Sept. 28 (Bloomberg) -- In 1984, Yoshihiko Noda was part of a Japanese youth group visiting China welcomed by an up-and-coming official named Hu Jintao. Now leaders of their nations, the two are locked in a conflict over barren islands that threatens to undermine a legacy of 40 years of diplomatic ties.
Political transitions in both nations may prolong what’s become the worst bilateral crisis since at least 2005, and impaired a $340 billion trade partnership. President Hu is poised to hand power to the next generation of China’s leaders, and Prime Minister Noda faces elections as soon as this year.
With boats from China, Japan and Taiwan in disputed East China Sea waters, any perception of backing down on territorial claims would risk domestic political backlash. Noda faces a newly installed opposition chief who advocates a harder line on China, while Chinese citizens have demonstrated in public over the Diaoyu, or Senkaku, islands. At the same time, it’s unlikely the leaders will allow any escalation into open conflict.
“A large part of this is due to domestic political considerations,” said Richard Samuels, a political science professor at the Massachusetts Institute of Technology and author of ‘Securing Japan: Tokyo’s Grand Strategy and the Future of East Asia.’ “The whole region is roiling amid the uncertainty over leadership and that creates room for mischief. There’s a period we’re going to have to get through, hopefully without conflict.”
In a sign that some elements in both countries want to limit friction, a delegation from the Japan-China Friendship Association met yesterday in Beijing with Jia Qinglin, a member of the Politburo Standing Committee, China’s top ruling body. Chinese stocks have also stabilized after a slide last week amid the worst of the protests, with the Shanghai Composite Index gaining 1.6 percent in the past week.
“The conditions are rather different from when I met your excellency in the spring, and I come this time with a heavy heart,” former Japanese Foreign Minister Yohei Kono, leader of the Japanese delegation, told Jia, who called the visitors “old friends of the Chinese people.”
Fishing and energy rights are at the center of the conflict. China and Japan have failed to implement a June 2008 deal to develop a natural gas field in the area and Japan has objected to Chinese drilling nearby.
The dispute escalated when Japan purchased the islands on Sept. 11, 10 days before Noda was re-elected head of the Democratic Party of Japan amid pressure to fulfill a pledge to call elections “soon.” The main opposition Liberal Democratic Party this week chose as its leader ex-premier Shinzo Abe, who advocates building on the islands to assert sovereignty.
Polls indicate the LDP may defeat the DPJ, putting Abe in line to become prime minister again. Japan is also embroiled in a row with South Korea that flared after South Korean President Lee Myung Bak last month visited islets claimed by both.
For the Communist Party, the conflict coincides with a once-in-a-decade succession of power that’s been complicated by the scandal involving ousted Politburo member Bo Xilai, whose wife was convicted of murdering a British businessman.
“Noda is having a difficult time at home and given the territorial disputes with neighboring countries, fanning the Diaoyu islands issue is the only card he can score to win support,” said Feng Wei, a history professor at Fudan University in Shanghai. “From China’s side, anti-Japanese sentiment serves as the glue and ideology that can bring everyone together.”
The dispute saw Japanese restaurants and businesses including Fast Retailing Co., owner of the Uniqlo clothing brand, close shops in Beijing at the height of the protests in the city. A Toyota Motor Corp. dealership was damaged by fire in the Chinese city of Qingdao, while a Honda Motor Co. dealership was also set ablaze.
China’s embassy in Tokyo today said it received a letter with a bullet inside yesterday, according to a statement posted on its website. The embassy urged Japanese police to secure the safety of Chinese organizations and employees in Japan.
Nissan Motor Co., the top Japanese seller of vehicles in China, said Sept. 26 that August output there fell 8.9 percent from a year earlier, while Toyota’s production dropped 18 percent and Honda’s fell 10 percent. Japanese autos will lose their lead this year to German competitors for the first time since 2005, China’s Passenger Car Association estimates.
Yesterday, Chen Yulu, an academic adviser to the People’s Bank of China, told reporters in Beijing that the island dispute threatens Tokyo’s future as an offshore yuan center.
China maintains that it’s owned the islands for centuries. Japan argues it took control of them in 1895, lost authority after World War II, and had them returned by the U.S. in 1972.
Chinese Foreign Minister Yang Jiechi yesterday in a speech at the United Nations General Assembly in New York said Japan “stole” the islands. Yang and Japanese counterpart Koichiro Gemba made no progress this week at a meeting in New York, and Noda said at the UN that Japan won’t retreat from its stance that the islands are “an inherent part of our territory.”
“China strongly urges Japan to immediately stop all activities that violate China’s territorial sovereignty,” Yang said in his speech. In response, Japanese Chief Cabinet Secretary Osamu Fujimura today told reporters in Tokyo that China’s claims had no basis in fact.
“Both sides have to understand that they need to take their egos and their nationalist instincts offline,” said Brad Glosserman, director of Pacific Forum CSIS, a Honolulu-based research institute. “At the same time, neither country can really afford to back down, insofar as they’ve both got extreme nationalistic pressures.”
China has sent patrol ships into waters administered by Japan at least three times since the islands were bought. There have been no confrontations with Japanese vessels, unlike the Sept. 25 clash between the Coast Guard and about 50 boats from Taiwan, which also claims the islands. The Japanese Coast Guard used water cannons to drive off the Taiwanese boats.
“The situation is worrisome,” M.I.T.’s Samuels said. “There is always the danger of miscalculation. That’s why Japan patrols with the Coast Guard and not naval vessels, to act as a buffer against rapid escalation.”
Chinese naval ships have been training in the area recently, Defense Ministry spokesman Yang Yujun said yesterday, according to the official Xinhua News Agency. U.S. Secretary of State Hillary Clinton yesterday urged Foreign Minister Yang in a meeting in New York to resolve the situation calmly, according to a State Department official speaking on condition of anonymity in line with ministry policy.
Noda and Hu failed to lower tensions at the Asia-Pacific Economic Cooperation Summit in Vladivostok, Russia this month. The atmosphere contrasted with a November 2011 meeting in Honolulu, when the two reminisced about Noda’s participation in the 3,000-member exchange group that Hu welcomed in 1984.
In the meeting in Russia, Hu warned Noda that nationalizing the islands would be illegal, Xinhua reported. Two days later, Noda struck the deal to buy them.
“What we need is to reset ties,” said Kunihiko Miyake, a professor of international relations at Ritsumeikan University in Kyoto. “For that to happen we have to change the players. I don’t think Hu Jintao and Noda can get along any more. We need to start the groundwork for that, it may take months.”
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