For the past year, the Western news cycle around Japan has focused on two themes: (1) "Abenomics," or the attempt to revive Japanese economic growth through monetary stimulus, currency depreciation, and structural reform, and (2) China's growing contestation of Japan's control over the Senkaku Islands, including at sea and more recently through Beijing's unilateral declaration of an air defense identification zone. In the economic domain, if one looks at all of Asia, more attention remains focused on China's economic reform program and expectations of continued high growth in the 7 to 8 percent range, alongside skepticism that Japanese Prime Minister Shinzo Abe can return a mature Japanese economy to sustained growth. On security, there is an expectation that a "declining" Japan's claim to the Senkakus will be increasingly difficult to defend against pressure from a rising China -- and that Japan's claim is a liability for America, which does not want to be drawn into war over a set of uninhabited islands.
But the conventional wisdom may be wrong. Japan's strategic and economic resurgence is a game-changer for the Pacific century. It will not be possible for China to enjoy dominion over Asia as long as its claim to leadership is challenged by an offshore power of Japan's weight -- in the same way that aspiring hegemons like Napoleon and Hitler found that they could not control Europe as long as Great Britain opposed them and formed the core of a balancing coalition.
In our time, the British comparison actually understates Japanese strength. Today, Japan's economy is more than twice the size of Britain's, and its navy is four times larger. Indeed, there is no vast imbalance of power between China and Japan, as international relations professor Robert Kelly wrote last month in the Japanese edition of Newsweek. China's economy only recently surpassed Japan's in size, but China has decades to go to even begin approaching Japan's technological sophistication and high standard of living. Despite their "self-defense" label, the Japanese armed forces are similarly qualitatively superior to their Chinese counterparts, and they are far more skilled in joint operations and crisis management as a result of Japan's military integration with U.S. forces. Moreover, Japan is only a political decision away from a nuclear arsenal that could easily match China's.
Unlike China, Japan enjoys close security ties and military partnerships with some of the Asia-Pacific's most capable powers. These include the United States, of course, but also India and Australia. When these four countries conducted joint military exercises in 2007, Chinese analysts correctly identified the grouping as one that could stymie China's "natural" leadership of Asia. For all the unfortunate tension in relations between Tokyo and Seoul over history issues, the Japanese and South Korean armed forces continue to conduct joint military exercises and pursue other forms of quiet security cooperation. By contrast, China's alliances with North Korea and Pakistan may have their uses, but they do not amplify Chinese security.
On security, Japan is not adrift but is rapidly transforming its ability to project power. The Abe administration is pursuing constitutional reinterpretation to loosen the restrictions on Japan's armed forces. It has created a National Security Council to centralize decision-making and recently rammed through the Diet a new secrecy law to enable closer intelligence cooperation and better contingency planning with the United States and other powers. A basing agreement on Okinawa has removed a thorn in the side of Japan-U.S. relations, while Japan continues to transform its own force posture by realigning its forces to the south (facing China) from the north (facing Russia).
Japan has lifted its ban on military exports, once an untouchable pillar of its post-1945 pacifist regime, and is providing arms and military assistance to Southeast Asian countries, including the Philippines and Indonesia. Tokyo is forging a far-reaching strategic partnership with New Delhi, a democratic axis that could redraw the strategic map of Asia. In short, China's bullying of Japanese patrol vessels and aircraft in Japanese waters and airspace has given Abe the cover to move Japan decisively closer to becoming a "normal" great power that is able to defend itself, assertively project power and influence in Asia, and diversify its strategic options by building military alliances with countries beyond the United States.
Meanwhile, on the economic front, as a Financial Times columnist put it, "China is in for a run for its money" as Japan returns to its role as an engine of the wider Asian economy. In 2014, the developed economies of the United States, Japan, and Europe will make a greater contribution to global growth than will China and the other emerging economies -- for the first time since the global financial crisis. Japan is at the core of the Trans-Pacific Partnership negotiations that, if concluded, will provide a powerful jolt to its reform and growth prospects as one of the biggest global trade deals ever concluded.
By contrast, China's recently concluded Third Plenum makes clear that President Xi Jinping understands a Chinese economic model premised on low-value-added exports, cheap labor, repressed saving, and politically directed bank loans to unprofitable state-owned enterprises is not sustainable. China's growth rates have already slowed by some 30 percent to settle in the 7 percent range, with financial markets flashing warning signs over the probability of a bumpy landing -- with all its social and political implications.
Both Japan and China face demographic cliffs that are shrinking their working-age populations and limiting their long-term economic trajectories. Japan, with its homogeneous society and a more politically stable and vastly wealthier economy on a per capita basis, looks far better equipped to handle these pressures than a China still only at the cusp of middle-income status and lacking a welfare state.
Rather than China rising forever while Japan relegates itself to genteel decline, the competition for leadership in Asia is alive and intensifying. India is also staking its claim and will not leave the balancing of Chinese power and influence to Japan alone. Regional powers like Indonesia and Vietnam do not want to return to a Sinocentric past and will support the efforts of the great powers to maintain pluralism in their region. And America will continue a pivot to Asia that began over a century before President Barack Obama took credit for it. In short, China's leaders should not assume that they own the future, and American leaders should more forthrightly support their Japanese ally's attempts to restore its geopolitical and economic competitiveness.
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