Japan, China gear up for gas talks

Posted in Japan | 12-Mar-07 | Author: Hisane Masaki| Source: Asia Times

TOKYO - Amid a thaw in chilly political relations, Japan and China are gearing up to resume high-level negotiations in Tokyo this month on the nasty dispute over potentially lucrative natural-gas deposits in the East China Sea.

Japan and China have so far held six rounds of ministry bureau-chief-level talks on the gas dispute, but the negotiations have been suspended since last July. The two countries agreed to resume the negotiations during Chinese Foreign Minister Li Zhaoxing's talks with Japanese Prime Minister Shinzo Abe and Foreign Minister Taro Aso in Tokyo in mid-February.

But it still seems too early to expect a significant breakthrough on the issue in the near term, although some progress cannot be ruled out. As a matter of fact, the two energy-hungry Asian powers seem to have just agreed to talk in the hopes of avoiding a reversal in the recent improvement in bilateral ties.

Li visited Tokyo to lay the groundwork for Premier Wen Jiabao's trip to Japan in mid-April, the first by a top-level Chinese leader in seven years. During his talks with Abe, Wen is expected to invite the Japanese leader to make a return visit to Beijing around October to keep up the pace of top-level contacts on the 35th anniversary of bilateral diplomatic relations being normalized in 1972.

Sino-Japanese relations sharply deteriorated under Abe's predecessor, Junichiro Koizumi, who upset Beijing by repeatedly visiting Tokyo's Yasukuni Shrine, which honors Japan's war dead - including convicted war criminals involved in the invasion of China and much of Asia before and during World War II.

During the last few years of Koizumi's five-and-a-half-year premiership, China shunned top-level contacts with Japan, even during international conferences in third countries, in protest of what it viewed as his glorification of Japan's militaristic past. But bilateral relations began to warm up when Abe succeeded Koizumi last September and made a fence-mending trip to Beijing soon afterward.

The gas dispute topped the agenda for the talks in mid-February between Li and Japanese leaders, along with the issues of North Korea's nuclear program and the past abduction of Japanese nationals to train spies.

At issue are Chinese natural-gas projects in the waters near the so-called median line, which was drawn by Japan but has not been recognized by China. The line is meant to separate the two countries' overlapping 200-nautical-mile exclusive economic zones (EEZs). China argues that the entire East China Sea continental shelf, extending eastward nearly all the way to the southernmost inhabited Japanese island of Okinawa, is a "natural prolongation" of the Chinese mainland.

The two countries have also been locked in the territorial row over the tiny Senkaku Islands, or Diaoyu Islands in Chinese, in the East China Sea. The islands in question are on the Japanese side of the median line and are in effect controlled by Japan. The Senkaku Islands were initially claimed by only Japan. But after the United Nations Economic Commission for Asia and the Far East reported the possibility of natural resources lying under the seabed around the islands in 1968, China and Taiwan also began claiming the islands as their own.

Early last month, only days before Chinese Foreign Minister Li's Tokyo visit, a Chinese civilian ship entered areas near the disputed islands and later into part of what Japan claims is its EEZ. Tokyo filed a protest and demanded an apology and explanation from Beijing, claiming that China had failed to comply with the earlier agreement to give prior notice about any such movements in the disputed waters. But Beijing defended the action, saying the ship was conducting normal maritime research.

The development of natural-gas resources in the East China Sea emerged as an issue in June 2004 when Japan learned China was developing the Chunxiao, or Shirakaba in Japanese, gas field. Since then, Japan and China have held six rounds of bureau-chief-level talks and occasional informal negotiations, without reaching any substantial agreements.

Among the litany of issues that have plagued ties between the two Asian neighbors, the gas dispute is potentially the most explosive, one that could spark even a military confrontation. In September 2005, a Chinese destroyer aimed its guns at a Japanese Maritime Self-Defense Force P3-C surveillance plane in the disputed waters near the Chunxiao/Shirakaba gas field. Five Chinese warships had been observed in the same area shortly before the incident.

The Sino-Japanese dispute also involves other fields, including Duanqiao (Kusunoki in Japanese), Tianwaitian (Kashi) and Longjing (Asunaro). Although these fields are all on the Chinese side of the Tokyo-designated median line, Japan has expressed deep concern that China may be siphoning off natural resources buried under the seabed on the Japanese side of the median line.

