Institute for National Strategic Studies

Blue Horizon: United States-Japan-PRC Tripartite Relations


1. The idea of charting the composition of the national economy is currently ideologically unacceptable to the free traders in America even though government-led development was practiced successfully in the past. Canals, railroads, land grant colleges, highways, the space program (and in the future optical fiber and telecommunications) have been the national infrastructure projects that business and commerce have relied upon to expand their prosperity. In the 1980s, American investment in infrastructure has not kept pace with competitiveness needs. Without federal and state investment incentives large and small businesses cannot compete globally. The Asian economic models, based as they are on the US practices of the 1950s and 1960s, are heavily infrastructure oriented.

2. China in the Near Term, 1994 (Summer Study Report for the Under Secretary of Defense for Policy) Office for Net Assessment, chaired by Ronald A. Morse.

3. Washington Post, November 11, 1995, A23.

4. Beijing Review, July 31-August 6, 1995, 6.

5. China Express (Hong Kong) October 10, 1995. The ,i>Asian Wall Street Journal dismissed this formula for survival-10 percent growth and hang on for dear life--as a poor substitute for the task of political reform (October 11, 1995, Review & Outlook Section).

6. Kazuo Watanabe, "Report on Chinese Economic Policy," Industrial Bank of Japan, December 1995 (in Japanese).

7. Dorothy J. Solinger, From Lathes to Looms: China's Industrial Policy in Comparative Perspective, 1979-1982 (Stanford University Press, 1991).

1. USIA Wireless File, February 1, 1996, 16.

2. Nicholas R. Lardy, China in the World Econom ,1994, 78-79.

3. Hong Kong External Trade, August 1995, 149.

4. See Lardy, 80.

5. Jetro White Paper on International Trade, 1994 March 1995,32.

6. Ibid., 4.

7. For text of March 11, 1994 speech see Vital Speeches of the Day, 360-363.

8. "Japan's Shrinking Giant," International Herald Tribune, January 25, 1996, 11.

9. Jon Schaffer, "October U.S. Trade Deficit Lowest in 1995," USIA release, January 17, 1996.

10. Christopher Howe, "China, Japan and Economic Interdependence in the Asia Pacific Region," China Quarterly, December 1990, 674-677.

11. Ibid., 676.

12. Ibid., 678.

13. Jetro, Hong Kong.

14. Allen S. Whiting and Xin Jianfei, "Sino-Japanese Relations: Pragmatism and Passion," World Policy Journal (Winter 1990).

15. Jetro White Paper on Foreign Direct Investment 1995 , 18.

16. Uldis Kruze, "Sino-Japanese Relations," Current History, April 1991, 156.

17. "China to Use 30 Billion US Dollars of Foreign Funds Annually," Xinhua News Agency release, February 2, 1996.

18. Jetro White Paper ,17.

19. World Policy Journal , 112.

20. China Daily, January 11, 1996, 5.

1. China officially portrays itself as socialist, but its economy is clearly moving towards a market economy. For convenience's sake, let us here regard China (and Russia) as "former socialist states," while mindful of the inevitable limitation of that categorization.

2. KIEOs, an acronym that refers to the IMF, World Bank, and GATT/WTO, was used by Harold K. Jacobson and Michael Oksenberg, China's Participation in the IMF, the World Bank, and GATT: Toward a Global Economic Order (University of Michigan Press, 1990).

3. The wings are a few examples of proposals for U.N. reforms.The United Nations in Its Second Half-Century: The Report of the Independent Working Group on the Future of the United Nations, Ford Foundation, N.D.; A Call for the US-Japan Joint Action: Strengthening the United Nation's Capability of Contributing to International Peace and Security, East Asian Institute and School of International and Public Affairs, Columbia University in conjunction with the Japan Institute of International Affairs (Columbia University, New York, 1995).

4. GATT was reorganized as The World Trade Organization (WTO) as of January 1, 1995. It would not make any serious harm if we treat them as one same institution for the purpose of this essay. I owe greatly to Jacobson and Oksenberg, op.cit. for the factual information about China's engagement with the KIEOs, though the sole responsibility is mine as for the interpretation.

5. Nicholas R. Lardy, China's Entry into the World Economy: Implications for Northeast Asia and the United States (The University Press of America for The Asia Society, 1987) 4. 6. Jacobson and Oksenberg, 85.

7. Chinese maintained, in view of the fact that China (then represented by the KMT government) was a contracting party to the GATT when it was originally signed in 1948, that "resumption" rather than "accession" or "entrance" should be the proper term to describe the Chinese position. The debate on this issue was shelved in the interest of more practical issues that had to be dealt with anyway. Thus this issue did not make any serious obstacle to the negotiations about China's participation in GATT at least in a basically cordial atmosphere that existed before the tragic events in the summer of 1989.

