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Event
December 12, 2013

‘China, Japan and the Future of East Asia: How to Cope with the Changing Dynamics’

by
Henry Jackson Society

SPEAKER: Hitoshi Tanaka, Senior Fellow at the Japan Center for International Exchange

Deputy Minister for Foreign Affairs of Japan, 2002 – 2005

TIME: 12 – 1pm, Thursday 12th December 2013

VENUE: Committee Room 19, House of Commons, London, SW1A 0AA

For a summary of this event, click here

Since the ending of the Cold War, East Asia has become a focus of global geopolitical attention. The rise of China and its muscle-flexing in disputed territories, continuing impasse on the Korean peninsula, military-strategic competition over the Taiwan Strait, and Japan’s struggle with slow economic growth and political reform have all played a key role in shaping international relations in the region. Together with the emergence of new dynamics in the Asia-Pacific region that have prompted the United States to rethink its priorities in Asia, these developments demand a timely and comprehensive review.

Over recent decades, the balance of power between China and Japan – East Asia’s two traditional powers – has changed dramatically. China’s remarkable rise has contrasted dramatically with Japan’s economic stagnation, and has led to tensions between Beijing and Tokyo. This is visible in the decades-long military-strategic competition over the disputed Senkaku/Diaoyu islands, which has intensified as oil and gas reserves in the East China Sea have increased in value. At the same time, Chinese state-backed cyberwarface against Japanese banks has increased, and Chinese state-backed anti-Japanese demonstrations have become more frequent. In short, as the importance of East Asia has increased, relations between China and Japan have deteriorated.

By kind invitation of Fabian Hamilton MP, The Henry Jackson Society is pleased to invite you to a discussion with Hitoshi Tanaka, Senior Fellow at the Japan Center for International Exchange and former Deputy Minister for Foreign Affairs of Japan. As somebody who has helped guide Japan’s foreign policy over the past several years, Mr Tanaka will reflect on the changing geopolitics of East Asia. In particular, Mr Tanaka will consider China’s recent military training exercises in the South China Sea and its declaration of a “no-fly zone” in the East China Sea, and what this means for regional and international politics.

Biography

Hitoshi Tanaka is the chairman of the Institute for International Strategy at the Japan Research Institute, Ltd. (JRI—Sumitomo Mitsui Financial Group) from 2010 and a senior fellow at the Japan Center for International Exchange (JCIE), a nongovernmental organization. He has also been a visiting professor at the Graduate School of Public Policy, University of Tokyo, since April 2006. Prior to joining JCIE in September 2005, he served for three years as Japan’s Deputy Minister for Foreign Affairs where he was a top advisor to Prime Minister Junichiro Koizumi on a broad range of issues, including relations with North Korea, China, Russia and the United States. As one of the main intellectual architects of Japan’s foreign policy over the past several years, he has been a key actor in shaping Japan’s approach to East Asia.

Before being named Deputy Minister, Mr. Tanaka held the posts of Director-General of the Asian and Oceanian Affairs Bureau (2001–02) and of the Economic Affairs Bureau (2000–01); Consul General in San Francisco (1998–2000); and Deputy Director-General of the North American Affairs Bureau (1996–98). He was Director for Policy Coordination of the Foreign Policy Bureau, Political Minister at the Japanese Embassy in London (1990–93), a research associate at the International Institute for Strategic Studies (IISS), London (1989–90), Director for North East Asian Affairs (1987–89), and Director for North American Affairs (1985–87). Mr. Tanaka holds a B.A. in law from Kyoto University and B.A./ M.A. in Philosophy, Politics, and Economics from Oxford University. His latest publications include Reimagining Japan (2011: McKinsey), Purofeshonaru no Kosho-ryoku [The Logic of Strategic Negotiation] (2009: Kodansha Ltd.), Gaiko no Chikara [The Power of Diplomacy] (2009: Nikkei Publishing Inc.) and Kokka to Gaiko [The Nation and Diplomacy] (2005: Kodansha Ltd.), and has contributed many articles to various newspapers and monthly magazines both in Japanese and in English including East Asia Insights (http://www.jcie.or.jp/insights/).

