China likely to push Japan on regional trade pact when Xi Jinping and Shinzo Abe meet in Beijing

Laura Zhou

China is expected to press Japan to stay in a regional trade pact when President Xi Jinping meets Japanese Prime Minister Shinzo Abe in Beijing on Monday, according to observers.

It will be Abe’s second visit to the Chinese capital since bilateral ties between the two neighbours – strained over wartime history and territorial disputes in the East China Sea – began thawing last year, partly because of trade pressure directed at both countries from US President Donald Trump.

Beijing has said relations are now on the path “back to a normal track”, and Xi is expected to pay a state visit to Japan in spring – his first to the country since he took office in 2013. China and Japan also agreed last year to explore cooperation on infrastructure projects in third countries, though little progress has been made.

Hong Kong and North Korea are expected to be high on Abe’s agenda when he meets Xi, observers said. The Japanese leader is also likely to raise the issue of human rights after a Hokkaido University professor was taken into custody in September on spying allegations but released on bail last month.

Xi, meanwhile, is likely to push Japan to stay in the Regional Comprehensive Economic Partnership (RCEP), an Asian free-trade pact being negotiated among the 10 Association of Southeast Asian Nations member states as well as Australia, China, India, Japan, New Zealand and South Korea.

Talks for what could be the world’s largest trade deal began in 2012 and accelerated last year, mainly pushed by China and Japan, as Asia’s two largest economies face further potential economic pain and declining exports amid a trade war between Beijing and Washington.

“The China-Japan relationship is not simply about these two countries – it can also play a bigger role at the regional level,” said Cai Liang, of the Shanghai Institutes for International Studies.

“RCEP is definitely a key regional cooperation area where China and Japan will need to work together, especially since it is difficult to make progress on security.”

But it may not be easy. Hideki Makihara, Japan’s deputy minister for economy trade and industry, told Bloomberg last month that Tokyo was not considering signing a RCEP trade pact without India. New Delhi had previously said it would withdraw from the deal because it could damage India’s interests if low-priced imports from China flooded the country.

“It is meaningful from the economic, political and potentially the national security point of view,” Makihara said of India being part of the agreement. “Japan will continue to try to persuade India to join.”

Both India and Japan are part of an informal security grouping with Australia and the United States known as the Quadrilateral Security Dialogue, which is seen as part of efforts to counter China’s growing influence in the region – and which Chinese Foreign Minister Wang Yi has said could stoke a new cold war.

Beijing wants to push forward RCEP as the world’s second largest economy faces a slowdown because of its protracted trade battle with the US, but the absence of Japan and India could hamper those efforts.

A statement from the remaining 15 countries in November said they had concluded “text-based” negotiations and would begin formal work towards signing the pact in late 2020 while trying to address India’s objections.

So far, neither the Japanese government nor Abe has publicly endorsed Makihara’s comment, and observers said it could have been part of Tokyo’s strategy to persuade New Delhi not to pull out, while attempting to counter Beijing’s leadership on free trade in the region.

“This could be about emphasising Japan’s role in regional integration – that it’s not just a leader on setting the agenda and rules, but in coordinating with developing countries,” Cai said.

Japan has viewed the trade pact as an important part of the “free and open Indo-Pacific” vision advocated by Abe, and India’s absence would be “a big blow” to that, according to Masahiro Kawai, a professor of international finance at the University of Tokyo.

But Kawai said Japan had no reason to step back from the deal, which would connect the country with China and South Korea – two key supply-chain economies in East Asia – especially since the three neighbours were themselves in talks for a trilateral free-trade pact.

“The absence of Japan from RCEP would make it a China-dominated trade agreement and would make China the sole leader of RCEP, which is not desirable for Japan from a political perspective,” he added.

But He Ping, an associate professor in Japanese studies at Fudan University in Shanghai, did not believe Tokyo’s ambivalence on RCEP would affect relations with Beijing.

Chinese Premier Li Keqiang will host Abe and South Korean President Moon Jae-in at a trilateral summit in Chengdu, Sichuan province on Tuesday.

“It’s very likely that the three leaders will offer support in principle for RCEP then,” He said.

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