8. Beginning with Czechoslovakia that was admitted to the GATT in 1947, Yugoslavia, Poland and Hungary joined the GATT in 1966, 1967 and 1973, respectively.

9. Peter B. Evans, Harold K. Jacobson and Robert D. Putnam, eds., Double-Edged Diplomacy: International Bargaining and Domestic Politics (University of California Press, 1993).

10. Lardy, 49.

11. Japan and most of the advanced countries other than the United States have already granted the MFN status for China in their bilateral trade agreements with the PRC irrespective of the GATT. Not to grand MFN status for a contracting party without good reasons is a violation of the GATT regulations. It is up to an individual contracting party to grant MFN status to those countries outside the GATT regime.

12. The Working Party on China's accession restarted its discussion in December 1989. We are here referring to the U.S.-PRC bilateral negotiations.

13. Transcript of Assistant U.S.Trade Representative Douglas Newkirk press conference in Beijing, March 2, 1993 (EPF305, 03/03/93). Emphasis in the text is the author's.

14. The exactly same five points were described as American position in Jacobson and Oksenberg,99-100.

15. For Chinese position see Jacobson and Oksenberg,100-101 and Newkirk interview.

16. Newkirk interview.

17. There is a list of these publications in Hishida Masaharu, "The Politics of China's Accession to GATT", in China in the Process of Transformation to Market Economy (in Japanese), ed. Mori Kazuko (Nihon Kokusaimondai Kenkyujo, Tokyo, 1995), 266-267.

18. Not yet confirmed but it is most probably true that the Japanese negotiators did not experience any significant impact of the Tiananmen Incident upon political pressure at home that would affect their position on the GATT negotiations. Unlike the United States, Japanese officials do not have any tradition of linking trade issues to political issues like human rights and democracy. For the Japanese response to the Tiananmen Incident in general, see Akio Watanabe, Japan's Foreign Policy-Making in Crises: China (1989-90) and Kuwait (1990-91), Working Paper No.34, University of Tokyo, Komaba, Department of Social and International Relations (April 1993).

19. The figures were taken from IMF, Direction of Trade Statistics Yearbook of the relevant years.

20. For a cautious view about the future of Asian economy see for example Paul Krugaman, "The Myth of Asia's Miracle," Foreign Affairs (Fall 1994). Commenting on this essay by Krugman, one Japanese economist wrote that Krugman is perfectly correct in his warning about the danger of making a forecast simply by extrapolating the past record, adding that Krugman is not necessarily saying Asian economy has a gloomy future. Ushijima Tatsuo, in Forecasts for Asia of 1996, ed. Makino Noboru (in Japanese) (Mitsubishi Research Institute 1995), 22-35.

21. Jacobson and Oksenberg, 7.

22. Ibid., 164.

23. "Down Payment of the People's Republic of China at the Osaka APEC Economic Leaders Informal Meeting." The document includes 5 points under the heading "Measures to be taken in 1996" and another 5 under the heading "Measure taken since Bogor Meeting."

24. Akio Watanabe and Tstutomu Kikuchi, "Japan's Perspective on APEC: Community or Association?" APEC Study Center at the University of Washington; "America, Japan, and APEC: The Challenge of Leadership in the Asia-Pacific," NBR Analysis 6, no.3 (The National Bureau of Asian Research, November 1995), 28.

25. Shinichi Nakayama, "East Asia's Economy and Japan's Role: A Bridge between East and West", Asahi Shimbun (in Japanese), 6 January 1996, 9.

26. For a contrasting, and typically American, view on the APEC style see Donald Hellmann, "America, APEC, and The Road Not Taken: International Leadership in the Post-Cold War Interregum in the Asia-Pacific," NBR Analysis 21. Hellmann compared APEC to the Kellogg-Briand Pact of 1928, saying that unlike the League of Nations the Pact provided no objective criteria against which to measure conduct or procedures through which decisions and sanctions could be imposed. "Rather, he continues to say, Kellogg-Briand called only for 'negotiation' to achieve its purpose. Similarly, APEC, unlike the GATT and the WTO, dose not have in place criteria, procedures, and sanctions to address economic conflicts of interest and results. Negotiation and consensus serve as the deus ex machina." Did the League of Nations work well, then?

27. Watanabe and Kikuchi, 34.

28. Japanese officials are known for their cautious or even cool attitudes towards an idea of adding political/security issues to APEC agenda. Prime Minister Tomiichi Murayama was, however, quoted to have expressed his support for that idea. How serious he was is difficult to know. Nihon Keizai Shimbun,

29. Jacobson and Oksenberg,162-163.

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