 

Full event transcript

by Alice Bexson

Fabian Hamilton MP

Welcome, this afternoon, to the House of Commons, to the Henry Jackson Society. My name is Fabian Hamilton; I’m a Labour Member of Parliament to the city of Leeds, a former member of the Foreign Affairs Committee and currently on the International Development Select Committee.

We’re here this afternoon to hear from Hitoshi Tanaka, who’s the chairman for international strategy at the Japan Research Institute and senior fellow at the Japan Center for International Exchange. Prior to joining the latter institution in December 2005, he served for three years as Japan’s deputy minister for Foreign Affairs, where he was the top advisor to Prime Minister Junichiro Koizumi on a broad range of issues including relations with North Korea, China, Russia and the United States. As one of the major intellectual architects of Japan’s foreign policy over the past several years, Mr Tanaka has been a key actor in shaping Japan’s approach to East Asia. Mr Tanaka will speak for 15 to 20 minutes and then we’ll have the chance to ask questions and have a discussion. Mr Tanaka.

Hitoshi Tanaka

It is a great privilege to be able to sit here. Let me talk about the recent evolution in East Asia. I think East Asia is going to be the centre of growth for the world, but it may be a centre of troubles. Let me make an assessment about where we are in relation to East Asia. First, we are seeing the huge rise of China. If things move as they are expected to, China will probably be two or three times as big as Japan in 2020, which is when Japan is going to host the Olympics. The Chinese military budget will probably be five or six times as big as Japan’s. I do not think that China will have surpassed the United States by then, but in terms of military capability and military budget, China will be very close, particularly seeing as the US is bound to reduce their military budget. In five or six years’ time, we will see an enormous nation. Some say that the many bottlenecks in the Chinese economy mean that the growth everyone expects will not be possible. However, President Xi Jinping declared that China wishes to double its 2010 GDP by 2020.

In addition, Chinese external behaviour is getting more and more self-assertive, particularly since 2010 when China surpassed Japan in terms of economic scale. There are a couple of incidents that demonstrate China’s aggressive attitude. Take the question of the Nobel Prize—China protested against the selection of the human rights campaigner, Lu Xiaobo, by raising their tariff against Norwegian salmon. In relation to the South China Sea, there is a confrontation with the Philippines, China raised its tariffs on bananas, the number one export item for the Philippines. In relation to Japan, there is the incident surrounding the Senkaku islands, and China decided to stop rare-earth exports to Japan. Again, recently, China unilaterally declared the instalment of the defence identification zone which is to do with the air traffic, and we do consider that aggressive.

Growing, rising, is fine. Japan rose greatly during the period after the Second World War, becoming the second largest economy in the world in the 25 years after 1945. It’s fine for a country to rise, but… China takes unilateral measures with their power behind, intending to change the status quo. So that is the kind of thing that constantly bothers us. Then one must ask why China is getting more assertive when it comes to external relations. Thirty or forty years ago Deng Xiao Ping talked about the appropriate Chinese external approach— to be ‘low key’ until China becomes big. Now China is big, and I do not believe that Deng Xiao Ping’s lesson applies anymore. When China surpassed Japan in terms of GDP in 2010, it acquired very strong confidence and became much more assertive vis-a-vis the rest of the world.

The United States obviously do not say that they are targeting China. But they are making sure that their military exposure in Asia is expanding. There is joint training with various nations in South East Asia, and they are moving in much more aggressive way towards Asia, for example they decided to join the East Asia summit, which was originally intended only for sixteen countries in Asia. Russia has also joined in the past two years. What this means is that the United States, after taking out troops from the Middle East, will try to expand their presence in East Asia. But it’s not only to do with containment; it’s a policy of rebalancing from the Middle East to Asia, and also hedging against the future unpredictability of China. There is no such question of containment policy because we are all so interdependent. China is the largest trade partner for Japan, the largest investor for Japan, for the United States, for Europe! They have a hugely interdependent relationship so there is no such thing as a containment policy as we had with the Soviet Union. This is more to do with how we can cope with China when they are growing and their attitude is changing. We would like to see China continuing to be a constructive entity in the region.

