WHY DID JAPAN ADOPT THE POLICY OF "SEPARATING ECONOMICS FROM POLITICS"? A Look at Post Second World War Sino-Japanese Relations from a Korean Standpoint by CHUNGJA CHO PARK B.A. , Ewha Womens University, 1950 B.A., Ohio Wesleyan University, 1954 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF ARTS i n the Department of P o l i t i c a l Science accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA January, 1973 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of P o l i t i c a l Science The University of B r i t i s h Columbia Vancouver 8, Canada Date February 26, 19 73 ABSTRACT Japan's f o r e i g n r e l a t i o n s w i t h the P e o p l e ' s R e p u b l i c o f C h i n a have been one of the most important and c o n t r o v e r s i a l i s s u e s s i n c e Japan r e g a i n e d h e r independence i n 1952. ties Geographical proximaty, historical t h a t Japan has w i t h C h i n a , and C h i n a b e i n g a major power w i t h n u c l e a r c a p a b i l i t y made i t v i t a l l y important f o r Japan to keep a p i p e l i n e open w i t h h e r , and the p o l i c y o f s e p a r a t i n g economics from p o l i t i c s p e r m i t t e d trade r e l a t i o n s w i t h h e r . i n g out why i t was In t h i s t h e s i s I am o f utmost importance chiefly Interested i n find- f o r Japan t o adopt this principle of f o r e i g n p o l i c y toward Communist C h i n a . In the f i r s t s e c t i o n , the i n t e r n a t i o n a l s i t u a t i o n and circumstances which e v e n t u a l l y l e d Japan to adopt explored. The second s e c t i o n w i l l and i m p l i c a t i o n s o f t h i s p o l i c y . how historical this policy w i l l d e a l w i t h the i n t e r n a t i o n a l significance In s e c t i o n t h r e e I s h o u l d l i k e the a c t u a l n e g o t i a t i o n s on " t r a d e " are used by b o t h be to a n a l y z e the C h i n e s e l e a d e r s and the p r o - P e k i n g l e a d e r s i n Japan as a means o f changing Japan's p o l i c y toward is China. An important a s p e c t o f t h i s p o l i c y the i n t e r n a l p o l i t i c a l impact i n Japan. Korea w i l l be a f f e c t e d by Japan's new t r e a t e d i n the l a s t section F i n a l l y , I s h o u l d l i k e to see r e l a t i o n s w i t h the P e o p l e ' s how Republic of China. The c h i e f cause o f a d o p t i n g and p u r s u i n g the p o l i c y o f s e p a r a t i n g economics from p o l i t i c s stemmed from i n t e r n a t i o n a l c i r c u m s t a n c e s i n which Japan found h e r s e l f as a d e f e a t e d n a t i o n a f t e r the Second World War. I t was the n a t u r e o f the San F r a n c i s c o Peace T r e a t y , the t i m i n g o f the s i g n i n g , the ii attitude of Communist China and Japan's p a r t i c u l a r r e l a t i o n to the United States that made Japan recognize N a t i o n a l i s t China. Since neither Nation- a l i s t China nor Communist China would permit diplomatic t i e s with any country that recognized the other, i t was not possible f o r Japan to recognize both regimes. Therefore, Japan maintained only economic relations with Communist China without any direct p o l i t i c a l contact. Sino-Japanese trade relations were based on the r e a l i t y Communist China and Japan. of both From Japan's point of view i t was a r e a l i s t i c approach to maximize economic opportunities and minimize p o l i t i c a l involvement u n t i l the r i g h t opportunity came f o r normalization. By adopting and p r a c t i s i n g the policy of separating economics from p o l i t i c s , Japan looked for larger commercial opportunities i n the future and i t also served as a pipeline between the two b i g countries i n A s i a . From China's viewpoint, i t was an "accumulative" approach f o r the eventual normalization of relations with Japan. Trade was used as an instrument of p o l i t i c a l pressure and i t r e f l e c t e d China's p o l i t i c a l aims. The volume of trade fluctuated and the techniques China used varied according to the p o l i t i c a l objectives. China appealed to a "broad p o l i t i c a l spectrum" i n Japan through private agreements and exchange of u n o f f i c i a l p r i v a t e delegations. China threatened Japan with suspension of trade, and manipulated her with " f r i e n d l y trade" and "memorandum trade". Since the agreement for the normalization of Sino-Japanese relations was signed on September 29, 1972 the controversial issue of "separating economics from p o l i t i c s " has become a story of the past. i The admission of iii Communist C h i n a to the U n i t e d N a t i o n s i n 1971, Nixon's v i s i t F e b r u a r y , 1972, to C h i n a i n and the e v e n t u a l change o f the p o l i c y o f the U n i t e d N a t i o n s gave Japan an o p p o r t u n i t y to change h e r p o l i c y and r e c o g n i z e the P e o p l e ' s Republic o f China. With the n o r m a l i z a t i o n o f Sino-Japanese r e l a t i o n s , K o r e a must seek h e r r o l e by p u r s u i n g "independent and p o s i t i v e " a c t i o n . The talks between North and South f o r the e v e n t u a l u n i f i c a t i o n o f Korea and the constitution o f South Korea which was attempts t o a d j u s t h e r s e l f to t h i s adopted i n 1972 role. reflect Korea's new iv CONTENTS Chapter Page Introduction 1 I H i s t o r i c a l Background 5 II International Reasons 11 Trade Negotiations 16 Internal P o l i t i c a l Reasons 31 Conclusion 39 Bibliography 43 III IV INTRODUCTION As a South Korean, i t has been one of the most important issues for me to observe Japan's r e l a t i o n s with the People's Republic of China. Korea i s sandwiched between the two nations, each a giant: Japan, an economic power belonging to the group of free, democratic nations; China, a growing m i l i t a r y power with her revolutionary zeal and communist reform. The impact of their r e l a t i o n s i s f e l t immediately i n Korea and her national i n t e r e s t and s u r v i v a l has been greatly affected by t h e i r moves. For the past twenty years between 1952 to 19 72, Japan has maintained ties with both N a t i o n a l i s t China and Communist China, one formal as the other informal, and this kind of r e l a t i o n s h i p was a l l based on the p o l i c y of "Separating Economics from P o l i t i c s . " Separating economics from p o l i t i c s has been used to mean carrying on economic r e l a t i o n s without d i r e c t p o l i t i c a l contact. With respect to Communist China this has meant that Japan has carried on tirade with China without diplomatic or other d i r e c t contact between the governments. Japan, i n the meantime, has carried on both trade and diplomatic r e l a t i o n s with Taiwan. Because neither of the two Chinas w i l l permit diplomatic ties with any country that recognizes the other, i t i s not possible to recognize both regimes. Now that Japan established diplomatic r e l a t i o n s with Peking and Taiwan had broken o f f diplomatic r e l a t i o n s with Japan, Japan may try to carry out the p o l i c y of separating economics from p o l i t i c s 2 by maintaining i t s trade and other economic t i e s with Taiwan but having no d i r e c t diplomatic r e l a t i o n s . Since the two Korean regimes also refuse to have relations with any country that simultaneously recognizes i t s r i v a l regime, Japan can maintain diplomatic and trade r e l a t i o n s only with South Korea. I t can, however, separate economics from p o l i t i c s by trading with the North Korean regime but have no diplomatic t i e s . D. C. Hellmann c a l l e d this p o l i c y "schizophrenic"! -jo a South Korean i n t e l l e c t u a l , this p o l i c y represents a t y p i c a l side of an "economic animal" and the p o l i c y p r i n c i p l e being manipulated by " p o l i t i c a l leaders o who have two faces and who c a l l f o r two d i f f e r e n t tunes at the same time." To former Prime Minister Ikeda, however, i t was the " r e a l i s t i c p o l i c y " i n 3 r e l a t i o n to Communist China. Whatever the description or i n t e r p r e t a t i o n of this p o l i c y may be, Japan's foreign r e l a t i o n s with Communist China have been one of the most important and controversial issues since Japan regained her independence i n 1952. The People's Republic of China, a f t e r a l l , governs a l l the main- land of China, an area about twenty-six times greater than that of Japan, with a population of 800 m i l l i o n . Geographical proximity, h i s t o r i c a l t i e s that Japan has with China, and China being a major power with nuclear ^Donald C. Hellman, "Japan's Relations with Communist China," Asian Survey IV (October, 1964) , p.1092. ^Suh Bong Yuen, Choongang Ilbo, September 9, p.3. •^Chronology, Japan Quarterly, January 1964, p. 250. 