China's Charm Blitz in `Shambles' Over Regional Spats

China may be undermining its effort to build strong ties with its neighbors and draw them away from the U.S. orbit as it seeks to impose its will in territorial disputes with Japan and Southeast Asian nations.

Relations between Asia’s two biggest economies deteriorated to the lowest point in five years during the 17-day detention of a Chinese fishing boat captain before Japanese authorities last week decided to release him. China opposed U.S.-South Korea military exercises aimed at deterring North Korea, and dismissed regional efforts to mediate maritime territorial claims.

Those positions reflect a more assertive diplomatic role in Asia over the past decade as China developed into Asia’s biggest economy. China set up a regional forum, flooded Malaysia and Thailand with tourists, boosted economic aid to countries including the Philippines and participated in Association of Southeast Asian Nations security dialogues.

“China has tried to establish an image in the region as a nice guy, but all of this could be in a shambles right now,” said Huang Jing, a visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “The real issue here is whether Beijing cares.”

China’s stance may benefit U.S.-Japan relations strained by a dispute over relocating American troops.

Obama-Kan Meeting

Japanese Prime Minister Naoto Kan and President Barack Obama in New York met Sept. 23 on the sidelines of the United Nations General Assembly, and “reaffirmed their commitment to strengthening the U.S.-Japan alliance,” according to a White House statement.

Kan in June succeeded Yukio Hatoyama, who made improving Chinese ties key to his administration and said in December that “Japan-China relations are developing in a strategically beneficial way.” Hatoyama resigned in June after signing an agreement with the U.S. to keep a Marine base in Okinawa over the objections of local residents and members of his government.

Chinese Premier Wen Jiabao refused to see Kan in New York. The boat captain was arrested Sept. 7 near islands in the East China Sea -- known as Diaoyu in Chinese and Senkaku in Japanese -- claimed by both countries close to natural gas fields. China and Japan signed an agreement in 2008 that has yet to be implemented to jointly develop the fields.

The captain’s release came hours after Japan said four of its citizens were being held in China for allegedly videotaping military targets. Chief Cabinet Secretary Yoshito Sengoku said the government didn’t think it was related to the dispute.

‘No Intention Whatsoever’

China over the weekend demanded an apology and compensation for the seizure of the trawler and crew, which Japan rejected. The Japanese government today said China should pay for repairs for the two damaged Coast Guard boats.

“We will demand that the ships be returned to their original condition,” Sengoku said today. “The ball’s in China’s court” to improve ties.

Sengoku last week couldn’t confirm reports that China has cut off Japan-bound exports of rare earth metals, which are used in hybrid vehicles and laptop computers as well as night-vision goggles and naval radar. A Chinese official denied the reports.

“China is testing Japan as domestic politics have been unstable and Japan-U.S. ties shaky,” said Koji Murata, professor of international relations at Doshisha University in Kyoto. The dispute with China “provides an opportunity for the Japanese to be reminded of the importance of U.S. relations.”

Opposition Criticism

The decision by prosecutors to release the captain, citing Japan-China ties as a contributing factor, drew criticism from ruling Democratic Party of Japan lawmakers as well as opposition politicians. A group of 73 DPJ legislators issued a statement calling the prosecutors’ judgment “extremely regrettable.”

Nobuteru Ishihara, secretary-general of the opposition Liberal Democratic Party, yesterday on NHK Television called the release “totally unacceptable.” He said he would summon officials to testify in parliament.

The U.S. is also rebuilding ties with Asean. Heads of many of its member states, including Vietnam, the Philippines and Malaysia, met Obama on Sept. 24. Obama told the group that the U.S. has an “enormous stake” in the region and will play a leadership role. The leaders issued a statement calling for the peaceful settlement of maritime and other regional disputes.

Foreign Ministry spokeswoman Jiang Yu told reporters Sept. 21 that “China enjoys indisputable sovereign rights over the South China Sea islands and adjacent waters” and opposes the U.S. discussing such conflicts with Asean.

Vietnam-China Dispute

Vietnam, whose president Nguyen Minh Triet co-chaired the meeting with Obama, disagrees and is selling rights to oil and gas fields that conflict with China’s claims. China arrests Vietnamese fishermen caught in disputed waters.

Meanwhile, South Korea and the U.S. are planning naval exercises in the Yellow Sea aimed at deterring North Korea, which an international probe found had torpedoed and sank a South Korean patrol boat in March. China has not accepted those findings and North Korean leader Kim Jong Il visited China twice this year, both times meeting with President Hu Jintao.

China is opposed to the exercises, and Chinese general Luo Yuan in August said that the government could retaliate through its holdings of $846.7 billion in U.S. Treasury securities. China is the biggest foreign holder of U.S. government debt.

China’s reaction to the captain’s detention included canceling youth visits, a protest outside of Japan’s embassy in Beijing and at least six summons of the Japanese ambassador. Huang said the response reflects the need to look tough on territorial issues amid jockeying for power ahead of 2012 leadership changes, when Hu and Wen are set to step down from their Communist Party posts.

“This will hurt China,” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Tokyo campus. “The reaction makes it seem to be coming from a petty, third-world country.”

--Michael Forsythe. With assistance from Sachiko Sakamaki and John Brinsley in Tokyo. Editors: John Brinsley, Brian Fowler

To contact the reporter on this story: Michael Forsythe in Beijing at mforsythe@bloomberg.net

To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net

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