We have the question of the small islands of Senkaku, which Japan has been effectively controlling for many years. After the war, the US controlled the islands as part of the Okinawa prefecture. The US gave Okinawa to Japan in 1972, and these islands came along with that. Japan didn’t have any choice at all in relation to that territory. That decision was made by the allied nations after the Second World War. Since then, we have been controlling the islands—up until now. China made a claim, and recently there has been considerable nationalism surrounding those islands. So there has been a ship circling the island and there has been this air defence identification zone. I personally don’t think there’s any solution to that. There is no room for Japan to make concessions, given the history and involvement of the other nations, and it’s not the kind of thing Japan wishes to compromise on. I do think that, even for China, it must be very difficult.

The whole question in today’s China is much stronger nationalism on the part of the people. There are huge domestic governance issues, like domestic income disparity, the environment, the food safety. If economic growth falls, social problems will increase, which will undoubtedly lead to a political power battle in China. It may be the case that they are trying to move their citizen’s attention to the outside, and unfortunately Japan is an easy target due to nationalism on the part of China. It is because of the Second World War. So I presume that it would be extremely difficult for China as well to get rid of their old pain vis a vis the islands. So there is no solution.

So what do you do? I think there is only one way for us to deal with things. Let’s put it in the refrigerator. Let’s reduce tension first, stand still. Then, let’s make sure that people understand the importance of the bilateral relationship between Japan and China. Only when the leaders and the people of a country understand the huge stake we have in the relationship between the two nations, may we be able to leave the island issue in the past. It must not undermine the relationship.

Let me conclude my statement by talking about what future interest we have in relation to the bilateral China-Japan relationship. East Asia is not a geographical concept. It consists of China, Japan, Korea, and the ASEAN nations, possibly the US in a functional way because they maintain troops in the region. We used to think about how to make East Asia part of the world, because it is going to be a centre of growth, and joined by India will be the very centre of the world’s population as well. So what would be the best way for us to do it?

Clearly, there is no need for stronger national security precautions. The Japan-US Security Alliance still functions well; the US has some other bilateral security arrangements with Korea, with Australia and others. The United States are clearly going to reduce their military expenditure so there is a need for us to share their responsibilities. Japan talks about how to strengthen our national security, about the interpretation of the constitution in relation to what we call collective self-defence. There is going to be a discussion sometime next year.

Secondly, there are bound to be confidence building measures! We are neighbours. It doesn’t make much sense for two nations to scramble their fighter jets and become very close to shooting at each other. There are bound to be confidence building measures. Again, as you may know, Korea also decided to claim their air defence identification zone as little as three days ago. It may be a good time for us to make use of the occasion and create a formation as a confidence building mechanism, formation meaning the United States, Japan, Korea and china. Once that type of confidence building scheme is made, you will have a treaty in relation to different things, for example North Korea and other strategic issues.

Thirdly, there is a need for deal making in the region. A country like Japan must consider Asia as their domestic demand. For that, we need common rules. We have initiated agreements such as the Japan-Korea-China free trade agreements, although there is still a long way to go. We started initiations in relation to the regional free trade agreement in the name of [inaudible], with sixteen nations in the region. As you know we have the TPP with the US, which is more to do with the creation of high level rules in relation to the protection of various investments and intellectual property. If we were able to create this East Asia free trade agreement while agreeing on the high level TPP, we may be able to have a much broader economic region at the end of the day.