3 c a p a b i l i t y made i t v i t a l l y important f o r Japan to keep a p i p e l i n e open with her giant neighbour, and the p o l i c y of "separating economics from p o l i t i c s " permitted informal f r i e n d l y r e l a t i o n s with her. not a front door diplomacy; i t was a back door diplomacy waiting f o r a ripe opportunity for normalization of r e l a t i o n s . arrived; In a way, i t was The ripe time has j u s t with Prime Minister Tanaka's v i s i t to Peking and the p o l i c y of s e i k e i bun r i (separation of economics and p o l i t i c s ) i s about to be reversed. The p r i n c i p l e of " p o l i t i c s " w i l l be applied to Communist China and the Japanese leaders hope that the p r i n c i p l e of "economics" w i l l apply to Formosa. In this thesis I am c h i e f l y interested i n finding out why i t was of utmost importance f o r Japan to adopt this p r i n c i p l e of foreign p o l i c y toward Communist China. In order to do so, I s h a l l devote the f i r s t section to exploring the i n t e r n a t i o n a l s i t u a t i o n and h i s t o r i c a l circumstances which eventually l e d Japan to adopt this p o l i c y . The second section w i l l deal with the i n t e r n a t i o n a l s i g n i f i c a n c e and implications of this p o l i c y . I t was the p o l i c y which gave the means f o r Japan to maintain informal f r i e n d l y r e l a t i o n s with Communist China without the formality of recognizing her and yet get around the objections and demands of Japan's f r i e n d s , the United States and Formosa. In section three I should l i k e to analyze how the actual negotia- tions on "trade" are used by both the Chinese leaders and the pro-Peking leaders i n Japan as a means of changing Japan's p o l i c y toward China. The process of negotiations was a constant pressure and reminder f o r the Japanese 4 p o l i t i c a l leaders to be aware of the "China problem". An important of this p o l i c y treated i n the l a s t section i s i t s i n t e r n a l p o l i t i c a l n i f i c a n c e i n Japan. The aspect sig- "China problem" s p l i t the p o l i t i c a l leaders, even within the government party of the L i b e r a l Democratic Party. The p o l i c y offered the means to m o l l i f y the opposition forces, and circumvent the dominant group i n the government party. I t was one of the b i g issues which the candidates f o r the e l e c t i o n of Prime M i n i s t e r debated during the e l e c t i o n i n July of 1972. In section four, I should l i k e to see how by Japan's new recent Korea w i l l be affected r e l a t i o n s with the People's Republic of China. 5 I The p o l i c y of "separating economics from p o l i t i c s " i s not enunciated by one i n d i v i d u a l , nor does i t spring from any s i n g l e source. The p o l i c y has evolved and grown out of Japan's p a r t i c u l a r g e o - p o l i t i c a l s i t uation, and i s heavily circumscribed by the l o g i c of events that have taken place i n the world. After the Second World War, i n the s t r i c t sense of the word, f u l l sovereignty i n foreign r e l a t i o n s started when the San Francisco Peace Treaty went into e f f e c t on A p r i l 28, 1952. Even with the freedom to pursue her i n - dependent course of action i n foreign p o l i c y , Japan had to accept and follow an already-established course. I t seems, therefore, very important to ex- amine and analyze just what the i n t e r n a t i o n a l conditions were that eventually led Japan to adopt the p o l i c y p r i n c i p l e of "separating economics from p o l i t i c s . " In the f i r s t place, Japanese foreign p o l i c i e s cannot be considered without taking into account her r e l a t i o n s with the United States. U n t i l the San Francisco Peace Treaty was signed and went into e f f e c t , Japan was under the occupation of the A l l i e d Forces and the core of the A l l i e d Forces was the United States Army. the The Supreme Commander of the A l l i e d Forces was American general, Douglas McArthur, who actually ruled Japan and h i s rule was d i r e c t l y influenced by the United States foreign p o l i c y towards Asia and toward the entire world. When Japan regained her independence i n 1952, the world was into two b l o c s divided each dominated by the two superpowers, the United States 6 and the Soviet Union. Japan, under the occupation and influence of the United States, had to choose her side i n the Cold War, and i t was almost the natural course of action that Japan stood on the side of the Western powers. Prime Minister Yoshida had this to say, that, "since the United States and the Soviet Union, the two major powers, are i n opposition to each other, one supported by a group of free countries, the other by the s a t e l l i t e Communist nations, the only l o g i c a l p o l i c y for (both West Germany and) Japan to adopt i n foreign a f f a i r s i s co-operation with the United States as members of the group of free nations. The San Francisco Peace Conference i t s e l f was the product of the Cold War, i and the Treaty was drafted and signed under the assumption that "Japan would do her best to contribute towards the strengthening of a close and s o l i d relationship with the United States."^ The timing and signing of the San Francisco Peace Treaty i n September 1951, States was and not before, was very important because at that time the United f i g h t i n g i n Korea as a member of the United Nations Forces against North Korean communists and the "volunteer" forces of Communist China. Had the Treaty been signed and r a t i f i e d as the United States f i r s t intended to do i n 1947^ the Japanese course of action would have been quite d i f f e r e n t . Japan, as a defeated nation under the severe terms of punishment and reparations, might have chosen a " n e u t r a l " p o l i c y and her c o l l a b o r a t i o n with the United Shigeru Yoshida, The Yoshida Memoirs (Boston: Houghton M i f f l i n Company, 1961), p. 111. 'ibid., p. 250. Richard N. Rosecrance, Australian Diplomacy and Japan, 1945-1951 (London and New York: Cambridge University Press f o r Melbourne University Press, 1962), p. 148. 7 States would not have been so close. I t was the Korean War which had the decisive impact on the negotiations of the San Francisco Peace Treaty. sixteen months before the Korean War s t a r t e d i n June 1950, Only the United States Secretary of the Army, Kenneth Royall, said i n Tokyo that Japan and the Far East were of secondary importance i n the world s t r a t e g i c s i t u a t i o n and the United States forces might be withdrawn i n the event of war with the Communists. 7 When John Foster Dulles was undertaking h i s mission i n preparatory negotiations for the Treaty, he had two choices i n the formulation of United States' p o l i c y . One was to b u i l d up Japanese strength and do everything pos- s i b l e to keep Japan on the United States' side, and the other was to try to detach Communist China from the Soviet Orbit and l e t China take her former 8 p o s i t i o n on the Anglo-American side of the balance. l a t t e r course impossible and Mainland China was she sent "volunteer" forces to Korea. The Korean War made the l a b e l l e d "aggressor" a f t e r Throughout the war, Japan was the rear base f o r the United Nations forces i n Korea, and Japan had to be counted upon as a free world member state when the Treaty was signed i n 1951. From the outset Communist China adopted a h o s t i l e p o l i c y toward Japan. The People's Republic of China was proclaimed i n October 1949 China concluded and the Treaty of Friendship, A l l i a n c e , and Mutual Assistance with the Soviet Union i n February 1950. This agreement provided f o r a j o i n t defensive stance against Japan, and A r t i c l e I stated that the signatories undertook j o i n t l y to "adopt a l l necessary measures at t h e i r disposal for the New York Times, February 17, 1949, p. 10. ^Frederick S. Dunn, Peace-Making and the Settlement with Japan (Princeton: Princeton University Press, 1963), p. 127. 8 purpose of preventing the resumption of aggression and v i o l a t i o n of peace on the part of Japan o r any other state that may collaborate with Japan d i r e c t l y or i n d i r e c t l y i n acts of aggression." I t i s notable that the wording of the Treaty was focussed on Japan and i t i s a l i t t l e d i f f i c u l t to understand why both the U.S.S.R. and Communist China overestimated Japan's strength. Japan, i n 1950, i n f a c t , was s t i l l a defeated nation, completely disarmed and i t s war-making capacity e n t i r e l y eliminated by i t s new c o n s t i t u t i o n . Harold C. Hinton suggests that, " i t was probably S t a l i n , rather than Mao, who preferred to name Japan instead of the United States as the power whose alleged aggressive tendencies the a l l i a n c e was e x p l i c i t y directed, but i t must be taken into account that China was the d i r e c t v i c t i m o f Japanese imperialism and was f e a r f u l of the r e v i v a l of Japanese m i l i t a r i s m and . imperialism. Compared with Japan, Communist China p r a c t i c a l l y had no ex- perience i n i n t e r n a t i o n a l p o l i t i c s , and i t i s not very s u r p r i s i n g that Communist China i n the wake of her success i n defeating N a t i o n a l i s t Chinese considered Japan a threatening power. Japan had yet to formulate her p o l i c y to- ward Communist China, but China had already adopted a h o s t i l e p o l i c y toward Jap an. When the question of which o f the two Chinas should be represented at the peace conference came up, according to the r e c o l l e c t i o n of Yoshida, the United States had i n s i s t e d that she would not on any account sign a Harold Hinton, Communist China i n World P o l i t i c s (Boston: f l i n Company, 1966), p. 123. Houghton, Mif- 9 treaty i n company with Communist China, while the United Kingdom maintained that of the two Chinese governments, the one that should be seated and sign at the conference was Communist China. In the end i t was agreed that China should not be represented at the conference, and that Japan could sign a separate peace treaty l a t e r with whichever of the two Chinese governments she chose to recognize."