The most trenchant critic of Japanese Prime Minister Shinzo Abe’s China policy is Uichiro Niwa, the ambassador to Beijing fired in 2012 for challenging the government’s plan to nationalize the Senkaku/Diaoyu islands.
A former chairman of Itochu Corp., one of the world’s biggest trading companies and his employer for 48 years, Niwa is Beijing’s best friend in Japan. He argues that close relations between the two countries are critical for the future of both.
But, among Japanese businessmen, Niwa is rare for his outspoken support and optimism about China’s economy.
A survey of 3,352 businesspeople published in Tuesday’s Nihon Keizai Shimbun found more than 60 per cent expect China’s “economic bubble” to burst, see a high level of political risk and instability and blame China for not following the rules of international commerce.
Niwa was appointed ambassador to Beijing in June 2010, the first non-diplomat to hold this vital post. For him, it was the job of a lifetime; he and his company had invested and done business in China since the 1960s before the two countries established diplomatic relations in 1972. He had friends and contacts in cities and provinces all over the country.
He was fired for saying in June 2012 that a plan to nationalize the Senkaku/Diaoyu islands “would result in an extremely grave crisis in Sino-Japanese relations. We cannot allow decades of effort to be brought to nothing.” The plan went ahead – and events proved him completely right.
Now retired and a professor at Waseda University, Niwa has not lost his passion. “Geography has made our two countries neighbours for thousands of years. This cannot be changed. We are like a couple who cannot divorce, however much they hate each other. Our relations must be better than those of man and wife.”
His argument is that the economies of the two countries are becoming a single unit. Bilateral trade last year was US$311.995 billion, three times the level of 2000 and accounting for 20 per cent of Japan’s total trade. Every day shipments of parts and components leave Japan by air and sea for Chinese factories that use them to make finished products for exports to Europe and North America.
Niwa said that earlier generations of leaders, from Zhou Enlai and Kakuei Tanaka in 1972, showed wisdom in dealing with disputes. “Each respects the sovereignty and territory of the other,” the two men declared. “Disputes must be solved peacefully and without recourse to weapons.” This principle was reaffirmed in joint declarations in 1978, 1998 and 2008. He warned of the evil results of inciting nationalism.
Niwa is also unusual for his unwavering optimism about China’s economy. “There is no bubble and so no risk of the bubble bursting. If you consider its GDP in 2013, there was no impact of the crises of shadow banking … the level of government debt is not small, at 50 per cent of last year’s GDP. The comparable figure in Japan is 220 per cent. So China has room to issue more debt.”
His optimism is not shared by most businesspeople in the Nikkei survey carried out online between April 4 and 14. They see China as a country in which they must invest and sell but one where the level of political and economic risk is increasing and international rules are not followed.
Overall, 42.9 per cent of the respondents said the bubble in the economy would burst within five to 10 years, leading to chaotic conditions; and 21.6 per cent said this would happen within five years. More than 46 per cent said diplomatic relations had worsened since Abe took power in Dec. 2012.
Asked if China was a country in which they had to invest as a centre of production, 76.5 per cent said “yes”, while 80.4 per cent said the political risk was a reason for caution. On top of that, 81.6 per cent said that the system of governance under President Xi Jinping was unstable and potentially dangerous.
Asked if China was a market in which they had to be present, 79.4 per cent said “yes”, with 23.3 per cent saying its importance would increase and 56.1 per cent saying that it would decrease as other markets grew.
On the question of China’s relations with Taiwan, 61.5 per cent said they see the status quo continuing and 53 per cent said they hope the island will become independent, against only 4.3 per cent supporting unification.
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