Jan. 23 (Bloomberg) -- Japanese Prime Minister Shinzo Abe said increased military spending in Asia threatens the region’s economic growth and called on countries to curb defense outlays at a time of heightened tension between his country and China.
“The dividend of growth in Asia must not be wasted on military expansion,” Abe said in a keynote address yesterday at the World Economic Forum in Davos, Switzerland. “We must use it to invest in innovation and human capital, which will further boost growth in the region.”
Abe yesterday compared Japan’s relationship with China to that between the U.K. and Germany in 1914 before World War I, saying the European countries also had strong economic ties but still went to war, the Globe & Mail reported today. At a meeting with a small group of editors at Davos, Abe called China’s fast-growing military budget a cause for alarm and said he didn’t want an inadvertent conflict, the paper said.
China is flexing its military muscle in Asia as it asserts claims to disputed territories and resources, while Abe has been trying to loosen restrictions on Japan’s Self-Defense Forces imposed by the country’s pacifist constitution. China expanded military spending 10.7 percent to 740.6 billion yuan ($122 billion) in 2013 and Abe plans a second consecutive rise in Japan’s defense budget.
Asia’s two largest economies are locked in an ownership spat over a chain of tiny islands in the East China Sea, over which China established an air defense identification zone in November. Abe’s visit the following month to a war shrine seen by nations such as China as a symbol of Japan’s past militarism added to tensions. The two countries haven’t held a summit since Abe took office in December 2012 and China said Jan. 21 it would not consider a meeting at the Sochi Winter Olympics next month.
Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo today that Abe’s comments about WWI “absolutely” did not mean the premier thought a war with China was possible, citing his call in the speech for dialog.
“The prime minister’s words underscore the importance of peace and prosperity in Asia,” Suga said.
China attracted new criticism from Japan as well as the U.S. when it introduced fishing rules requiring foreign vessels to seek permission before entering waters off its southern coast, part of which are claimed by Southeast Asian nations.
President Xi Jinping has called for China to be a strong maritime power. In 2012, China commissioned its first aircraft carrier and has plans to build at least two more by 2025, according to the U.S.-China Economic and Security Review Commission. In December the carrier, the Liaoning, returned from its first training mission in the South China Sea, where China has been at odds with the Philippines over control of the Scarborough Shoal, a rich fishing ground.
“Military budgets should be made completely transparent and there should be public disclosure in a form that can be verified,” Abe said in the speech. While he did not mention China directly, both Japan and the U.S. have repeatedly criticized a lack of transparency in China’s military outlays. The Stockholm International Peace Research Institute estimates Chinese military spending at 1,049 billion yuan for 2012, almost 50 percent more than China’s official figure.
Abe called for the creation of a mechanism for crisis management and a communication channel between armed forces to help build trust. “This can only be achieved through dialogue and the rule of law and not through force or coercion,” he said.
Japan and China have agreed in principle to set up a system to avoid unplanned marine clashes but it has never been implemented. Patrol boats from Japan and China have frequently tailed each other around the disputed areas of the East China Sea.
Asked after his speech about his December visit to the Yasukuni shrine, Abe said: “I put my hands together and pledged to create a world where people would never again suffer the cruelty of war.”
“Just like the many Japanese leaders who have visited the shrine since the war, I had absolutely no intention to hurt the feelings of China and South Korea,” he said.
U.S. Ambassador to Japan Caroline Kennedy urged Japan to reconcile with its neighbors in an interview published by the Asahi newspaper today. Reiterating U.S. “disappointment” over Abe’s visit to the shrine and concern it could raise regional tensions, she told the paper that leaders who try to overcome history and create a peaceful future should be encouraged and supported.
Japan and China are interdependent for many reasons, Japan’s Minister for Ocean Policy and Territorial Issues Ichita Yamamoto said in an interview at Davos Jan. 21. “I really hope our prime minister can have a talk with the leader of China,” Yamamoto said.
On the economy, Abe said he planned to make further changes to corporate tax rates this year, after abolishing a 2.4 percentage-point reconstruction levy from the financial year starting in April.
“We must also make the tax system for companies internationally competitive,” he said in his speech. He added that the government would review the investment portfolio of Japan’s Government Pension Investment Fund and adopt a deregulation plan to cut red tape and boost competitiveness.
Abe reiterated a pledge to have women in 30 percent of leadership positions by 2020.