*"^ Indeed, on the surface, Japan was l e f t with the freedom to pick either N a t i o n a l i s t China or Communist China to be the other party i n concluding peace with J a p a n a n d A r t i c l e 26 o f the Peace Treaty gave the l e g a l base for i t , but i n a c t u a l i t y Japan didn't have much choice. a l i s t Chinese with whom Japan had conducted I t was the Nation- the war, and her p o s i t i o n i n the Security Council i n the United Nations was a very important factor f o r Japan. U n t i l the end of 1951, Japan adopted the cautious p o l i c y of welcoming f r i e n d l y and intimate economic r e l a t i o n s with Taiwan, but at the same time, avoiding any form of t i e s with Taiwan which would probably win the strong disapproval 12 of the newly established Communist China. When John Foster Dulles made h i s fourth v i s i t to Japan i n December 1951, he answered to a newspaperman i n Japan that he had no intention of i n posing upon Japan which of the two governments of China she should choose to make a peacy treaty. However when the question of what the United States' Senate would do i f Japan didn't make i t clear that she intended to make a ^ Y o s h i d a , op_. c i t . , p. 253. "^Morinosuke Kajima, A B r i e f Diplomatic History of Modern Japan (Rutland and Tokyo: Charles F. Tuttle & Co., 1965), p. 151. 12 Ibid., p. 151. 10 peace treaty with N a t i o n l i s t China, the answer was, "In case Japan recognized Communist China unexpectedly, the Senate might not r a t i f y the 13 Peace Treaty." The r e s u l t of the Dulles v i s i t ended with a l e t t e r from Yoshida to Dulles on December 24, 1951, affirming that "Japan has no i n t e n t i o n of concluding a b i l a t e r a l treaty with Communist China" and assured him that "Japan i s ready to formalize r e l a t i o n s with the Nationa l i s t government i n accordance with the p r i n c i p l e s l a i d down i n the San »14 Francisco Peace Treaty. As the incident of this l e t t e r i n d i c a t e s , Japan was already oriented toward the "Washington l i n e , " and the pressure was on her to recognize and have diplomatic r e l a t i o n s with N a t i o n a l i s t China. Accordingly, on A p r i l 28, 1952, the Sino-Japanese Peace Treaty was concluded with N a t i o n a l i s t China. So f a r , I have examined the simple question why Japan chose Nationa l i s t China instead of Communist China to conclude the Peace Treaty and to e s t a b l i s h diplomatic r e l a t i o n s with. The f a c t that Japan was a member of the Western b l o c does not n e c e s s a r i l y answer the whole question. The United Kingdom, for instance, recognized Communist China i n 1949. I t was the process and nature o f the San Francisco Treaty, the timing of the s i g n ing, the a t t i t u d e of Communist China, Japan's p a r t i c u l a r r e l a t i o n to the United States, and a c e r t a i n pressure as w e l l as an expectation from the United States, that were a l l woven together f o r Japan to adopt the p o l i c y of recognizing N a t i o n a l i s t China. The root of the p o l i c y of separating economics from p o l i t i c s s t a r t e d at this point. Asahi Shinbun, December 11, 1951, p. 1. Asahi Nenkan, 1952, p. 105. 11 II Because o f the reasons stated above, Japan's r e l a t i o n s with Communist China cannot be considered without taking into account her r e l a t i o n s with the United States and N a t i o n a l i s t China. Japan's external p o l i c y had to comply w i t h i n the framework of the United States' o v e r a l l foreign p o l i c y . I t i s e s s e n t i a l to c o r r e l a t e Japan's r e l a t i o n s with f i r s t the United States and secondly with N a t i o n a l i s t China. The p o l i c y of separating economics from p o l i t i c s emerged and evolved out of the t r i a n g l e r e l a t i o n s h i p between Japan, the United States and N a t i o n a l i s t China. When Japan regained her independence i n 1952, the o v e r a l l foreign p o l i c y o f the United States was the p o l i c y of "containment." containment, before the Korean War expansion The p o l i c y o f started, was mainly aimed to stop the of communist influence i n Europe exercised by the Soviet Union. According to George F. Kennan who f i r s t proposed this p o l i c y i n h i s a r t i c l e , "The Sources of Soviet Conduct," there were three postulates regarding Soviet b e l i e f s and expectations. of was The f i r s t of these was the Kremlin's acceptance the fundamental antagonism between c a p i t a l i s m and communism. The second that the Soviets believed that capitalism i n this competition was doomed and therefore there was no need to engage i n a l l - o u t war. The t h i r d was the Soviet assumption of Kremlin i n f a l l i b i l i t y made i t useless to negotiate with Russian diplomats since a l l important He, decisions were made at top l e v e l . therefore, came up with the p o l i c y which he summarized: 12 "In these circumstances i t i s c l e a r that the main element of any United States p o l i c y toward the Soviet Union must be that of a long-term, patient but firm and v i g i l a n t containment of Russian expansive tendencies."-^ A f t e r this a r t i c l e was published the term "containment" was up and elevated to the status of a "doctrine" which was picked then i d e n t i f i e d with 16 the foreign p o l i c y of the United States. With the outbreak of the Korean War, to be applied to the Far East. the p o l i c y of containment came President Truman stated on June 27, 1950: "The attack upon Korea makes i t p l a i n beyond a l l doubt that Communism has passed beyond the use of subversion to conquer independent nations and w i l l now use armed invasion and war."" Accordingly he ordered United States a i r and sea forces to give the Korean government troops cover and support. Regarding N a t i o n a l i s t China, i n the same statement, President Truman reversed the p o s i t i o n he had enunciated on January 5 that same year. In that statement he said that Taiwan had already become Chinese t e r r i t o r y i n keeping with the Cairo and Potsdam Declarations, and that the f i g h t i n g between the Chinese Communists and N a t i o n a l i s t s was a c i v i l war i n which the U.S. •^Goerge F. Kennan, under the pseudonym of "Mr. X", "The Sources of Soviet Conduct," Foreign A f f a i r s , Vol 25, No. 4 (July 1947), p. 375. 16 George F. Kennan, Memoirs 1925-1950 (Boston: p. 356. 17 New York Times, June 28, 1950, p. 1. Brown and Company 1967), 13 Forces would not be used. But h i s new p o l i c y statement was that, "In these circumstances, the occupation of Formosa by Communist forces would be a d i r e c t threat to the security of the P a c i f i c area and to United States forces performing t h e i r lawful and necessary function i n that area. Accordingly, I have ordered the Seventh Fleet to prevent any attack on Formosa . . . The Seventh Fleet w i l l see that this i s done." 19 Within s i x months the p o l i c y of the United States toward Asia had changed r a d i c a l l y , and i t indicated that the United States viewed the Korean War as an extension of Soviet communist power i n Asia. From the viewpoint of the United States, South Korea and N a t i o n a l i s t China were not considered to be p a r t i e s to a mere c i v i l war, but f r o n t l i n e s i n a struggle between communism and the western world. Japan also became very important i n t h i s struggle, f o r without Japan, the United States would lose a v i t a l communication, supply and s t r a t e g i c base i n the Far East. Thus, South Korea, N a t i o n a l i s t China and Japan became embroiled i n the defence of the "free world" and the United States established a series of a l l i a n c e s aimed at the containment of communism. The Mutual Defence Treaty was concluded with the Republic of Korea i n October 1953, and with the Republic of China a m i l i t a r y assistance agreement i n February 1951 and a Mutual Defence Treaty i n December 1954. With Japan, the Treaty of Mutual Cooperation and Security was signed i n 1951. The Treaty of Mutual Cooperation and Security between the United New York Times, January 6, 1950, p. 1. New York Times, June 28, 1950, p. 1. 14 States of America and Japan t i e d Japan d i r e c t l y to the United States, f o r Japan depended e n t i r e l y on the United States for n a t i o n a l defence. Article V provided: "Each party recognizes that an armed attack against either party i n the t e r r i t o r i e s under the administration of Japan would be dangerous to i t s own peace and safety and declares that i t would act to meet the common danger i n accordance with i t s c o n s t i t u t i o n a l provisions and processes." The treaty went on to say i n A r t i c l e VI that, "For the purpose of contributing to the security of Japan and maintenance of peace and security i n the Far East, the United States of America i s granted the use by i t s land, a i r and naval forces of f a c i l i t i e s and areas i n Japan." In these circumstances i t was the n a t u r a l course of development that Japan had to cooperate and be party to the accomplishment of the p o l i c y of containment i n Asia. Japan and the United States became indispensable partners to each other. As a r e s u l t of Treaty commitments, Japan followed the United States p o l i c y of non-recognition of Communist China and established formal diplomatic t i e s s o l e l y with the N a t i o n a l i s t government i n Formosa. As f a r as Japan's r e l a t i o n s with N a t i o n a l i s t China are concerned, Japan recognized the N a t i o n a l i s t government as the de jure government of China by concluding the Sino-Japanese Peace Treaty i n A p r i l 1952, war between Japan and China was terminated. and the state of At f i r s t Japan might have appeared to recognize N a t i o n a l i s t China wholely under pressure from the United States, but Japan on her part, i s "indebted" to Generalissimo Chiang Kai-shek who nounced a l l right to claim any reparations from Japan. re- He had e a r l i e r issued 15 proclamation to "repay enmity