The warming relationship between China and Japan took a chilly turn this week when it emerged Tokyo had threatened to withdraw its funding for a port project in El Salvador if the Central American nation agreed to hand over the operating rights to a Chinese company.
According to a report by Japanese news agency Kyodo, the move came after Washington took issue with the Chinese firm’s interest in the project, which was not named but is thought to be under development in the west of the country.
When Tokyo said it would withdraw US$102 million in development support for the project, the government in El Salvador suspended the tender process for the operating rights, Japanese and US diplomatic sources said.
“Beijing is looking to make inroads into Latin America, which the United States considers its backyard,” a Japanese foreign ministry official was quoted as saying.
Diplomatic observers said the incident showed that Japan, Washington’s main ally in Asia, was still locked in competition with China, despite Chinese President Xi Jinping telling Japanese Prime Minister Shinzo Abe in Beijing last month that the two nations should not see each other as a threat.
Sun Yun, a senior fellow and director of the China programme at the Stimson Centre in Washington, said Tokyo’s decision was evidence of the tensions in China’s relations with its rival economic powers.
“Despite the warming ties between Beijing and Tokyo, it reflects China’s competition with the US in a geopolitical sense and with Japan in a geoeconomic sense,” she said.
“Port facilities carry particular importance in the military arena. No matter how China tries to portray them as purely commercial, they indicate power projection capabilities.”
Under Beijing’s multibillion-dollar Belt and Road Initiative – a blueprint announced in 2013 to increase trade and connectivity across Asia, Africa, Europe and beyond – China has significantly increased its global investments, particularly in maritime infrastructure. Companies like Cosco Shipping Ports and China Merchants Port Holdings are on a march to acquire shares and sign deals to build terminals at seaports overseas.
While the Kyodo report did not name the port, after San Salvador severed its diplomatic ties to Taiwan in favour of Beijing in 2018 US officials warned of China’s intention to turn La Union port in eastern El Salvador into a military base.
Abe expressed his concerns about the possibility of China using ports in Latin America for military purposes during El Salvador President Nayib Bukele’s visit to Tokyo in November.
The Japanese leader said also that some nations, like Sri Lanka, had become mired in debt as a result of them hosting belt and road projects.
Sun said that the latest move by Tokyo reflected broader global concerns about Beijing’s infrastructure expansion plans.
“China is likely to blame it on the United States’ anti-China campaign … and its attempt to convince the rest of the world that China is a threat,” she said.
“But even without the US, the fact is that many countries are witnessing the negative impact of BRI [belt and road] projects, and China’s dubious intention, which may or may not be benevolent.”
Sun said also that while ties between Beijing and Tokyo had been warming, Japan had a much longer and closer relationship with the US.
“The improvement in [China’s] relations with Japan should not be interpreted as Japan’s abandonment of the cornerstone of its national security – its alliance with the US,” she said.
“At most, Japan is hedging between the US and China.”
Alexander Huang, director of the Institute of Strategic Studies at Tamkang University in Taiwan, agreed, saying China had failed to convince other countries that its infrastructure investment and development programme was benevolent.
“Although Beijing has brought up the notion of a ‘community of shared future for mankind’, it’s unique political and economic system – in which the Communist Party has absolute control – is not compatible with the systems of most other countries, so countries can’t easily believe that China won’t harm their national interests,” he said.
Ehud Gonen, an expert on maritime policy and strategy at Israel’s Haifa University, said Chinese infrastructure projects under the belt and road plan had raised concerns in many countries as they appeared to help Beijing acquire political influence in countries that received the investment, especially through the acquisition of strategic assets.
“The investments, which are of significant amounts, are carried out in sectors that are perceived in as national strategic sectors. And much of the Chinese investment in infrastructure is executed by Chinese state companies,” Gonen said, adding that such factors raised alarm in many countries.
Meanwhile, Japan has been keen to boost its own involvement in infrastructure development projects, particularly in Southeast Asia.
According to figures published last year by market intelligence firm Fitch Solutions, the value of Japanese-backed projects in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam was US$367 billion in June, while China-funded schemes in the same countries were worth US$255 billion.
Across all 10 countries of Southeast Asia, Japan had 240 infrastructure ventures in development compared to China’s 210, it said.
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