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back to index backCHINAtalk May,  2005


Japan and China will hold an auto dialogue in May, but seeds of conflict remain

Though recent anti-Japanese demonstrations in Beijing and cities across China have caused cancellation of a number of business meetings and events, the two governments and auto industry groups will proceed with their plans for an annual bilateral government-private sector dialogue” in Beijing late this month, Nikkan Jidosha said.

The agreement came at a meeting between officials of Japan's Ministry of Economy, Trade and Industry and its Chinese counterpart last week. The two sides haven't set a date, but the fact they agreed to go ahead with the plan removed some of the concerns in the minds of Japanese auto executives about the future of their investments in China.

No Effect So Far
Nissan co-chairman Itaru Koeda, who heads the Japan Automobile Manufacturers Association, told reporters late last week that the anti-Japanese outburst in China has caused no adverse effects on his industry so far.

Most of our plants in China are joint ventures (with local firms) and are run mainly by the Chinese. We think we are contributing to the development of the Chinese auto industry,” he said. Koeda added that the aim of JAMA member companies is to create a winwin” situation by offering products that meet the needs of the Chinese people.”

The bilateral dialogue on autos began in 1993. It was suspended after the 1995 meeting, but the two sides decided to resume it in 2004, with a session held in Beijing last April.

That meeting was attended by officials from METI, JAMA, China's National Development and Reform Committee, and the China Automotive Industry Association.

This month's meeting is likely to focus on environmental issues, with discussion of possible transfers of Japanese technology for improving fuel economy, reducing emissions and producing cleaner fuel, Nikkan Jidosha said. The Japanese side, at least, is hoping that cooperation in such areas will help to dissipate anti-Japanese feelings and strengthen bilateral ties. At last week's meeting with METI, Chinese officials said that Japanese investments in China are always welcome,” and promised to do all they can to protect the safety of Japanese businesses.

Crackdown
By last week, Chinese authorities had begun cracking down on the organizers of the anti-Japanese demonstrations and their Websites. Officials in some cities, including Shanghai, said they'll track down the rioters who damaged Japanese restaurants and other businesses, and make them pay for it.

Those moves were followed by President Hu Jintao's comments to Prime Minister Junichiro Koizumi in Bandung, Indonesia, on the sidelines of the 50th anniversary Africa-Asia conference, that Beijing is committed to friendly relations with Japan. If we cannot resolve (the current difficulties in relations), it would affect the interests of the two countries as well as the stability of Asia,” Hu was quoted as saying.

Need Apology
But Hu was also adamant about the need for Japan to face up to its history and stop doing things that inflame Chinese public sentiment, such as approving school history books that whitewash the atrocities committed by the Imperial Army, appearing to support Taiwan independence, and blaming China for the anti-Japanese demonstrations.

Koizumi uttered a new apology for Japan's war crimes during the plenary session of the Bandung conference before he met with Hu, but he gave no ground on either the textbooks or the issue of his annual visit to a Tokyo shrine that honors Japan's World War II leaders—including 13 convicted as war criminals—along with Japan's war dead.

The bottom line is that the two sides agreed to keep economic relations on an even keel without resolving any of the fundamental political issues that divide them. That, of course, leaves the seeds for potential future conflicts and disruptions of relations.

Technology Attractive
Japanese investment and technology in the automotive sector may be too attractive for China to sacrifice, and value conscious Chinese consumers may still be unwilling to forego Japanese cars.

But Japanese firms that make smaller goods, for which there are acceptable substitutes, are already beginning to suffer. Asahi Brewery, falsely accused of financing a nationalistic textbook company, has seen its beer removed from the shelves of Chinese stores, and Nihon Keizai reported that Sony is now expecting a sales decline of several billion yen for the FY 2005 first quarter (April-June), because its PCs, cameras and televisions have disappeared from Chinese shop windows.

Source: Japan Automotive Digest - GAI

For a free sample copy of the Japan Automotive Digest, click here.


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