I don’t think China can join the TPP at this juncture, because the TPP talks about the concept of the state industries and the concept of less intervention on the part of said industries into the private market, therefore for China to be able to join they would have to change their domestic set ups in relation to their state industries, but we would very much like to see these free trade agreements join together to become an Asia Pacific free trade agreement. With the US-EU free trade agreement and the Japan-EU free trade agreement, we would have a more prosperous and much wider free trade area which would not have been achieved otherwise. So I am hopeful of a linkage between regional free trade agreements, the trans-Pacific tree trade agreements and agreements involving the EU that force a final element that enables us to launch a mechanism for energy cooperation.

As growth rate of East Asia increases, so does the demand for energy. There is a very great need for energy cooperation, joint energy exploration, the safety of civil nuclear energy, the need for energy conservation and energy saving measures. The region must address the question of energy. If we could create some strong methods regarding this energy cooperation it would, at the end of the day, also serve the confidence building in the region involving Japan, China, Korea and others. The point I am making is that by showing the people and the political leaders that we have a common political interest and a very high stake in the future, we can make sure that the question of islands is something that can be left in a quiet time.

I understand the Prime Minister, David Cameron, just went to China. There is a strong appeal on the part of the Chinese market—the German, British and other European countries are very attracted by its growth, there is no question about it. But please do not forget the geopolitical issues we have in the region. If China continues to take these very strong, self- assertive measures, it will create strong unpredictability in the future. We have a common interest with Europe as well; we would all like to see a constructive China. I have a strong belief that the nation can change, and the rest of the world needs to watch Asia very carefully because it’s your issue as well. Thank you very much.

Fabian Hamilton MP

Thank you very much, Mr Tanaka. That was a very interesting talk on a very important subject. I would like to pick up on one point you made about the possibility of the reduction in economic growth in China leading to political instability. Do you think that, if that were to happen, it would be a threat to the dominance of the Communist party’s rule in that country, or do you think that they would be extremely careful to ensure that wasn’t a possibility in spite of economic slowdown?

Hitoshi Tanaka

The past record of the Communist regime demonstrates that they are very skilful! They very skilfully govern the nation. We are talking about 1.3 billion people. We are talking about a China surrounded by fourteen nations without having any single [inaudible] relationship. There are fifty three minorities in China. So I guess that governance must be very, very difficult. But China has done well in terms of economic growth in the past ten, twenty years, succeeding in double-digit economic growth. As you say, if China fails to produce a certain economic growth rate, normally people say seven percent… If economic growth drops below seven percent, it will mean that the Chinese government cannot distribute oil to the poorer people.

The most serious question with China is that income disparity is huge. In the recent party conference the Prime Minister said that two hundred and sixty million people who came out of agricultural districts to the city cannot receive social welfare. This has created huge income disparity between those who live in the city and those who come to the city. The Prime Minister stated that in order for the agricultural workers who live in the city to receive social welfare, each person needs about one thousand dollars. Two hundred and sixty million people! That’s a huge amount of money that means that it is a near impossibility to deal with the question of income disparity.

So if the economic growth rate goes down, then it would set fire to social problems—not just income disparity but the environment. Go to Beijing these days without a mask… When I go to various places in China my friends talk about the difficulty of feeding their children because milk has been poisoned. You will see that China will have a huge middle income population as time goes by, and if they fail to distribute certain amounts of treatment to those poorer people that will lead to political struggle. China’s known for long term political struggle, but Xi Jinping is trying to balance the fundamental communists and the liberals. He talks about strong economic default measures which satisfy liberals, but at the same time he talks about controlling freedom of speech and the media to satisfy the fundamentalists.

Even over this question of Senkaku—I was in China in October, invited by one of the think tanks to give a speech. They said there has been a change of Chinese policy since the local district is short of funding—they decided to have exchanges with Japan in the economic sector. They would like to send their investment promotion mission to Japan. But yet the political issues are the same as before—they have no intention to make compromises in relation to political issues, so all of a student they decided to send delegation to Japan, but after a while they decided to introduce air defence identification zone. So it seems to me that they are taking a balance between the conservative and the liberal. I am not entirely sure that the Communist party will survive without moving toward political reform. It will survive if economic growth continues as it is but if it falls…

Fabian Hamilton MP

Right well thank you very much. Questions from the floor?