In the past six rounds of bureau-chief-level talks, the two countries have agreed to develop gas reserves jointly in the disputed waters. But they remain far apart over specifics, especially the areas to be jointly developed. Japan has proposed the joint development of four gas fields - Chunxiao/Shirakaba, Duanqiao/Kusunoki, Tianwaitian/Kashi and Longjing/Asunaro. China has rejected the Japanese proposal and made counter-proposals that call for the joint development of two areas - one around Longjing/Asunaro and the other around the Senkaku Islands. China wants to limit any possible joint development to the Japanese side of the median line. Japan's Nikkei business daily reported recently that Tokyo has proposed to China joint development of a wider area around the disputed gas fields than it proposed earlier, including on the Japanese side of the median line, in a bid to break the deadlock in negotiations. "Japan seeks to effectively shelve the contentious issue of setting a demarcation line," the Nikkei said. The paper said Japanese Administrative Vice Foreign Minister Shotaro Yachi made the proposal during a visit to Beijing in late January and that Japan hoped for a deal in time for Premier Wen's visit to Tokyo in mid-April.

But Akira Amari, the minister of economy, trade and industry, immediately denied the report, saying: "It is not a fact that such a proposal was made at the vice-ministerial talks in January." Amari said, however, that the top Chinese leadership is saying progress may be achieved in the next bureau-chief-level talks on the gas dispute and that he also has "high expectations".

In their meeting in mid-February, Abe told Li, "I would like to resolve the resources-development issue as soon as possible so that the East China Sea will be a place of peace, cooperation and friendship." Li replied that he wanted the two governments to discuss issues "seriously and with patience" and then proposed resuming bureau-chief-level talks as early as March. Japan agreed to this proposal.

The agreement to hold the next meeting, the seventh round of high-level talks, apparently reflects a strong desire on both sides to sustain improved bilateral relations

China is now Japan's most important trading partner, along with the United States. Japan also needs to cooperate closely to resolve the issue of North Korea's nuclear and missile programs, which currently pose the biggest security threat to Japan. Furthermore, Japan wants to see China exert its influence with the reclusive Stalinist state to address the issue of that country's past abductions of Japanese citizens, the biggest sticking point between Tokyo and Pyongyang.

China, for its part, also has good reasons to push for a further improvement in bilateral ties. Despite its rapid ascendance as an economic power, China, the world's most populous developing country, still badly needs Japanese capital and technologies.

To be sure, the agreement to resume high-level gas talks should be welcome news. The two countries will get nowhere if they do not talk anyway. But expectations of an early breakthrough may be betrayed. It is becoming increasingly difficult for either government to compromise on the issue, for political as well as economic reasons.

Abe is a staunchly conservative politician. He is widely known for his nationalist views on history and hawkish stance toward countries such as China, which is rapidly building up and modernizing its military and is widely viewed in Japan as the biggest potential security threat in the medium and long terms. There is growing discontent among conservatives, however, that Abe has changed his coat since taking office. In an attempt to repair damaged relations with China, Abe has either toned down or even reversed his previous rhetoric, at least in public.

Japan has strongly demanded that China stop its development of the gas fields in question until the two countries strike a deal on the dispute, a demand ignored by Beijing. Many lawmakers of Abe's ruling Liberal Democratic Party (LDP) doubt Beijing's seriousness about seeking a negotiated settlement to the gas issue. In fact, it was not until mid-February that Beijing agreed to repeated Japanese requests for a resumption of high-level talks on the gas issue.

Many LDP politicians believe that a weak-kneed stance could hurt Japan's national interests. Shoichi Nakagawa, the hawkish LDP policy chief, recently criticized the Japanese government for what he sees as a too-weak stance and called for it to let Teikoku Oil Co, a unit of Inpex Holdings, the nation's largest oil and gas explorer, to start test-drilling in waters near the gas fields in question as a countermeasure against China.

In the summer of 2005, the Japanese government granted Teikoku Oil the right to conduct a test-drilling in the areas near the disputed gas fields, although no such test-drilling has been actually conducted yet for fears of aggravating tensions - and possibly triggering an armed confrontation - with China. Inpex Holdings was born last April as a joint holding company of Inpex Corp and Teikoku Oil, Japan's No 1 and No 3 oil developers, to integrate their operations.

In 2005, the Japanese government decided to build the country's first ship specially designed to survey offshore oil deposits. Also, in a move aimed at providing a legal basis for protecting Japan's test-drilling activities in the East China Sea, the ruling LDP has been pressing for the enactment of a bill since early last year to protect vessels used by marine-resource explorers as well as fishermen in Japan's EEZ.

The bill stipulates that the Land, Infrastructure and Transport Ministry may create off-limits zones near structures set up for resource exploration and development in the EEZ. Trespassers would be punished with prison terms and fines. The legislation has been prepared to support Teikoku Oil in an apparent bid to counter natural-gas exploration conducted nearby by China. The biggest opposition Democratic Party of Japan (DPJ) has also prepared a similar bill.

