Sharp declines in the value of the yuan and share prices in China have rocked financial markets all over the world since the beginning of this year. Meanwhile, Chinese aircraft carried out several test flights to and from an airport on an island China built in the South China Sea where a standoff is continuing between Washington and Beijing.
On the other hand, there are growing hopes that China will exercise its influence on North Korea over Pyongyang's latest nuclear test. Lately, there is a lot of news showing China's strong presence in the international community, whether good or bad.
In his New Year address to the Chinese people, President Xi Jinping said, "The international community is listening to the voices of China." It is certain that nothing can be done without China's involvement now. However, China's strategy that is beginning to have growing influence on the world occasionally appears as if it is a challenge to the current international order.
How to incorporate China into the current U.S.-led world order is a task that the international community must tackle from a mid- and long-term perspective. However, the power shift is going on so rapidly that China and the international community have been unable to sufficiently respond to the changes. It is necessary to work out measures to respond to such changes while precisely grasping the current international situation.
First of all, China should show a positive attitude toward participating in the current world order. When he visited the United States in September 2015, President Xi said, "China is not only a participant in, constructor of and contributor to the current international system but also a beneficiary. We're calling for reform but it doesn't mean we want something different to be created." The question is whether China will act just as he said.
China's military buildup and maritime advancements in the East China Sea and South China Sea appear as if they are a challenge to the freedom of navigation that has been protected on the initiative of the United States. If China is to continue to rapidly increase its defense spending while the country's rapid economic growth has come to an end, it would only increase doubts in the international community.
The current world order is supported by universal values such as freedom, democracy, respect for human rights, the rule of law and the market economy. China is aiming to achieve market-oriented economic reform and transform the country into a law-governed one as its key national policy. Since the Xi government was launched in 2013, however, Chinese authorities have cracked down on lawyers and others who call for realization of these universal values and protection of human rights.
China, which has achieved economic growth by becoming a major trading country, is undoubtedly one of the largest beneficiaries of the current world economic order. However, there is a wide gap between China and the current world order in terms of domestic politics and security. Without efforts to narrow this gap, it is difficult to eliminate friction between China and the international community. If the Xi administration is to prioritize further economic growth and ask for a stable international environment for that, China should also embark on political reform.
Needless to say, the international community including Japan and the United States should take China's rise calmly, and pursue an order in which they can coexist with China. The fact that the International Monetary Fund (IMF) has recognized the Chinese yuan as an international currency is a good example of such efforts. However, the international community was divided over responses to China's "Two Silk Roads Initiative" and the establishment of the Asian Infrastructure Investment Bank (AIIB).
It is only natural that China, which has become a major power, is attempting to sally forth into the world. The international community is unlikely to be able to coexist with China if it rejects China's moves simply as a challenge to the international order without sufficiently examining the moves.
China has been proactively participating in U.N. peacekeeping operations as a permanent member of the U.N. Security Council. All countries consider their international strategy from the viewpoint of protecting their national interests. If China is enthusiastic about contributing to the international community, it should be welcome. China's influence is indispensable in blocking North Korea from developing nuclear arms.
China's gross domestic product (GDP), which stood at a mere one-fourth of that of Japan in 2000, expanded to 2.77 times that of Japan in 2015, according to an estimate made by the IMF. The figure is expected to reach three times that of Japan in 2017. China's per-capita GDP is still one-fourth the figure in Japan. Considering that China's per-capita GDP had been less than 3 percent of that of Japan in 2000, however, the growth is quite rapid.
There may be an image among some Japanese people that China is an "underdeveloped" country. However, a gap between the recognition and the reality will only widen unless close attention is paid to the changes. It is difficult to grasp the real situation of China because it is a huge country.
For example, a surge in the number of Chinese visitors to Japan who buy massive amounts of goods in a move known as "bakugai," or "explosive purchases," could give many Japanese people the impression that Chinese people are rolling only into Japan, but these Chinese visitors to Japan account for only about 5 percent of over 100 million Chinese who travel overseas a year.
Japan's view on China is quite severe because of the issue of the Senkaku Islands in Okinawa Prefecture, also claimed by Beijing, as well as historical perceptions. While numerous European countries have decided to participate in the AIIB, it is regrettable that there are those in Japan who express hope that China's economy will slow down.
Uncertainty is growing over the prospects of the Chinese economy, but the country's service industry is reportedly enjoying steady growth and consumer spending is brisk, while the manufacturing sector is slumping. Economic conditions vary from region to region in China. The trends of the Chinese economy have a huge influence on Japan. It is indispensable to precisely analyze China's economic conditions to facilitate Japan's implementation of policy measures.
There are perception gaps in security issues between countries. While the United States and Australia are continuing joint military drills with China despite tensions in the South China Sea, Japan-China defense exchanges have been deadlocked. Japan should continue its diplomatic efforts to improve bilateral defense cooperation.
Since last year, there have been signs of improvements in relations between Japan and China. The Japanese government should place priority on restoring mutual trust and continue dialogue with China with long-term bilateral relations fully in mind.