Question One

I wondered if I could follow up on what Mr Tanaka was saying about compromise, and look at the model of Western Europe within Europe and sometimes as far as the Pacific. There has been a formula for shared sovereignty—the condominium. Do you ever think that that kind of framework might be a way of resolving issues rather than putting them on ice, so that you might have the right framework for oil companies to develop natural resources offshore which seems to be the main interest in some of these islands or regions?

Fabian Hamilton MP

Mr Tanaka, would you mind taking three at a time? Does anybody have a further question?

Question Two- Jonathan Carmody, Henry Jackson Society

Prime Minister Shinzo Abe is developing a new national security reform. I wonder if you could comment on the direction of these reforms and the implication for the relationship with the United States and the relationship with China?

Question Three

Wouldn’t it help if Japan more fully acknowledged what it did in the Second World War and the dreadful things it did then to draw the countries closer together?

Hitoshi Tanaka

The question of possible joint exploration or joint [inaudible] regarding energy… We have made one agreement with China for gas exploration underwater in the East China Sea but it has never been implemented. With Senkaku, it’s already such an emotional issue and such a public issue I don’t think there’s any easy fix. If you take public opinion in Japan, ninety percent of the people dislike China. If you take public opinion in China, ninety-five percent dislike Japan! So by making or creating an appearance that we may be able to resolve things would create a huge public expectation that at the end of the day would be quite damaging to the future relationship. I think that in the meantime we should stand the tension still—that’s the only way.

The second question… Shinzo Abe… I am not his greatest fan. Mr Abe has a very strong belief that Japan must come back and needs to be strong. He thinks Japan has sufficient resources to come back, and he started doing things as Prime Minister in 2006 but wasn’t able to finish because of his illness, and decided to step down. This time he stared talking about the economy first, because clearly, for Japan, the economy is what is most important. Therefore he created the concept of Abenomics, which is more to do with changing the people’s attitude in the economy — making sure you spend money—to push the economic activity up. It remains to be seen if his economic activity plan is sustainable. You have to produce a much stronger economic growth strategy.

After all this he started making public infrastructure for stronger national security. A bill has been passed in relation to the creation of a national security council, because he thinks that in order for Japan to produce a viable strategy there is a need for us to… In the UK one was established in 2010, which is more or less the same thing. As well as that, he succeeded in getting the secret law because this Security Council is supposed to have exchanges of sensitive intelligence information with the UK and the US, therefore very tight security set ups would be needed. But this is seen in public that Mr Abe has pushed too far. There was a strong opposition group. It’s not necessarily a question of intelligence exchange but one of the freedom of the media. There are newspapers which doubt the way Abe handles things.

After all this, there are a couple of other issues that he would have to tackle. That one Korea issue is a question of collective self-defence. Given the very pacifist trait of Japan you probably don’t understand what this is but yet suppose that… Japan has an absolute preparedness in terms of self-defence. Suppose that North Korea shot a missile at Japan we would clearly be able to fight back— we have very sophisticated anti-ballistic missile protection, and we have short range fighter aeroplanes. But we don’t have long range fighter aeroplanes. We don’t have aircraft carriers because we are not supposed to make power protections as the UK can, meaning that we don’t have the constitutional authority to send troops abroad, to fight alongside our allies. For instance we were not able to send troops to fight in Iraq alongside the United States. Instead, we decided to send troops engaged not in combat but in the construction of Iraq. So Japan has tremendous handicaps in terms of the military.

Now Mr Abe says ‘why shouldn’t we be relaxing some of the limitations regarding corrective self-defence?’ One thing that is very easy to understand is the question of peacekeeping operations. For instance, Japan sent troops for the purpose of UN peacekeeping operations, but could not fight for the other blue helmets. Suppose that the UK peacekeepers fighting alongside the Japanese were shot at? Japan cannot shoot back for the sake of the British contingent. This is irrational!