Meanwhile, the LDP-led coalition plans to submit to the current ordinary session of the Diet - Japan's parliament - a bill to establish a "basic marine law" to protect better Japan's interests in the seas around the country, including the disputed areas with China, through management of Japan's EEZ, protection and preservation of the marine environment, development of underwater resources, and securing safe marine transport.

The proposed law would feature, among other things, the establishment of a "comprehensive marine policy council" within the Cabinet Office and creation of the post of state minister in charge of marine policy. The proposed law is designed to integrate the nation's ocean and maritime policies, which are now vertically divided among government organizations. The LDP and its junior coalition partner, New Komeito, are discussing with the DPJ a possible unified bill to establish the basic marine law. This month, the three parties agreed on basic points of the bill.

In China, meanwhile, demand for oil and natural gas has been rising rapidly because of its red-hot economic growth. China regards gas fields in the East China Sea as a key energy source for the eastern coastal areas, including Shanghai. Under such circumstances, there seems little possibility of China compromising with Japan. In addition, there are political factors that apparently play an equally important role in shaping Beijing's stance on the gas issue.

The Chinese Communist Party (CCP) leadership faces a politically sensitive year. This year marks the 70th anniversary of the Marco Polo Bridge Incident, which triggered the second Sino-Japanese War (1937-45), and also of the Nanking massacre, commonly known as the Rape of Nanking, an infamous war crime committed by Japanese soldiers.

The Chinese public's anti-Japan feelings still run deep, especially because of a campaign launched in the 1990s at the behest of then-president Jiang Zemin, widely known for its anti-Japan stance, which was aimed at instilling such feelings in Chinese.

President Hu Jintao, who took power in a CCP convention in the autumn of 2002, succeeding Jiang, is widely believed to be trying to consolidate his grip on power at the next quinquennial party convention this autumn. Hu is widely believed to be intending to bring his close aides into the top echelons of the party to get rid of the still-powerful influence exerted by Jiang and his followers.

Therefore, any significant concession to Japan on the gas dispute and other sensitive issues would be politically risky. It could not only invite a public backlash against the current CCP leadership, but also provide Jiang and his followers with powerful ammunition to launch counterattacks against Hu and his followers.

South Korea reacted harshly to Abe's recent controversial remarks that were widely taken as an attempt to evade Japan's responsibility for Asian women forced into sex slavery for Japanese soldiers before and during World War II. In stark contrast, China seems to be at pains to avoid rocking the boat over the "comfort women" issue, amid a thaw in relations with Japan since Abe took office and also ahead of Premier Wen's planned visit to Tokyo.

Chinese Foreign Minister Li has said that Japan must confront its past of coercing women into prostitution with Japanese troops. "The forced use of so-called comfort women was one of the most serious crimes committed by the Japanese imperialists in World War II," Li told a news conference recently on the sidelines of China's annual meeting of parliament. But at the same time he stressed his hopes for improved ties with Tokyo.

Many experts agree that Tokyo and Beijing need to deal with the gas dispute in a cool-headed manner so as not to turn the East China Sea into a "sea of confrontation". They also say it is important for Japan to impart its advanced energy-saving technology to China and other energy-inefficient Asian economies. China itself has set a goal of improving its energy efficiency by 20% by 2010 in its current five-year plan for economic and social development. Japan's increased assistance for China in this area will benefit both, because it helps China correct its tendency to waste resources and possibly dull its avid appetite for oil and gas reserves in the East China Sea and elsewhere.

The two countries are also preparing to hold the first meeting of ministers in charge of economic affairs in Tokyo early next month, before Wen's scheduled visit to Japan. Abe and Wen agreed during the second East Asia Summit, held in the Philippines in January, to hold such a meeting on a regular basis to discuss cooperation in a wide range of economic areas, including energy and intellectual property rights. Japan's assistance in the energy-conservation area, as well as the gas dispute, is expected to be high on the agenda.

Aside from the energy realm, many experts agree that the two Asian neighbors need to do a lot more to deepen mutual understanding of each other's people and history. They specifically stress that youth exchanges need to be further promoted. They also emphasize that Japan needs to teach its school pupils fully about the nation's wartime history, while China needs to teach its pupils fully about the pacifist path Japan has followed after World War II, instead of just focusing on its wartime atrocities. In making these suggestions, some experts cite an old saying: "The furthest way about is the nearest way home."

Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. Masaki's e-mail address is yiu45535@nifty.com.