SINO-JAPANESE RELATIONS AFTER PM FUKUDA'S

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 003459

SIPDIS

DEPT FOR EAP/CM AND EAP/J

E.O. 12958: DECL: 09/05/2033
TAGS: PREL PGOV CH JA
SUBJECT: SINO-JAPANESE RELATIONS AFTER PM FUKUDA'S
RESIGNATION

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.
4 (b/d).


1. (C) Summary: Although Japanese PM Fukuda was instrumental
in improving Sino-Japanese relations and neither of his
likely immediate successors are instinctively pro-China,
Japan's growing economic reliance on China, coupled with
pro-China Liberal Democratic Party (LDP) leaders holding key
positions, should help prevent the bilateral turmoil that
characterized the tenure of Prime Minister Junichiro Koizumi,
Fukuda's predecessor-once-removed, according to several
Embassy contacts. Chinese leaders have made the decision to
seek good relations with Japan, and only a major misstep
(from the Chinese point of view) by the next Prime Minister
could change that. Should Democratic Party of Japan (DPJ)
leader Ichiro Ozawa eventually become Prime Minister after
the next Japanese general elections, our sources predict that
Ozawa would temper his views toward China and the DPJ would
not allow its previous links to Taiwan's Democratic
Progressive Party to stand in the way of bilateral ties. We
note a bit of hubris among Chinese scholars who see Japan's
political and economic struggles taking place in the wake of
China's economic rise, successful Olympics and return to the
global stage. End Summary.

Fukuda's Major Accomplishment: Better Ties with China
-------------- --------------


2. (C) Although Japan watchers in Beijing uniformly credited
President Hu Jintao as the primary force behind the recent
improvement in Sino-Japanese relations, in a series of recent
meetings with PolOff they acknowledged the pace of
improvement would not have been possible without the
leadership and collaboration of recently resigned Japanese PM
Yasuo Fukuda. Dr. Liu Jiangyong, Professor at the Institute
of International Studies at Tsinghua University, described
the frosty bilateral relationship Hu and his predecessor
Jiang Zemin had with then-Japanese PM Junichiro Koizumi, a
relationship punctuated by anti-Japan protests in China after
Koizumi's visit to Tokyo's Yasukuni War Shrine and by
anti-China sentiment in Japan caused in part over territorial
disputes over the Senkaku/Diaoyu Islands. Liu contrasted the
state of the Hu-Koizumi era with the Hu-Fukuda partnership by
pointing to the June 2008 agreement under which Japan and
China may develop jointly the gas fields in the East China
Sea, the same area which was the source of so much
controversy.


3. (C) MFA Asian Affairs Department Japan Division Deputy
Director Lu Guijun credited Hu Jintao's "vision" and Fukuda's
"leadership" as the primary factors for the "unprecedented"
good relations between China and Japan. Dr. Liang Yunxiang,
a Japan Studies Professor at the Institute of International
Studies at Beijing University, said that Fukuda was the right
man at the right time to seize upon Hu's willingness to
improve links with Tokyo. Dr. Jin Xide, Deputy Director of
the Institute of Japanese Studies at the Chinese Academy of
Social Sciences (CASS),praised Fukuda for taking the
political risks of reaching out to Beijing and resisting
using the "China threat" tactics Koizumi and others used to
drum up support among the LDP right wing.

The Chinese Leadership Wants Good Relations with Japan
-------------- --------------


4. (C) Our contacts all agreed that President Hu strongly
supports close links with Japan and it would take a major
faux pas on the part of the next Japanese Prime Minister to
change that policy. MFA's Lu said that China and Japan have
agreed on new principles of cooperation and are committed to
using dialogue to solve bilateral problems. Both China and
Japan "agree that China's development is an opportunity,"
said Lu. Liu from Tsinghua and Liang from Beijing University
both maintained that it would take a major anti-China move on
the part of the next Japanese leader to cause Hu to abandon
his engagement policy with Japan.

Other Key LDP Leaders Favor Sino-Japanese Ties
-------------- -


5. (C) Although all of our contacts were surprise by Fukuda's
sudden resignation announcement on September 1, they
expressed belief that his legacy of improved Sino-Japanese
links will endure. Dr. Liu from Tsinghua University noted
the importance to the relationship of Fukuda's top advisors,
especially Minister of Economy, Trade and Industry Toshihiro
Nikai and Minister of Construction and Transport Sadakazu
Tanigaki. Liu pointed out that Nikai has long had good
relations with senior Chinese officials and delivered Tokyo a
major public relations victory in China by delivering

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Japanese relief supplies to victims of the May 12 Sichuan
earthquake. "The goodwill generated by the Japanese
assistance lingers and helped convince Chinese officials to
discuss publicly the extent and amount of Japanese foreign
development assistance, a subject that was previously not
publicly discussed," said Liu. Dr. Jin from CASS predicted
confidently that no matter who the LDP elects in late
September as its next leader and Prime Minister, both Nikai
and Tanigaki will continue to hold high offices and support
strong Sino-Japanese relations.

