War of nerves in the South China Sea

The feud between China and Japan, over the lonely islets in the East China Sea – known as the Diaoyu in China and the Senkaku in Japan – has entered what is best described as a sluggish phase, despite the ongoing anti-Japan rallies in China, boycotting all Japanese goods, canceling all Japanese tourist visas, along with the patrolling of the islets by Chinese and Japanese warships. One is reminded of two Latin adages: cui bono and quo vadis. In other words, whose benefit you are serving and which way you are headed.

Apart from what one can watch on the Chinese government-run television channels (considering that the protest rallies have been banned after the Tiananmen Square Massacre), there must be other, more serious reasons for the mounting tensions in the Asia-Pacific region.

A number of analysts note that the interest in these islets increased after they were found to contain hydrocarbon deposits; also, their strategic position in the vicinity of Taiwan and the ability to control navigation in the South China Sea. Beijing appears to be unperturbed.

Territorial integrity remains a sore point deep within the mentality of the Chinese ruling elite. This vast country suffered a long period of fragmentation in the 20th century, being exposed to expansion on the part of its stronger neighbors.

The protest rallies reached their peak on September 18, commemorating the Mukden Incident, when, back in 1931, a small quantity of dynamite was detonated by Lt. Kawamoto Suemori, close to a railroad owned by Japan’s South Manchuria Railway near Mukden – now Shenyang. The Kwantung Army launched a full-scale offensive and eventually seized Manchuria, where the puppet state of Manchuko was established, with a death toll of 35 million and economic losses upward of 600 billion dollars.

This conflict has nothing to do with history, considering that the Beijing rulers can forget all about history, territorial integrity included, where and when this serves their benefit. Traditionally, they have put off the issue of restoring “historical justice” for another couple of decades.

There are other reasons behind the islet feud between China and Japan.

First, it is being fueled up by Beijing. One is strongly reminded of the Spratly Archipelago, or Chyongsha in Vietnamese. Here territorial claims come from Vietnam, Taiwan, Malaysia, Philippines, and Brunei. Not so long ago, China appropriated Woody Island (part of the Paracel Islands, known as Yongxing in Chinese cartography) and made it part of China’s Hainan Province, complete with a garrison of the People’s Liberation Army and civil authorities. In this context, the Senkaku confrontation appears to be a sequel to [Beijing’s] overall strategy.

Second, China wants to use this opportunity to demonstrate its mounting economic and military – naval, to be precise – potential to all the neighboring countries, including Japan.

Third, considering that Japan and the Philippines are bound by security agreements with the US, with Hanoi expanding military and technological cooperation with Washington and Delhi, also, to an extent, with Moscow (much to Beijing’s chagrin), China is faced up with the task of showing the international community an example; that this ancient and newly built powerful state is not afraid of any threat. In actuality, the situation is different, but who would ever pass up the opportunity of pulling the propaganda wool over the ears across the world?

Fourth, Beijing appears to have played what it believes to be its trump card when its party-run People’s Daily carried an editorial to the effect that, in case of trade war with Japan, the latter’s economy wouldn’t endure the blow dealt to it for the next 20 years; that China, as the world’s second strongest economy, is capable of showing resolve and heaving a long breath to destroy a thousand enemies before 800 Chinese are killed. China will also suffer, but Japan, already weakened by the crisis, after the nuclear disaster and earthquake, will find itself on the verge of an abyss.

China is Japan’s major export-import partner, sharing 19.7 percent in Japan’s exports (compared to US 15.5 percent) and 21.5 percent imports (compared to US 8.9 percent). Japan’s share in China’s imports is 11.2 percent, compared to 9.3 percent in South Korea and 6.8 percent in the US. Japan would suffer to lose the Chinese market, but this wouldn’t be a lethal blow to China. If and when Beijing orders all local Japanese businesses closed, China will face an even sharper unemployment crisis. All of the People’s Daily’s long-breath maxims are pure propaganda; before Japan finds itself on the edge of an abyss, the future of China will remain anyone’s guess.

Yurii Galenovich, a noted Russian sinologist, senior research fellow with the Institute of Far East under the aegis of Russia’s Academy of Sciences, author of more than 200 books on China, says the mounting tensions in the China-Japan islet feud are the result of backstage political goings-on in China, owing to the complex social situation on the eve of the 18th Congress of the of Communist Party. What is happening is a confrontation between the two neo-Maoist and Shanghai ruling party factions, each trying to enhance its influence, using populist techniques. As a result, people take to the streets to protest “hard living conditions,” adding to large-scale rallies. Undoubtedly, the neo-Maoists are behind these rallies because mounting public tensions are playing into their hands, because they want to come to power and wage a more rigid domestic and foreign policy.

In the course of a major political party election campaign in Japan, Tokyo’s stand in regard to Beijing became a matter of cadre reshuffling, particularly in regard to the leader of the Liberal Democratic Party. All five candidates are conservatives, each proving more conservative than the next. In Tokyo, there are increasing moods for stronger defenses, so this islet feud is adding points on the scoreboard of those who are trying to make nuclear China afraid of non-nuclear Japan. Under the circumstances, the next point on Tokyo’s political agenda could be Japan’s refusal of the non-nuclear status.

This China-Japan islet feud has no direct impact on Ukraine’s economy.

Says Maria Salnikova, an expert with Forex Club’s analysis center in Ukraine: “There won’t be any significant negative indices in the domestic export growth rate. [Ukraine’s] exports to China amounted to a mere 2.5 percent, compared to 0.77 percent to Japan. This conflict is having a negative effect on the world’s stock markets, including the Ukrainian one.” Salnikova believes that the Chinese and Japanese currency exchange rates will change, probably with the yuan being on a downward curve and the yen getting steadier, considering that the Japanese currency has the save haven status.

If aggravated, this conflict in the Far East will have a negative effect on world economy, as well as on the international situation. Hopefully, it will not reach the boiling point. None on either side would want this to happen. Most likely, what is happening between Beijing and Tokyo is a war of nerves, or another umpteenth “serious warning” from China.