One other thing is the question of the situation where Japan suffers from a direct security threat in short of actual aggression. Suppose North Korea cross the current border with south, which would harm the national security of Japan. Korea would be involved in the fighting, the United States would send troops from Japan… But Japan would not be able to send troops, although Japan would be sure that the North Koreans would shoot missiles onto the United States base in Japan. So we say that suppose we define those situations and suppose we say that we can change the interpretation… but this has not been fully explained to the region, and nations like Korea and China are expressing doubt about what Japan should be doing.

One other thing… It is not a question of national security but a question of history. The other gentleman talked about Japanese recognition of its past history. I took part in drafting the Murayama Statement. This is a very straight forward apology. In this statement, Japan acknowledged the colonisation of Korea and aggression towards China, killing many people and inflicting huge suffering. Japan expressed sincere apologies. It’s a very clear statement. What is important about that statement is that Murayama was a socialist prime minister who had a very strong wish to make these straight forward apologies. Since then, all Japanese Prime Ministers, including LDP Prime Ministers and DPJ Prime Ministers, about twenty of them, have endorsed that statement. So that has become Japan’s basic stance regarding the past. But you cannot deny the fact that there are other people, very conservative, who may say different things in regard to the past.

In the case of Nazis, in the case of Germany—if you go to Berlin and go to the Holocaust Museum, everything is Nazis, not Germans. Its Nazis, Nazis, Nazis. It was a crime of the Nazis. But how unfortunate—Japan, to an extent, was able to continue the Emperor’s regime. Many Japanese soldiers committed suicide. The Americans decided to maintain the Emperor’s regime because they needed that relationship. They thought ‘the Soviets are coming to the Korean peninsula!’ and thought that it would be better for them to reconstruct Japan as soon as possible so that the Emperor would play a major role in uniting people in Japan. It was very lucky for us, as I said. Japan became the second largest economy in the world in twenty three years! Can you believe that? If the Emperor had been removed I don’t think we would have been able to do that. I accept the crime that Japan and the Japanese military committed and that was very clearly spoken in this statement. There was a lot of misunderstanding. Japan is not very good at explaining. When I went to Oxford they said that the best Oxford tradition is the Speakers’ Union. So go there and try to improve yourself! [Laughter].

Fabian Hamilton MP

We have time for a few more questions… Yes, gentleman there?

Question Four- Rem Korteweg, Centre for European Reform

Thank you very much. Mr Tanaka—on the security side you talked about the US pivots looking to rebalance and the military implications of that. Here in the UK but also in Europe there is a discussion going on about what Europe could do to contribute to confidence building, perhaps supporting the principles of Americans on security. What role do you expect that the UK and also European powers could play in this?

Question Five

I wonder if you could elaborate on what Japan’s attitude is at the moment towards North Korea—how high a concern it is and whether you can see any significant signs of optimism about this.

Question Six- Virginia Winslow, student at Regent’s University

I was curious about what you were saying regarding building confidence in East Asia and how China needs to reform. I think what you were saying was that their state industries need to move more towards privatisation in order to build more with Japan and the rest of East Asia. I wonder if you could talk more on the subject.

Hitoshi Tanaka

On the question of the UK’s role… I was in the Foreign Service and was the political director for the question of G7/G8. We always talked about the question of Yugoslavia, Iraq and also [inaudible]. We thought that Japan has a definitive role to play, but it wasn’t something that another country told us to do; it was in Japan’s own interest to take part in a major way. I do think that there is a definitive role in the part of the EU and in particular the UK because the UK has got various linkages in Japan, in East Asia. It is more a question of maritime safety, and we have mechanisms like the ARF. I have some concern about the very weak evolution regarding ARF… I have a strong feeling that the East Asia Summit should play a much more decisive role in relation to maritime security, particularly regarding counter-piracy, non-proliferation and natural disaster protection.