with, v i r t u e " and safely r e p a t r i a t e more than 20 two m i l l i o n Japanese s o l d i e r s from the Chinese Mainland. Thus Japan's r e l a t i o n s with Communist China emerged as the result of Japan's o v e r a l l r e l a t i o n s with the United States and N a t i o n a l i s t China. Non-recognition of Communist China suited Japan's three fundamental objectives of foreign p o l i c y since her independence, which are the "Cooperation with the free world community," "Support of the United Nations," and "being 21 a staunch member state of the Asian community." Japan also was able to insure her security by being a member of the "free world," f o r American containment of Communist China meant at the same time protection f o r Japan under the nuclear umbrella of the United States. In order to "contain" Communist China, the United States had i t s nuclear base i n Okinawa, i t s Seventh Fleet i n Taiwan S t r a i t , m i l i t a r y bases i n South Korea, and l a t e r i n Vietnam. was Japan able to become the t h i r d economic power i n the world by completely r e l y - ing upon the United States f o r her n a t i o n a l defence. The p o l i c y of separating economics from p o l i t i c s stemmed from the b a s i c assumption that Japan wanted to maximize b e n e f i t s with f r i e n d l y nations and at the same time minimize h o s t i l i t y with Communist China. In this aspect, Japan did not follow unswervingly the l i n e of the United States p o l i c y toward Communist China. By adopting the p o l i c y of separating economics from p o l i t i c s , Japan carried on non-strategic trade with China but did not i n v i t e the f e e l i n g of b e t r a y a l from the United States, N a t i o n a l i s t China and South Korea. she was able to maintain a p i p e l i n e with Communist China. Morinosuke Kajima, op. c i t . , p. Ibid., p. 191. 139. Yet, 16 III The t h i r d important aspect of the p o l i c y of separating economics from p o l i t i c s i s the f a c t that this p o l i c y , despite the o f f i c i a l protest and the counter-claim by China of the p r i n c i p l e of " i n s e p a r a b i l i t y of p o l i t i c s and economics," was accepted by i t , and Sino-Japanese trade was r i e d on from the establishment of the People's Republic. The attitude of Communist China towards Japan i n this aspect, was quite d i f f e r e n t from attitude towards the United States. car- its I t seems appropriate to examine what i t i s which made this p o l i c y work with Communist China. The p o l i c y of sep- arating economics from p o l i t i c s would not have worked unless Communist China was w i l l i n g to trade with Japan. From the p o s i t i o n of Communist China, what advantage could i t gain? Communist China's attitude to trade with Japan has been quite d i f ferent from that of the United States toward China trade. Roger Hilsman, Assistant Secretary of State, i n a speech to the Commonwealth Club of San Francisco, underlines this difference. "Much speculation has commercial relations and Communist China. c r y s t a l clear on this of i t , " He s a i d : turned around the question of p o s s i b l e . . . between p r i v a t e American firms Peking's own p o l i c y , however, seems point. Peking apparently wants none and Hilsman quoted one Chinese o f f i c i a l as saying that, "we won't trade with the United States because the United States Government i s h o s t i l e to us," 17 and he emphasized Mao's maxim that " p o l i t i c s and economics are inseparable." The oft-repeated Chinese o f f i c i a l emphasis that " p o l i t i c s and ec- onomics are inseparable" c o l l i d e d d i r e c t l y with the p r i n c i p l e of separating economics from p o l i t i c s . The United States refused to trade with China, but trade with Japan was a d i f f e r e n t story. Marius B. Jansen brought out this point saying that the story of Sino-Japanese trade r e l a t i o n s i s f u l l of irony. Economics and p o l i t i c s are inseparable, according to Chairman Mao, but i n 23 fact the Chinese have been w i l l i n g to separate them f o r the Japanese. There are two main i n t e r e s t s involved between Japan and Communist China i n t h e i r trade r e l a t i o n s . a p o l i t i c a l interest. One i s an economic i n t e r e s t , and the other, One c e r t a i n l y cannot deny the economic advantages of trade between Japan and Communist China. A developing China and an indust- r i a l l y advanced Japan could benefit each other by promoting close trade r e l a tions. Geographical proximity, f o r one, reduces shipping costs. An example of these savings i s shown underneath i n Japan's trade with the United States a f t e r Japan followed the embargo on trade with Communist China. In 1956 Japan imported coal from the United States at $26.50 per ton, while i t was possible to import some from Communist China at $12.20, less than h a l f the amount. With s a l t , Japan paid $18.10 per ton from the United States while i t cost only $9.50 from Communist China. The items of trading goods are also complementary to each other. Japanese items such as f e r t i l i z e r , machinery and s t e e l goods are just what 22 New York Times, December 14, 1968, p. 2. 23 Marius B. Jansen, "China and Japan," P o l i c i e s Toward China: Views from Six Continents, edited by A.M. Halpern (New York: McGraw-Hill Book Company, 1965), p. 460. 18 Table I China U.S.A. Average p r i c e of t o t a l imports Coal (ton) $12.2 $25.5 $24.0 Iron Ore (ton) $13.7 $20.3 $18.6 Salt (ton) $ 9.4 $18.1 $12.9 Source: Ministry of Finance, Monthly Return of the Foreign Trade of Japan (Tokyo), No. 74 (Jan.-Dec. 1956), c i t e d by Leng Shao-Chuan, Japan and Communist China (Tokyo: Doshisha University Press, 1958), p. 60. r China needs and many Japanese products are more suited to Chinese people than s i m i l a r products manufactured i n Western countries. And some Chinese products such as soy beans have a ready market i n Japan but v i r t u a l l y none i n Europe. Besides, from the p o s i t i o n of Japan, foreign trade has always been a major consideration i n the foreign p o l i c y of contemporary Japan and China i s a b i g market with 800 m i l l i o n people. Japan, l i k e B r i t a i n , i s i n a p o s i - t i o n to "trade or fade" and has to follow the l i n e of " p o l i t i c s i s p o l i t i c s , 2A trade i s trade." But as a trade partner, Japan i s v a s t l y more important 25 to China than China i s to Japan. More important than trade i t s e l f , other p o l i t i c a l and p r a c t i c a l considerations promoted trade between Japan and Communist China. In this aspect, they used trade as a means to achieve t h e i r p o l i t i c a l aims, and t h i s 24 Young Hum Kim, East Asia's Turbulent Century (New York: Appleton L. CenturyCrofts D i v i s i o n of Meredith Publishing Company, 1966), p. 174. 25 L. W. Beer, "Some Dimensions of Japan's Present and P o t e n t i a l Relations with Communist China," Asian Survey, V o l . IX, No. 3 (March, 1969). 19 i s p a r t i c u l a r l y so with Communist China. into trade. Peking always injected politics Accordingly, what Japan w i l l s e l l and buy and the terms and conditions of trade w i l l be determined by Chinese Communist leaders to f i t 26 their own p o l i t i c a l aims rather than t h e i r own or Japan's economic At the core of the p o l i t i c a l nature of Sino-Japanese trade are the major objectives of Chinese foreign p o l i c y toward Japan. objective was needs. The first to separate Japan from the influence of the United States, and the second was to prevent Japan from dealing with "two Chinas." The immediate p o l i c y which China adopted varied according to the domestic and i n t e r n a t i o n a l s i t u a t i o n , but there were no changes as f a r as t h e i r major 27 objectives i n p r i n c i p l e was concerned. "The i n s e p a r a b i l i t y of p o l i t i c s and economics" i s the p r i n c i p l e aimed to achieve these ends, and the Chinese government hoped to b u i l d up pressure i n Japan, through trade, to a t t a i n the eventual normalization of r e l a t i o n s between the two countries. From the very beginning of trade r e l a t i o n s the Chinese had these objectives i n mind, and they are c l e a r l y maintained throughout the h i s t o r y of trade r e l a t i o n s . J . Stephen Hoadley and Sukehiro Hasegawa divide the Sino-Japanese r e l a t i o n s between 1950 and 1970 i n terms of four linkage periods, and i t i s convenient to follow t h e i r d i v i s i o n , since they bring out the immediate aims of Communist China very c l e a r l y and the f l u c t u a t i o n s of trade between Japan and China. The f i r s t , an i d e o l o g i c a l linkage under the "people's diplomacy," and second, p o l i t i c a l linkage with "peace diplomacy," 'Wilbur Martin, "Japan and the Rise of Communist China," Japan between East and West, edited by Hugh Borton (New York: Harper for the Council on Foreign Relations, 1959), p. 201. r Tadao Ishikawa, "Communsit China's Policy toward Japan," The Future of Communist China, edited by Joon Yup Kim (Seoul: Bum Moon Sa, 1967), p. 393. 