A Trilateral Synergy

Source: The Hitavada      Date: 02 Nov 2018 12:13:17

By SUBRATA MAJUMDER,

 

India and Japan have several commonalities in their relations with China. Both have a long history of political enmity with China. Notwithstanding that, China is the biggest trading partner of India and Japan. In both summits – India and Japan and China and Japan - Japan asserted to take forward the relations in a new direction in the economic realm by proposing joint partnerships for development of projects in third countries in Asia.


GONE are the days when the US sneezes, Japan gets a cold. Today, Japan can say ‘No’ to US. Despite USA’s grave concern over the Chinese Belt and Road Initiative, the recent visit of Japanese Prime Minister Shinzo Abe to China shows Japanese willingness to justify Chinese President Xi Jinping’s initiative. This will make a turning point in the Sino-Japan bilateral relations, which were shackled by age-long political hostility. The volte-face of Japan is viewed as a silent negation to Trump’s protectionism. To this end, Modi’s visit to Japan, on the close heels of Abe’s visit to China, showcases a new pattern of trilateral relationship between the three leaders in Asia.


Nevertheless, whether the rebuilt relationship between Japan and China will sustain or not, it is hard to say in the wake of ongoing dispute on Senkaku Islands, which erupted as a volcano. The main agenda of Japan–China summit was to end the development aid to China and jointly work for the development in third world countries, especially the countries embraced by Belt and Road Initiative.


Modi’s visit to Japan, even though it was for the 13th annual summit of India and Japan, attaches special significance, given the fact that summit was after the visit of Abe to China -- the formal visit of a Japanese leader after seven years and its aim was to rebuild political trust with China. The Chinese official media, ‘Global Times’, welcoming the visit, said that ‘China-Japan economic ties should lead to political trust.’


India and Japan have several commonalities in their relations with China. Both have a long history of political enmity with China. Notwithstanding that, China is the biggest trading partner of India and Japan. In both summits – India and Japan and China and Japan - Japan asserted to take forward the relations in a new direction in the economic realm by proposing joint partnerships for development of projects in third world countries in Asia. With India, it pledged for joint partnership with India’s neighbours and with China it proposed a joint partnership with ASEAN countries.


To synergise Modi’s Act Asia policy, India and Japan entered into a Memorandum of Co-operation for development of LNG-related infrastructures in Sri Lanka, development of housing, education and electrification projects in Myanmar and enhancing connectivity with Bangladesh by way of constructing a four-lane road and reconstructing bridges. Parallel to it, Japan proposed 50 private sector infrastructure projects jointly with China in Asia during the summit. A high speed railway and a smart city project in Thailand will be the first gainers of Sino-Japan joint partnership ventures in Asia.


Tension soared and speculation grew about the impact of Japan’s volte-face in re-energising relations with China despite the historical political enmity. Nevertheless, Indian Foreign Secretary was quick to rule out any collateral damage to India’s relation with Japan. Instead, he was hopeful of a positive impact of the Sino-Japan deal, believing that this would play an important role in India-Japan strategic partnership to sustain peace and tranquillity in Indo-Pacific region.


He asserted that the core point of Modi’s visit was to establish a close strategic partnership with Japan to deepen security and defence co-operation and play a prime role in maintaining peace in Indo-Pacific region. The aim will further be spearheaded by the normalisation of Japan-China relations.


Japan’s joint partnership with China for development of infrastructure and joint co-operation in the private sector in third world countries in Asia will curtail the scope for under-cutting competition in Asia and will establish a fair ground for development of infrastructure. Indonesia was a case in point. Japan lost the high speed railway project in Indonesia against stiff competition from China, despite providing better technology and after half a decade of hard negotiations with the Indonesian Government.


The thaw in Sino-Japan relation will bring ADB (Asian Development Bank) and AIIB (Asian Infrastructure Investment Bank), the two big Asian multilateral financial institutions, closer to each other. Both are to fund the development of infrastructure in Asia. ADB is dominated by Japan and AIIB is dominated by China. India is the second biggest stakeholder in AIIB. Both ADB and AIIB are competing against each other.


According to ADB, Asia requires US $8 trillion to meet its vast infrastructure fund by the end of this decade. Of these, India’s requirement is the biggest, amounting to US $1 trillion. The funding requirements are beyond the capacity of World Bank, IMF and ADB. This led India to join AIIB and become the second biggest stake holder in it. But, a proxy war triggered by Japan and China made the borrowing countries face headwinds. The thaw in Sino-Japan relations will likely pitch for a smoother road for India to avail of funds from ADB, in addition to AIIB fund.


As a matter of fact, after the trade war intensified, China dwarfed its aggression against India. It is tending to emerge as a new important export destination for India.
For example, China will open a big market for India’s soybean meal after Beijing restricted its imports from US as a retaliatory measure by imposing 25 per cent tariff. China is the biggest importer of soybean in the world and US has the biggest stake in Chinese soybean import market.

The high tariff on US soybean will make space for new entrants. India stands a bigger chance to cut a big pie of Chinese soybean market, with the tariff expected to slip to zero from 3 per cent. Recently, it dropped a ban on import of rapeseed meal from India. The ban was imposed in 2011 due to quality concerns. China planned for a bigger role in infrastructure investment in India. Last year, China’s Sany Heavy Industry planned an investment of US $9.8 billion in India, while Pacific Construction, China Fortune Land Development and Dalian Wanda planned Investments of more than US$5 billion each.


Narendra Modi was never averse to Chinese investment. His yearn for foreign investment pitched China not as a foe.
During his Prime Ministership, India signed MoUs for setting up four industrial parks with Chinese investment. China too seemed to be comfortable to work with Modi. Given the new silver line between India and China, which was further spearheaded by US protectionism, Japan’s volte face to China will act a boon to India.