The UK is not a member of the East Asia summit, but I think that if we come up with a specific project for this there is sufficient room for Europeans to join. The point I’m making is that it’s not another country asking you to do something; it’s in your interest to play a role in relation to East Asia.

Secondly, the question of North Korea. The ‘number two man’ was just toppled. I spent one year negotiating secretly with North Korea and I may have spent the most time with the Korean military out of anyone in the world. When I saw this new regime, Kim Jong-Un’s regime, it seems to me that they are trying to create a power basis in the Workers’ Party, because his uncle is named as the general manager in this party but Kim Jong-Il’s regime used the military to run the nation and the military received huge privileges.

I was surprised that when I arrived at Pyongyang airport I was escorted by very old Mercedes. One night they asked me to come to the rear gate of the hotel and I saw the most sophisticated Mercedes I have ever seen. Think of this—the ‘military comes first’ policy meant that the military received lots of privileges and benefits and all of a sudden the political party takes the upper hand. If you look at all the changes taking place in terms of the personnel, all those military generals are removed from their various important posts. I’m sure there are very strong complaints from inside the military. I don’t have any sort of evidence for this, but think this incident is due to the strong dissatisfaction on the part of the military.

People may say that if the military takes the upper hand North Korea will become much more aggressive towards the rest of the world but I do not think this is the case because the military has a very strong realistic sentiment. They have their weapon and they know that the other side has superior weaponry and are very pragmatically minded. This power struggle will continue for some time and during this power struggle we must be very careful and very prepared for any irregular incident.

In China, the Chinese state industries are the main entity of the Chinese economy, but you cannot deny the fact that private companies and private markets are growing, and if you look at the statement produced by the most recent political party convention Xi Jinping talks about the form of the Chinese economy focussing on 2020. There is a precise mentioning about state industry vs. private market. It appears to me that they are moving from much stronger centrality to private markets, probably reforming the state industry to create much more transparency and power in the private market. It remains to be seen because if you are to reform state owned industries you would have to get rid of vested interest. Getting rid of vested interest in any country would be extremely difficult, but it seems that Xi Jinping has a strong grip on the PLA. So it remains to be seen but I think here is a certain will to reform it.

Question Six- J. Cao from London and Partners

Thank you very much. [Inaudible period]. Last year [Japan] was one of the top investors into London, and we are also a key EU investor and trade partners to Japan. So what’s happening in that part of the world offshore? [Inaudible].Talking about this confidence building is very important for the region and a forum of the three key players—Japan, Korea and China but also the US… But is Russia having any real complaints?

Hitoshi Tanaka

I talked about the East Asia summit in which Russia is newly included. There is a very clear tendency on the part of Russia that means East Asia is a much more attractive region because of the shale gas revolution which means that Europeans are not buying Russian gas, they are buying Algerian gas much cheaper! Russia is finding it more difficult to sell in Europe and instead is trying to sell in Asia. Putin often visits far Eastern parts of Russia, and if you look at the situation in that part of Russia there are very few people—only six million Russians! While three Chinese provinces have 120 million!

There is very strong population pressure on the far eastern part of Russia therefore Russia want to balance the Chinese influence with something else, and they find that Japan is a convenient nation to use to offset China’s strong influence. So there is a possibility that the Japan- Russia relationship will see some improvement, but in order for Japan to see improvement you would have to resolve the question of the Northern territories, but yet I do not expect everything will be settled, although I think if you have a strong Japanese and a strong Russian government there may be some accommodations made there. As you say Russia is gradually going to be seen in East Asia—but it’s just beginning.

Fabian Hamilton MP

Hitoshi Tanaka, thank you very much indeed for a very thought provoking talk and discussion this afternoon. Thank you to the Henry Jackson Society for making today possible and thank you to all of you or being with us. I think you’ve made it very clear to us why you have been so influential in Japanese foreign relations. Thank you very much.