20 the t h i r d , economic linkage with "friendship trade," and the l a s t , quasi28 diplomatic linkage with "L-T Trade." The f i r s t two linkages cover the " u n o f f i c i a l , " "private" trade agreements between 1950 and 1957. During this period, the trade volume was small, but as the r e s u l t of opening a regular trade channel, a number of private organizations were established i n Japan to promote Sino-Japanese trade, including the Japan-China Friendship Association, the Association f o r the Promotion of International Trade, and the Japan-China Importers' and Exporters' Association. Through these associations, Individual Japanese leaders and p r i vate firms, Peking's main objectives during this period were to c u l t i v a t e Japanese friendship, to encourage Japan to detach i t s e l f from the U.S.Japan a l l i a n c e and to support Japanese domestic r a d i c a l s favouring China over the United States. Thus, Peking worked to increase the p o l i t i c a l pressures on the Japanese government to grant at least de facto recognition of Communist China. This kind of approach, however, did not bring the desired r e s u l t s , and the arguments over the p r i n c i p l e of separating economics from p o l i t i c s had already started. Shanghai i n 1956, When the Japanese trade, f a i r s were held i n Peking and Ta Rung Pao pointed out, i n p r a i s i n g the trade f a i r , that trade ought not to be separated from p o l i t i c s even though the Japanese embargo on s t r a t e g i c goods had prevented many Japanese products from being on 29 display i n the trade f a i r . On the part of the Japanese government, Prime J . Stephen Hoadley and Sukehiro Hasegawa, "Sino-Japanese Relations 19501970," International Quarterly. Vol. 15 No. 2 (June, 1971). T 9 ' Ta Kung Pao, October 29, 1956, c i t e d by C. P. Jan, "Japan's Trade with Communist China," Asian Survey. V o l : IX (December; 1969), p. 907. 21 Minister K i s h i stated i n June 1957 during his v i s i t to Washington that Japan had no intention to extend p o l i t i c a l recognition to Peking, and this statement c l e a r l y r e f l e c t e d Japan's p o l i c y of separating economics from p o l i t i c s . Private, u n - o f f i c i a l trade was suspended a f t e r concluding the fourth Sino-Japanese agreement on March 5, 1958. The reasons f o r suspen- sion given by the Communist Chinese trade corporations were the r e f u s a l to f u l l y honour the fourth Japan-China p r i v a t e trade agreement by the K i s h i administration and an i n s u l t to the Chinese national f l a g i n Nagasaki, which 30 had been torn down by a student who had not been punished. However, the r e a l motivations of Peking could be interpreted as one of trying to i n f l u ence the outcome of the Japanese general e l e c t i o n of that month by holding K i s h i responsible f o r the suspension of trade. Peking also might have hoped to influence Japanese p o l i t i c a l groups to pressure the K i s h i government i n 31 to concessions to Peking. A f t e r two years of trade suspension, i t was Communist China which again i n i t i a t e d the opening of "friendship trade" i n 1960. I t was begun by Premier Chou and Chinese p o l i t i c a l objectives during the t h i r d linkage period are seen c l e a r l y i n t h e i r demands. This trade was so named because the Chinese wanted to trade with only a few " f r i e n d l y " Japanese companies which pledged to respect Chou's three p o l i t i c a l p r i n c i p l e s and oppose the U.S.-Japanese Security Treaty. Chou's three p o l i t i c k , p r i n c i p l e s were: 1) not to adopt p o l i c y i n i m i c a l to China, 2) not to j o i n a p l o t to recognize two Chinas, and 3) not to hamper attempts to normalize Sino-Japanese 30 Uemura Sachisei, "Around the Nagasaki National Flag Incident," Asahi Janaru, Vol. 14, No. 35 (September 1, 1972), p. 12. 31 C P . Jan, "Japan's Trade with Communist China," Asian Survey, Vol. IX (December, 1969), p. 910. 22 relations. 32 Under these conditions, the Chinese held the ultimate r i g h t to decide which companies are " f r i e n d l y " and which were not, and whether to recognize or r e j e c t Japanese companies. The firms were also e a s i l y able to obtain favorable commercial terms i n such s p e c i f i c arrangements as 33 p r i c i n g , inspection, a r b i t r a t i o n and shipping. The " f r i e n d l y " firms which China chose, however, were small and weak, and the p o l i t i c a l objectives of e s t a b l i s h i n g channels of communication and influence upon the r u l i n g L i b e r a l Democratic Party and major i n dustries were only p a r t i a l l y affected. In order to supplement and the channels opened by "Friendship" trade, an L-T Trade was enlarge signed on Nov- ember 9, 1962, and China entered a quasi-diplomatic, linkage period. trade was c a l l e d "L-T Trade" because i t was The signed by Liao Cheng-Chih and Takasaki Tatsunosuke and i t covered an " o v e r - a l l trade" f o r f i v e years be- tween 1963 and 1967. . The L-T Trade had a s e m i - o f f i c i a l nature since Takasaki was of the L i b e r a l Democratic Party leaders i n the Diet and he had the one support of a s u b s t a n t i a l portion of the L.D.P. Diet members as w e l l as the Ministry of International Trade and Industry. the agreement was From the L.D.P. leaders' viewpoint, s a t i s f a c t o r y since the Chinese leaders genuinely 34 nized the necessity of dealing with the Japanese conservatives recog- and i t showed that the Chinese f i n a l l y accepted the r e a l i t i e s by t a c i t l y consenting 32 Asahi Nenkan, 1963, p. 305. 33 Chae-Jin Lee, "The P o l i t i c s of Sino-Japanese Trade Relations, 1963-68," P a c i f i c A f f a i r s , XLII CSummer, 1 9 6 9 ) , p. 129. 34 A.M. Halpern, "China and Japan," China i n C r i s i s , edited by Tang Tsou (Chicago: University of Chicago Press, 1 9 6 8 ) , p. 447. 23 to tolerate the Japanese government's established p r i n c i p l e of "separating economics from p o l i t i c s . " From the p o s i t i o n of Communist China, the agreement gave them the opportunity to maintain two trade channels of "friendship trade" and "L-T Trade." Their c a l c u l a t i o n on maintaining separate trade channels were again political. Friendship trade serves China's short-range goals such as stim- u l a t i o n of Japanese l e f t wing p o l i t i c a l support for China and Mao and opposi- tion to the Sato government p o l i c y toward Taiwan and the United States, while L-T Trade serves long-range goals such as an encouragement of top conservat i v e L.D.P. leaders recognition of China as a legitimate and respected n e i 35 ghbor. They aimed at small pay-offs i n the short run while deferring to I prospect of large pay-offs such as the normalization of r e l a t i o n s between the two countries. The conclusion of L-T Trade also gave Communist China a good ex- cuse to engage i n quasi-diplomatic a c t i v i t i e s . Trade L i a i s o n Council" was its first ments. The "Japan-China Over-All founded i n Tokyo with Takasaki Tatsunosuke as chairman to f a c i l i t a t e the implementation of the L-T Trade agree- Also, on August 13, 1964, Communist China was authorized to open a trade l i a i s o n o f f i c e i n Tokyo, headed by Sun Ping-hua. Since the open- ing of this o f f i c e , i t continued to function more as a p o l i t i c a l agency than as normal trade mission, and the Chinese gradually engaged i n a wide 36 range of open p o l i t i c a l a c t i v i t i e s against the Japanese government. kind of a c t i v i t y i s w e l l i l l u s t r a t e d by the statement of Liao during a v i s i t to the Tokyo L i a i s o n O f f i c e who This Cheng-chih\ s a i d , on September 9, 1967, that Sato's v i s i t to Taiwan, "constituted a criminal interference i n China's 35 Hoadley and Hasegawa, op. c i t . , p. 151. ~^Lee, op. c i t . , p. 135. 24 domestic a f f a i r s and the act of p o l i t i c a l provocation against the Chinese people." To this statement the Japanese o f f i c i a l of the Ministry of For- eign A f f a i r s showed his displeasure "that the l i a i s o n o f f i c e which should be concerned for the promotion of Japan-China trade should not utter such 37 p o l i t i c a l statements." Communist China was also able to manipulate the competitive r e l a tionship between friendship and L-T Trade agreements. As Table 2 shows, the Sino-Japanese trade volumes were almost equally divided between the two u n t i l 1965. In 1966, however, the " f r i e n d l y " firms trade accounted for 67 per cent and the L-T Trade only 33 per cent. By 1967, the propor- tion of L-T Trade i n t o t a l volume further declined to 27.7 per cent. This decline was a d i r e c t r e s u l t of Communist China's increasingly h o s t i l e a t t i tude toward Sato's government. This h o s t i l i t y was heightened by the "private l e t t e r " o f Yoshida which gave the assurance to the N a t i o n a l i s t government i n Taiwan that the Japanese Import and Export bank would no longer be used to 38 finance Japanese i n d u s t r i a l exports to Peking. This "private l e t t e r " was produced as a r e s u l t of protest from N a t i o n a l i s t China when the Kuroshiki Rayon Company of Japan agreed to export a $22 m i l l i o n nylon plant to Communist China, and i n August 1963 the Japanese government approved the export under a five-year deferred payment plan. "Yoshida's l e t t e r " gave a series of set-backs to Peking's p r e s t i g e i and i n t e r e s t s , and i n r e t a l i a t i o n i n 1965 the Chinese delayed renewal of the L-T Trade arrangement, but permitted the f r i e n d l y trade to increase. Asahi Shinbun, September 9, 1967, p. 3. ! Asahi Shinbun, March 6, 1968, p. 7. 