May 30, 2010 / 3:29 AM / 10 years ago

Q+A - Rivalry and friendship between Japan and China

TOKYO (Reuters) - Chinese Premier Wen Jiabao will meet Japanese Prime Minister Yukio Hatoyama in Tokyo on Monday, but even as Asia’s economic powerhouses move to deepen ties disputes are simmering and mutual mistrust persists.

Here are some questions and answers about ties and tensions between the Asian giants.

HOW CLOSE ARE THEIR ECONOMIC TIES?

Japan and China, the world’s second- and third-biggest economies respectively with a combined GDP accounting for some 15 percent of the world’s total output, are increasingly interdependent in terms of growth, trade and business.

China — already Japan’s biggest trading partner — replaced the United States as Japan’s No.1 export destination for the first time in 2009. Two-way trade flows between China and Japan totalled 21.7 trillion yen (165 billion pounds) last year.

As Japan’s economic might declines with the ageing of its population, it must increasingly rely on China’s expanding economic power for future growth.

Japanese business leaders see more opportunities in Chinese demand. But some see a blow to Japanese pride from the rise of China, which is expected to overtake Japan as the world’s No.2 economy as early as this year.

Japan recently decided to ease rules on visas for Chinese nationals from July, hoping more will visit Japan and spend.

For China, Japan’s technology and direct investment, which totalled $4.1 billion in 2009, are vital for further development. Japan can also offer China a valuable lesson from the bursting of its bubble economy in the early 1990s as Beijing tries to keep its overheating property market under control.

Tokyo has been less vocal than Washington on the need for a more flexible yuan. It thinks putting pressure on Beijing makes it even harder, politically, for China to reform its currency.

HOW SERIOUS ARE MILITARY SPATS?

China’s enhanced naval activities in the seas near Japan have recently been making Tokyo nervous, although analysts say those actions were probably not aimed at threatening Japan.

In May, Japan lodged a protest with China, claiming a Chinese ship had violated Japan’s sovereign rights by approaching a Japanese survey vessel. The spat followed a separate protest over a Chinese helicopter that flew too close to a Japanese destroyer.

In both cases, Beijing said they acted within their rights.

Some analysts say such protests have become routine without leading to a wider dispute, suggesting the two nations are now enjoying a more mature diplomatic relationship than before.

Still, Tokyo, worried about the balance of power in the region, has repeatedly called for greater transparency of Beijing’s military spending and equipment.

Japanese Foreign Minister Katsuya Okada told his Chinese counterpart, Yang Jiechi, in mid-May that Beijing should commit itself to cut, or at least not increase, the number of its nuclear weapons, prompting an angry rebuttal.

ARE TOKYO AND BEIJING ON SAME PAGE ABOUT NORTH KOREA?

No. Tokyo, convinced that North Korea torpedoed a South Korean warship, wants Beijing to take a stronger stance towards Pyongyang. Tokyo sees itself as a potential target of any North Korean attack and has long been upset over Pyongyang’s abductions of Japanese citizens decades ago.

But Japan also needs help from China, North Korea’s only major ally, for peace and stability in the Korean peninsula.

China has tried to balance North and South Korea by avoiding apportioning blame for the sinking of a South Korean ship in March that killed 46 sailors, and urging restraint by all.

ANY PROGRESS IN TERRITORIAL DISPUTES?

Not really. While ties between Japan and China have warmed in recent years, territorial disputes occasionally flare up as the two neighbours seek to secure exclusive economic zones in the region’s waters, thought to be rich in oil and minerals.

The two nations have been at odds over China’s exploration for natural gas in the East China Sea. In June 2008, they reached a broad agreement intended to solve the row by jointly developing gas fields. Informal talks have recently started, but progress has been slow.

HOW DO JAPAN’S TIES WITH U.S. COMPARE TO TIES WITH CHINA?

Hatoyama has sought to steer a diplomatic course more independent of the United States, but these efforts hit a roadblock when he failed to find an alternative to keeping a U.S. airbase in Okinawa.

Rising tension on the Korean peninsula has also underscored the importance of the U.S.-Japan alliance. But Hatoyama still wants to put greater emphasis on Japan’s ties with Asia and has pushed for an idea of creating an East Asia Community.

Bitter memories of Japan’s invasion and occupation from 1931 to 1945 run deep in China, but historical tensions have been subdued since Hatoyama took office last year, continuing a warming trend over the past few years.

Editing by Bill Tarrant

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