The Business Community is Louder Than the Far Right
-------------- --------------


6. (C) Liang from Beijing University maintained that Koizumi
and, to a lesser extent, then-PM Shinzo Abe were prisoners of
their polemics and could only move so far toward improving
relations with China or risk strong criticism from the
radical right wing in Japan. Tsinghua's Liu agreed, saying
that "Important factions within the LDP forced Koizumi to
visit the Yasukuni War Shrine despite the anger such visits
stirred in China." Separately, Liu and Jin from CASS both
maintained that the hard-line, right-wing LDP factions that
urged Japanese leaders to visit Yasukuni have now lost the
upper hand to Japanese business interests who are
increasingly reliant on the Chinese market. "Toyota and
Matsushita are telling the Japanese leaders to stay away from
Yasukuni lest they kill their firm's ability to make greater
profits off of the China trade; with Japan's economic
troubles, Japanese leaders can no longer risk alienating
China," Jin said. (Note: We leave it to our colleagues in
Tokyo to assess the merits of this Chinese analysis of
Yasukuni visits. We note that Hiroyuki Namazu, Counselor at
the Japanese Embassy in Beijing, told us that while he doubts
a future PM will visit Yasukuni, it would be unwise to
totally rule out such a visit.)

Views on Taro Aso
--------------


7. (C) Our Chinese interlocutors unanimously predicted that
Taro Aso will be the next PM of Japan. They were all aware
of Aso's perceived anti-China baggage. Jin from CASS
recounted Aso's remarks several years ago suggesting that the
Japanese colonization of Taiwan was a good thing for Taiwan's
development and noted that Aso still has not adequately
explained his father's (Takakichi Aso) exploitation of Korean
forced labor during WWII. That said, Jin believed Aso will
have the same pro-China economic advisors as Fukuda and the
same pressure from Japanese business to avoid hurting
business interests by saying inflammatory things about the
War.


8. (C) Liang Yunxiang expressed some concerns over Aso's
policies as Foreign Minister under Koizumi and Abe. Liang
noted that as Foreign Minister, Aso's economic and foreign
assistance policies toward other Asian nations were
interpreted by some in Beijing as designed to contain China.
That said, Liang shared the view that a Prime Minister Aso
would be pushed by his economic advisors and influential
members of Japan's business community not to antagonize China.

Yuriko Koike
--------------


9. (C) Our scholarly contacts were dismissive of Koike's
chances to be Prime Minister this year. "Japanese politics
are extremely conservative; I doubt Japan is ready for a
female PM," said Liu. Jin from CASS also thought Koike will
not replace Fukuda but acknowledged that, with the recent
history of Japan changing Prime Ministers every year, "her
time may come soon." Jin held that, since Koike is also a
member of the right-wing faction of the LDP, she may feel a
need to burnish her credentials with Japanese hawks and be as
tough as Koizumi on issues like defense spending and curbing
the rise of China. "She might feel like she is Japan's
Margaret Thatcher," he said.

Ichiro Ozawa
--------------


10. (C) Our contacts tended to view DPJ leader Ozawa as a
political opportunist whose conservative foreign policy views
may be tempered by the DPJ's progressive domestic platform.
Although Jin from CASS expected Ozawa would listen to his
economic advisors and not be antagonistic toward China, he
noted that Ozawa was fairly conservative toward China when he
was with the LDP. Jin suggested that the Democratic Party of
Japan's former close links with then-Taiwan President Chen
Shui-bian and Taiwan's Democratic Progressive Party may be

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cause for concern with Chinese leaders should Ozawa win the
next general election. Liu from Tsinghua had a slightly
different take on Ozawa: "If the Democratic Party of Japan
wins the next election, relations with China will continue to
improve in part because the (DPJ's) opposition to supporting
U.S. efforts in Iraq and Afghanistan will make the DPJ a more
palatable partner for China," he said.

Public Opinion
--------------


11. (C) Recent Xinhua polling of Chinese citizens' views
toward Japan indicates that more Chinese view Japan favorably
than in recent years. At the same time, polling by the
Yomiuri Shimbun and others in Japan suggests in contrast that
a growing number of Japanese view China with suspicion.
Liang from Tsinghua attributed these trends to the "problems
of a free press." "In China, once Hu Jintao and others
decided to improve relations with Japan, all the media organs
had to run pro-Japan stories," Liang said. "Meanwhile,
Japan's free press was able to run stories about
Chinese-manufactured tainted gyoza/dumplings poisoning
Japanese and the 'rise of China' to sell papers and increase
suspicion in Japan.". Jin from CASS drew a similar
conclusion, adding "as China continues to rise, Chinese
leaders must take into account foreign public opinion. I
think we should apologize for the dumplings."


12. (C) While not addressing the need to apologize or the
merits of press freedom, Lu from MFA also observed the
general pro-Japan tenor of recent articles in China,
especially after Hu Jintao's June visit to Japan. Despite
the Yomiuri polling, Lu thought that Hu's visit and the
recent bilateral agreements will change Japanese public
opinion.

Are the Chinese Guilty of Hubris?
--------------


13. (C) The Chinese scholars we spoke with have extensive
experience and numerous degrees from top Japanese
universities, including Tokyo University and Waseda. Despite
such pedigrees, their comments on the future of Sino-Japanese
relations evinced a hint of arrogance and nationalism. Liang
from Beijing University maintained that the "old economic
relationship where Japan was stronger than China is over."
Liu from Tsinghua seemed convinced that most Japanese
economic leaders accept the fact that China's economic rise
and Japan's stagnation will continue for years. Perhaps most
dogmatic was Jin from CASS who likened today's Japan to
Scandinavia "filled with young people who want to travel,
spend money, and enjoy consumer goods, while China is like
the Japan of the 1960s when Japanese worked hard." When
PolOff shared this observation with Namazu from the Japanese
Embassy, he smiled and replied, "I seem to recall hearing
similar things from Japanese in the 1980s when they discussed
America and wrote 'The Japan Who Can Say No;' perhaps the
future is not preordained. In any event, Scandinavia is a
nice place."
RANDT