25 Table 2 The Evaluation of the "Friendly Firms" Trade and the L-T Trade i n Sino -Japanese Trade (unit : 1,000 Year dollars) Composition (%) Compared to Previous Year (%) Volume of Trade Friendly Firm Trade L-T Trade 53.7 46.3 202.6 58.6 41.4 156.7 143.6 60.7 39.3 205,058 146.0 111.1 67.0 33.0 154,408 96.8 75.3 72.3 27.7 Friendly Firm Trade L-T Trade Friendly Firm Trade L-T Trade 1963 73,577 63,439 1964 181,947 128,542 247.3 1965 285,133 184,608 1966 416,329 1967 403,022 Source: Chugoku Kenkyusho (China Research I n s t i t u t e ) ed. , Shin Chugoku Nenkan (New China Yearbook), Tokyo: Toho Shoten, 1968, p. 179. — — They also i n t e n s i f i e d their propaganda campaign against Sato's "Anti-China" policy. Another reason that Communist China put the p r i o r i t y on " f r i e n d l y " trade i n 1966 and 1967 was that the large firms and industries which joined the L-T Trade were p o l i t i c a l l y uncontrollable, compared with " f r i e n d l y firms" which engaged i n pro-Chinese a c t i v i t i e s on behalf of Peking. The L-T firms were large and carried on trade on the basis of long-term arrangements with China. They were, therefore, less dependent on China and l e s s susceptible 39 to Chinese p o l i t i c a l pressure. Since detailed arrangements under the L-T Trade agreement had to be negotiated on a yearly basis, Peking was able to drive a hard bargain Lee, op. c i t . , p. 132. 26 before i t signed the annual trade agreement. f i v e year L-T Trade agreement i n 1967, other long term agreement. After the expiration of the Mainland China refused to sign an- Their immediate fury was due to the Sato v i s i t to Taipeh i n September and to Washington i n November 1967. During those v i s i t s , Sato referred to the threat posed by Communist China to her neigh- 40 bors, and Peking attacked this saying that, "Sato's t r i p to Taiwan was a component part of a fcig anti-China, anti-Communist, a n t i - p e o p l e . " ^ cerning Sato's v i s i t to Washington, J i n Min J i h Pao declared that Con- "the-out- cry against the threats of China's nuclear weapons i s a b i g conspiracy by 42 the U.S. and Japanese r e a c t i o n a r i e s . " On March 7, 1968, To secure the new a memorandum f o r one year's trade was signed. agreement, the Chinese made the Japanese L.D.P. Diet members sign a statement where they recognized Chou's three p o l i t i c a l p r i n - c i p l e s and they reaffirmed the p r i n c i p l e of i n s e p a r a b i l i t y of economics and 43 p o l i t i c a l matters. This reference was s p e c i f i c a l l y intended Japanese government for i t s p o l i c y which continued to rebuke the to permit economic r e l a - tions with Communist China without granting diplomatic r e l a t i o n s . Deputy Vice Minister of'Foreign Trade, L i u Hsi-Wen warned at a reception for the returning Japanese delgates that "the escalation of Sato's reactionary f o r eign p o l i c y would generally endanger the future of memorandum trade. 40 Asahi Shinbun, September 9, 1967, p. 3. 41 Peking Review, September 1967, p. 32. 42 Quoted i n Peking Review, Decemher 1, 1967, p. 31. 43 Asahi Shinbun, March 7, 1968, p. 2. 44 Asahi Shinbun, March 7, 1968, evening e d i t i o n , p. 1, 27 Hereafter anti-Japanese government statements appears i n connection with a l l the trade agreements China. signed between Japan and Communist When the Friendship trade agreement for 1967-1968 was signed, the p o l i t i c a l statement contained phrases which praised the C u l t u r a l Revolution and Mao's thoughts. I t also included a statement on a struggle against four common enemies o f the Chinese and Japanese people: U.S. imperialism, Soviet revisionism, Japanese reaction, and the Japanese Communist Party. The Chinese negotiator even stated that " p o l i t i c s i s the b a s i s , l i f e and s p i r i t of economics" and suggested that Mao's doctrine should be 45 the foundation of Sino-Japanese trade. Communist China f u l l y c a p i t a l i z e d on the opportunity to conclude a new trade agreement every year to l e t the Japanese delegates recognize the Chinese p r i n c i p l e of " i n s e p a r a b i l i t y of p o l i t i c s and economics" and attack the p o l i c y of the Japanese government toward China. In the new agreement signed on A p r i l 20, 1970, Communist China showed her fury on the Sato-Nixon Communique signed i n November 1969 by adding Chou's fourth p r i n c i p l e as a new condition i n trading with Japan. Sato acknowledged Japan's commitment to the defence of Taiwan which China feared would lead to a r e v i v a l of Japanese m i l i t a r i s m against China. The essence of Chou's fourth p r i n c i p l e was that Communist China would not trade with Japanese firms and 46 companies trading with and a s s i s t i n g Taiwan or South Korea. At the end of the new agreement both Communist Chinese and Japanese negotiators agreed that the deterioration of r e l a t i o n s between the two countries was created Lee, op. c i t . , p. 136. Sei I c h i Tagawa, "Chou's Four P r i n c i p l e s , " Bungei Shunju CAugust 1970). 28 by Sato's government and that the Japanese delegates would make an e f f o r t to dispel this obstruction. The study of the patterns and techniques used throughout the h i s t ory of Sino-Japanese trade relations shows that Communist China took the i n i t i a t i v e and Japan responded. to p o l i t i c a l events such as: The volume of trade fluctuated according the Nagasaki f l a g incident, "Yoshida's p r i - vate l e t t e r , " Sato's v i s i t s to Taiwan and the United States, and the SatoNixon Communiques. The techniques Communist China used varied according to the shortterm objectives of Communist China. spectrum" i n Japan^ 7 China appealed to a "broad p o l i t i c a l through private agreements and exchange of u n o f f i c - i a l private delegations. China threatened by way of suspending trade. China demanded and this demand appeared i n the form of Chou's four p o l i t i c a l principles. F i n a l l y , China manipulated Japan e s p e c i a l l y with " f r i e n d l y trade" and "memorandum trade." In short, trade was used as an instrument of p o l i t i c a l pressure and i t r e f l e c t e d China's p o l i t i c a l aims. Sino-Japanese trade went on, despite the fundamental differences i n t h e i r concepts of the p r i n c i p l e of " i n s e p a r a b i l i t y of p o l i t i c s and economics" and the p r i n c i p l e of "separating economics from p o l i t i c s . " I t was because they both agreed at one point that p r i n c i p l e i s p r i n c i p l e and reality i s reality. They both claimed t h e i r own p r i n c i p l e , but accepted the r e a l i t y and compromised. From China's viewpoint, i t was an "accumulat i v e " approach f o r the eventual normalization of relations between the two countries. From Japan's point of view i t also was a r e a l i s t i c approach A.M. Halpern, New York Times, March 4, 1966, p. 6. 29 to maximize economic opportunities and minimize p o l i t i c a l involvement u n t i l the r i g h t opportunity came f o r normalization. By adopting and p r a c t i s i n g the p o l i c y of separating economics from p o l i t i c s , Japan looked f o r a bigger commercial opportunity i n the future and also i t served as a p i p e l i n e between the two b i g countries i n Asia. Furui Yosh- imi, who headed the Japanese negotiations f o r trade negotiations as a member of the L.D.P. had these words to say: "Trade i s the only p o l i t i c a l p i p e l i n e which connects Mainland China and Japan. In the case o f Sino-U.S. r e l a t i o n s , there i s ambassadorial talk at Warsaw. Between Washington, D.C. and Moscow, there i s a 'hot-line' connected. Imagine the r e l a tions between Japan and Mainland China without t h i s pipeline? This l i n e may be small and narrow, but i t has a tremendous p o l i t i c a l significance for the future. Yoshimi Furui, "Is 'Sino-Japanese Negotiation' an Humiliating Diplomacy?" Burigei Shunju, July 1970, p. 96. 30. Table 3 JAPAN'S TRADE WITH CHINA, 1950-1971 (U.S. $1,000*3) Year Exports to China A $ Value % Prev. Yr. Imports from China B $ Value % Prev. Yr. T o t a l s A + B $ Value % Prev. Yr. 1950 $ 19,633 0 $ 39,328 0 $ 58,961 0 1951 5,828 29.7 21,606 54.9 27,434 46.5 1952 599 10.3 14,903 69.0 15,502 56.5 1953 4,539 757.8 29,700 199.3 34,239 220.9 1954 19,097 420.7 40,770 137.3 59,869 174.9 1955 28,547 149.5 80,778 198.1 109,325 182.6 1956 67,339 235.9 83,647 103.6 150,968 138.1 1957 60,485 89.8 80,483 96.2 140,968 93.4 1958 50,600 83.7 54,427 67.6 105,027 74.5 1959 3,648 7.2 18,917 34.8 22,565 21.5 1960 2,726 74.7 20,729 109.6 23,455 103.9 1961 16,639 610.4 30,895 149.0 47,534 142.1 1962 38,460 231.1 46,020 149.0 84,480 177.7 1963 62,417 162.3 74,599 162.1 137,016 162.2 1964 152,739 244.7 157,750 211.5 310,489 226.2 1965 245,036 160.4 224,705 142.4 469,741 151.3 1966 315,150 128.6 306,237 136.3 621,387 132.3 1967 288,294 91.5 269,439 88.0 557,733 89.8 1968 325,439 122.9 224,185 83.2 549,624 98.5 1969 390,803 120.1 234,540 104.6 625,343 113.8 1970 568,878 145.6 253,818 108.2 822,696 131.6 1971 587,188 101.6 323,172 127.3 901,360 109.5 SOURCE: Asahi Janaru (Customs D i v i s i o n , Ministry of Finance, Japan), September 15, 1972, p. 19. 