part to their dispute over the Senkaku/Diaoyu Islands
and Chinas insistence that Japan more formally accept responsibility for atrocities committed
during the Second World War, that is only part of the story.
In fact, Japanese investment is moving to areas where labor is cheaper. As China rebalances away
from an export dependence to a consumption-driven economy, its labor costs will have to rise to
meet inflation, otherwise the ruling Communist Party of China will likely need to contend with
considerable unrest.
Another result of Chinas economic growth miracle has been its ability to sustain annual
double-digit increases in military spending for well over a decade. This, more than any other

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factor, has created growing tenisions with Japan, as well as many Southeast Asian countries.
China now has the ability to contest disputed airspace and maritime territory with Japan, which
already has a military comparable in size to France and with substantial surface vessel and
submarine firepower. The increasing size of both countries naval assets, combined with Japans
recent push to normalize its Self-Defense Forces, have shrunk the East China Sea and, in the
absence of clear protocol and lines of communication, have ramped up the likelihood for conflict.
The relationship between South Korea and Japan has deteriorated over roughly the same time
span, but the reasons for this are more difficult to assess. Publicly Seoul is unhappy with Japans
recent questioning of the Kono Statement, and argues that Tokyo hasnt taken full responsibility
for Imperial Japans use of comfort women in Korea. There is also the delicate matter of the
disputed Dokkodo/Takeshima Islands, which is a much more volatile and nationalistic issue in
South Korea than it is in Japan.
However, while these issues have received more media attention over the last few years, they are
not new problems. Abes more nationalistic approach certainly does not help matters, yet these
issues obscure the fact that Japan and South Korea are two very similar countries experiencing
the same set of problems. Their rapidly aging populations are creating structural economic
fissures that both are attempting to address through government spending. While Japan is
farther along in the process, South Korea is taking largely the same course.
This situation is not drawing them closer together, however, as they compete globally in the
automotive, shipbuilding, and consumer electronics sectors. It is further exacerbated by the fact
that South Korea is outperforming Japan in these industries, which leaves Tokyo with less room
to maneuver as Japanese companies seek protection from strong regional rivals.
Finally, there is the specter of increasing Russian influence in the region. As Moscow and
Washington continue to spar in Europe over Ukraine, Russias once dominant hand in European
energy markets is likely to decline as the U.S. makes Europe a prime target for its new shale gas
industry over the next five years. In response, Russia has already signed a natural gas deal with
China that is highly favorable to Beijing. It is also reviving talk of an underwater pipeline to Japan
linking Sakhalin Island with Japans northern island of Hokkaido, which could supply almost 20
percent of Japans total natural gas imports. Even without the Japanese pipeline, cheaper natural
gas to China could drive down the premium that all of Northeast Asia currently pays.
A greater role for Russia could further offset regional politics, as Japan has shown it is willing to
continue negotiating with Russia despite Moscows continued tensions with the U.S. and EU.
In short, there should be no expectation of a dramatic statement or initiative to improve ties
between the regions leaders at APEC this month. For all of Abes well-publicized diplomacy over
the last few months, even a cordial meeting with all three of his regional counterparts will not
change the long-term trajectory of their relationships. A more fundamental realignment of their
interests will need to take place before that can happen.
Clint Richards is an Associate Editor at The Diplomat.

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