31 IV So f a r , the p o l i c y of "separating economics from p o l i t i c s " has been examined within the frame of i n t e r n a t i o n a l circumstances and how ex- ternal factors outside Japan, including the attitude of Communist China, affected the Japanese government i n pursuing this p o l i c y . No less import- ant than external factors are the i n t e r n a l factors which influenced the formation and p r a c t i c e of t h i s p o l i c y . I t seems of utmost importance to analyze the i n t e r n a l aspect of Japanese p o l i t i c s i n this l a s t s e c t i o n . Apart from trade interests which we observed i n section three, the p o l i c y of separating economics from p o l i t i c s served mainly two purposes. One was that, to a certain extent, i t met the popular demand f o r improved r e l a t i o n s with Communist China, and the other was that i t served the need of appeasing the opposition p a r t i e s i n Japan as well as the anti-^mainstream factions within the governing L i b e r a l Democratic Party. The former was r e - lated to the Japanese people i n general and the l a t t e r was connected with Japanese i n t e r n a l p o l i t i c s . Popular demand i s a vague expression, but i t represents the f e e l ing of the Japanese people. At the bottom of their hearts, they have a f e e l i n g of g u i l t f o r the past acts of Japan. During eight years of war be- tween 1937 and 1945 the Japanese army k i l l e d more than ten m i l l i o n Chinese and caused f i v e b i l l i o n d o l l a r s i n war damage. tion of war with Mainland China, twenty-seven Without the l e g a l termina- years have passed, and during these years the Japanese have been somewhat frustrated by the f e e l i n g of 32 need to atone for Japan's past crimes. This f e e l i n g i n general i s w e l l represented by the act of Prime Minister Tanaka when he stated h i s "pro49 found self-examination f o r the great troubles Japan i n f l i c t e d on China" at h i s f i r s t banquet i n Peking i n September l a s t year. Besides the f e e l i n g of g u i l t , there also i s a f e e l i n g of a f f i n i t y between the Chinese and Japanese, rooted i n t h e i r common c u l t u r a l , l i n g u i s t i c and r a c i a l background. For the Japanese, China has always stood " i n s i d e " and the western nations "outside," "Orientals" and "fellow Asians" are the words often used to describe this kind of a f f i n i t y . this f e e l i n g i s the sort of moral sympathy toward China. Stemming from Both Japan and China went through the p a i n f u l process of modernization; Japan s u c c e s s f u l l y with "Meiji Isshin""^ and China not so successfully with the "Movement to Westernize" and a large segment of the Japanese i n t e l l e c t u a l s i s sympathetic to the e f f o r t s of the Chinese people to modernize t h e i r society, even i f these e f f o r t s are being made under the Communist r e g i m e . ^ It i s very d i f f i c u l t to describe this kind of f e e l i n g as a "nat i o n a l f e e l i n g , " but i t may be safe to say that the Japanese, i n general, tend to be swayed by the " f e e l i n g " or the "mood" rather than by sound l o g i c a l reasoning. This common c u l t u r a l f e e l i n g cut across the p o l i t i c a l l i n e s and culminated i n a popular demand f o r better r e l a t i o n s h i p s with Mainland China. The p o l i c y of "separating economics from p o l i t i c s " didn^t meet this demand a l l the way, but a trading relationship was b e t t e r than 49 Asahi Shinbun, September 29, 1972, p. 3. "*^A movement to modernize Japan i n the era of Emperor M e i j i . "'"'"Jun Eto, "The Views from Japan," speech f o r Japan Society i n New York, Chuo Koron (December, 1971), p. 66. 33 no r e l a t i o n s h i p at a l l . I t was short of normal, diplomatic r e l a t i o n s , but i t provided a r e l i e f or comfort that a Japan-China r e l a t i o n s h i p i s there i f only i n the form of trade. The p o l i c y of "separating economics from p o l i t i c s " gave them the hope that the p o l i c y would eventually end up with the normalization of r e l a t i o n s between the two countries. In defending the p o l i c y of "separating economics from p o l i t i c s , " former Prime M i n i s t e r Sato said that the p r i n c i p l e w i l l not continue forever, and the government 52 i s j u s t waiting for the r i g h t time f o r normalization. The impact of the China p o l i c y upon Japanese i n t e r n a l p o l i t i c s has always been one of the intense and c o n t r o v e r s i a l issues i n Japanese p o l i t i c s . The opposition p a r t i e s sharply opposed the government p o l i c y of "separating economics from p o l i t i c s , " but the p o l i c y also divided the members of the governing L i b e r a l Democratic Party. Before the signing of the agreement for the normalization of diplomatic r e l a t i o n s on September 29 of l a s t year, the opposition p a r t i e s have been constant c r i t i c s of the p o l i c y . The China p o l i c y of opposition p a r t i e s varied. The p o l i c y of the Japan S o c i a l i s t Party, the major opposition party i n Japan, appeared very c l e a r l y i n i t s four p r i n c i p l e s for Sino-Japanese f r i e n d l y , diplomatic r e l a tions which J.S.P. announced after the f i f t h v i s i t to China by the members of that party i n November, 1970. The four p r i n c i p l e s contained: 1. The J.S.P. opposes U.S. imperialism and the r e s t o r a t i o n of Japanese m i l i t a r i s m . 2. The party i s against the government p o l i c y of t r e a t i n g China as an enemy and upholds the view that there i s only "One China." I t also urges the abrogation of Japan- As ahi Shinbun, December 26, 1969, p. 2. 34 N a t i o n a l i s t China Peace Treaty. 3. I t accepts the view of the i n s e p a r a b i l i t y of p o l i t i c s economics, and, and 4. I t has organized a united front to accommodate a l l the forces which stand f o r an early agreement to SinoJapanese diplomatic r e l a t i o n s . The party also urged the conclusion of a Sino-Japanese non-aggression pact immediately following the normalization of diplomatic r e l a t i o n s . The Japan Democratic S o c i a l i s t Party, the second major opposition party, i s less d r a s t i c i n opposing the government p o l i c y than the J.S.P. upheld the idea of "One China and One Taiwan" but ar,gued that Peking, Taipeh, should be regarded as the legitimate government of China. The It not Na- t i o n a l i s t government should be recqgnized as a temporary government of the area i t now controls, and the ultimate status of Taiwan should be determined by the w i l l of the Taiwanese and Mainland Chinese residents on Taiwan. The D.S.P. also urged the government to change i t s foreign p o l i c y that b l i n d l y followed the United States and undertake an early conclusion of diplomatic 54 r e l a t i o n s with Communist China as a basis for peace i n A s i a . The Japanese Communist Party, the smallest segment of the opposit i o n , i n terms of representatives i n the Diet ( house ) wan 36 seats i n the lower advocated the immediate abrogation of the peace treaty with T a i - and immediate r e s t o r a t i o n of r e l a t i o n s with Communist China. i n i t s apparent form, was This p o l i c y , s i m i l a r to that of the J.S.P., but the J.C.P. stood more f i r m l y against the United States' Far-Eastern p o l i c y . Mainichi Shinbun, November 4, 1970, Kokumin S e i j i Nenkan, 1969, p. 789. p. 4. I t also urged 35 the "end" of the U.S.-Japan Security Treaty. The impact of these d i f f e r i n g views and p o l i c i e s toward Communi s t China held by the opposition parties upon Japanese government i s not very s i g n i f i c a n t , as would be the case i n the United States where the major two-party system i s practised, but the successive L.D.P. government had to take them into consideration for p o l i t i c a l s t a b i l i t y as w e l l as f o r the s u r v i v a l of their own party. As f a r as Japanese-China p o l i c y was concerned, the government i n pursuing the p o l i c y of separating economics from p o l i t i c s has been i n the defensive side i n the face of those views which came from the opposition p a r t i e s . Much more s i g n i f i c a n t than the views and claims of opposition parties i s the s p l i t cf opinions and factions on the China p o l i c y among the L.D.P. members. On the China issue, L.D.P. has been divided into a pro- Peking group and a pro-Taiwan group. The pro-Peking group was a combina- tion of about 86 Diet members from both houses and represented by the Asian A f r i c a Study group (Ajiya-Afurika Mondai Kenkyu K a i ) . by such members as The group was l e d Fujiyama A i i c h i r o , Matsumura Kenzo, Furui Yoshimi, and Miki Takeo, the most outspoken c r i t i c s within the governing party. To them i t was u n r e a l i s t i c to recognize N a t i o n a l i s t China as the only legitimate government of China. I t i s Communist China, after a l l , which has controlled the mainland with 800 m i l l i o n people since 1949, and i t was unnatural that Japan should leave her r e l a t i o n s with China i n a state o f war and follow the 56 "policy of containment." They, therefore, favored the recognition of Peking Ibid., p. 798. Fujiyama A i i c h i r o , "The Base of Negotiations with Peking," Chuo Koron (October, 1972), p. 146. 36 instead of Taipeh, and pressed for the expansion of trade through the conclusion of an o f f i c i a l agreement and not by means of u n o f f i c i a l agreements. The Pro-Taiwan group, on the other hand, based i t s claim on the basis that i t i s with Chiang Kai-shek's government that Japan fought and Japan must be bound by the Sino-Japanese Peace Treaty. not Japan also should forget the generous "favours" which Chiang Kai-shek provided right a f t e r the end of the Second World War by returning two m i l l i o n Japanese l i v i n g i n China safely to Japan and not claiming any reparations from Japan. The Pro-Taiwan group was represented by about 161 Diet members who belong to the Asian Problems Study Group (Ajiya Mondai Kenkyu Kai). The group i n - cluded such senior members of L.D.P. as K i s h i Nobusuke, Fukuda Takeo and I s h i i M i t s u j i r o who have been the chief f a c t i o n leaders backing Sato. are They the more right-wing conservatives who have pursued an anti-communist l i n e , and they maintained the r i g i d p o s i t i o n that Taiwan should continue to receive recognition as the only legitimate representative of China. They, however, had no objection to trade with Communist China, provided that i t did not damage r e l a t i o n s with either Taiwan or the United States. I f the claims of pro-Taiwan group, as represented by the government p o l i c y of separating economics from p o l i t i c s , are c a r e f u l l y examined, this group d i d not deny the necessity of eventual normalization of d i p l o matic r e l a t i o n s with Communist China. I t only hesitated to betray Japan's f r i e n d l y a l l i e s , the United States and Taiwan. Fukuda, as the foreign min- i s t e r of Japan under Sato, c a l l e d Japan's p o l i c y toward China "duck d i p l o macy." "A duck i n i t s appearance doesn't seem to be swimming, but under the surface of water i t i s paddling c o n s t a n t l y . " ^ ^ M a i n i c h i Shinbun, November 20, 1971, p. 4. 7 He also defended the 37 government p o l i c y saying that "the normalization of diplomatic r e l a t i o n s with Communist China i s our national task. We are working to achieve this 58 goal, but we should keep our i n t e r n a t i o n a l f a i t h i n the process." The s p l i t over the China issue among L.D.P. members cut across the main f a c t i o n a l d i v i s i o n s and i t s impact i s f e l t every two years when there i s the party p r e s i d e n t i a l contest. Actually, the chief objective of a f a c t i o n 59 i s to obtain Cabinet, Diet and party leadership posts f o r their members, -but China p o l i c y i s often used as the f o c a l point to improve t h e i r p o s i t i o n i n the inner party leadership contest. Aiming at the p r e s i d e n t i a l e l e c t i o n which was held i n July l a s t year, anti-main stream factions made a b i g issue of the China p o l i c y of the mainstream. The Dietmen's League for Normaliza- I tion of Japan-China Relations was formed on October 21, 1970 and this supra- party league included the opposition party members of the J.S.P., D.S.P. and Komeito, as w e l l as 28 L.D.P. members and they severely c r i t i c i z e d the China p o l i c y o f the Sato government. admitted E s p e c i a l l y a f t e r Communist China was to the United Nations i n October 1971, 12 members of the L.D.P. abstained i n the non-confidence vote against Fukuda, the foreign minister, along with opposition party members. I t was the f i r s t time the anti-Sato factions acted out their discontent i n not voting for the government, and they included such pro-Peking members as Fujiyama, Utsunomiya and Furui. Miki Takeo was i n the forefront of c r i t i c i s i n g the government when he said "The Prime Minister ignored the opinion of the inner party, group" for Japan's Mainichi Shinbun, October 18, 1971, p. 2. I Frank C. Langdon, "Japanese L i b e r a l Democratic F a c t i o n a l Discord on China P o l i c y , " P a c i f i c A f f a i r s , Vol. XLI, No. 3 ( F a l l , 1968), p. 405. 38 p o l i c y toward China. Thus, i n Japanese p o l i t i c s , factionalism, p o l i c y issues, and vote-getting measures for the party leadership post intermingled and the eventual aim of r a i s i n g the China p o l i c y issue was together, to get the votes for the leadership contest. I t may as sound paradoxical that the governing party members such Fujiyama, Matsumura and Furui, committed to the promotion of trade with Communist China, openly c r i t i c i z e d so often the p o l i c y of t h e i r party government, but the Sato government was own u n o f f i c i a l l y able to use them for leading to the eventual diplomatic normalization between both countries. Mairiichi Shinbun, October 26, 1971, evening e d i t i o n , p. 1. 39 V Now that the agreement f o r the normalization of Sino-Japan r e l a - tions i s signed as of September 29, 1972, the controversial issue of "separating economics from p o l i t i c s " has become a story of the past. Japan recognized the People's Republic of China as the sole legitimate government of China and Japan f u l l y understood and respected the Chinese claim that Taiwan i s an "inalienable p a r t " of Chinese territory. From the p o l i c y of separating economics from p o l i t i c s , which was the o f f i c i a l p o l i c y of Japan between 1952 and 1972, the following conclusions can be drawn. The chief cause of adopting and pursuing the p o l i c y of separating economics from p o l i t i c s stemmed, above anything else, from i n t e r n a t i o n a l circumstances i n which Japan found h e r s e l f as a defeated nation a f t e r the Second World War. The opposition voices i n Japan c r i t i c i z e d the China p o l i c y , saying that the p o l i c y was based on a f i c t i o n that the Nationali s t government i n Taiwan represented the whole of China. But from the p o s i t i o n of the Japanese government, i t was not because the government did not r e a l i z e the existence and importance of Communist China on the mainland that she did not recognize Communist China. There was not much room for Japan to follow an independent course of action toward China. The p o l i c y of separating economics from p o l i t i c s was based on the r e a l i t y of i n t e r n a t i o n a l p o l i t i c s and i t represented a "wait and see" a t t i tude u n t i l the r i g h t time f o r the change came. 40 The admission of Communist China to the United Nations i n 1971, Nixon's v i s i t to China i n February, 1972, and the eventual change of the p o l i c y of the United Nations gave Japan the opportunity to change her p o l i c y and recognize mainland China. In this respect, Japan even jumped ahead of the United States i n the normalization of diplomatic r e l a tions and Japan now i n a new claims that she i s ready f o r "independent diplomacy" era f o r A s i a . The p o l i c y of separating economics and p o l i t i c s allowed Japan to be able to put her one foot on Taiwan and one on China, without hurting any a l l i e d countries. cause China also saw Trading relationships with China were possible be- the advantage of maintaining that r e l a t i o n s h i p . the agreement on normalization of Sino-Japanese r e l a t i o n s , Japan now Since appears eager to maintain trading relationships with Taiwan, and hence the adoption of the p o l i c y of separating economics from p o l i t i c s f o r the other China. But, that p o l i c y toward Taiwan w i l l not cause much controversy i n Japanese i n t e r n a l p o l i t i c s as i t did toward Communist China. Korea also has to readjust her p o l i c y toward North Korea and Communist China according to the changes and s h i f t s of the p o l i c i e s of the United States and Japan. In order to do so, i t i s very important to evaluate where Korea should stand i n the newly established relationship between Japan and Communist China. H i s t o r i c a l l y , Japan has pursued a Korean p o l i c y by which Japan could check the influence of other nations i n Korea which threatened Japan. The main cause of the Sino-Japanese war war i n 1904 i n 1894 and the Russo-Japanese stemmed from Japan's b e l i e f that the influence of either China or Russia was the immediate threat to Japan. The Taft-Katsura agreement 41 i n 1905 gave Japan a f r e e hand i n K o r e a , and i t opened the way f o r Japan 61 to p r o c l a i m o u t r i g h t a n n e x a t i o n i n 1910. The T a f t - K a t s u r a agreement gave Japan complete d o m i n a t i o n o f K o r e a and e x p r e s s e d hope f o r peace i n the F a r E a s t , b u t i t became the main cause o f u n r e s t and war between Japan China. and A f t e r the Second World.War K o r e a was d i v i d e d i n t o two s e c t i o n s a l o n g the 3 8 t h p a r a l l e l . I n s t e a d o f a l l o w i n g one power t o dominate K o r e a , K o r e a came under the i n f l u e n c e o f t h r e e b i g powers, C h i n a , t h e S o v i e t U n i o n and the U n i t e d S t a t e s , and K o r e a became a f o c a l p o i n t i n the c o l d war. S a t o - N i x o n Communique o f 1969 r e a f f i r m e d Japan's commitment t o Korean fence i n . A r t i c l e 4 that s a i d , "the s e c u r i t y o f the R e p u b l i c of Korea e s s e n t i a l to Japan's own The de- was security." Thus, K o r e a i n the p a s t has e x p e r i e n c e d t h r e e d i f f e r e n t waves o f i n f l u e n c e from t h e b i g powers around h e r , and she now has t o f i n d h e r r o l e i n the c h a n g i n g c i r c u m s t a n c e s o f i n t e r n a t i o n a l r e l a t i o n s . K o r e a has to f a c e a new new On-one hand, Japan t h a t emerged as an economic b i g power and may s t a r t t o t a k e the p l a c e o f t h e U n i t e d S t a t e s as the g u a r a n t o r o f s e c u r i t y i n non-Communist A s i a . On the o t h e r hand, K o r e a a l s o has to a c c e p t the r e a l i t y t h a t Communist C h i n a now has a new forum i n w h i c h t o p r e s s h e r views on Korean a f f a i r s through h e r a d m i s s i o n to the U n i t e d N a t i o n s . S i t u a t e d between t h e s e two b i g powers i n A s i a , K o r e a s h o u l d get o v e r the " c o l d war c o n s c i o u s n e s s " and h a l t i t y toward N o r t h K o r e a and Communist C h i n a . the p o l i c y o f u n m i t i g a t e d h o s t i l K o r e a a l s o s h o u l d be careful t h a t Japanese economic power i n K o r e a s h o u l d n o t t u r n i n t o p o l i t i c a l o r m i l i t a r y power. Communist C h i n a has a l r e a d y warned a g a i n s t s i g n s o f r i s i n g m i l i t a r i s m i n Japan and any s i g n of such a move by Japan would i n v o k e 61 Woo-keun Han, The H i s t o r y o f K o r e a ( H o n o l u l u : East-West C e n t e r P r e s s , 1970), p. 447. 42 immediate reaction from Communist China. History i n Korea t e l l s the l e s - son that Korea should not i n v i t e one power to chase the other power from the Korean peninsula. This has been Korea's fate since the Sino-Japanese war of 1894-95. 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