Why Chinese-Japanese Economic Relations Are Improving

Delinking Trade From Politics

A Japanese flag in front of a picture of Chairman Mao at Tiananmen Square in Beijing, October 8, 2006. Reinhard Krause / Courtesy Reuters

When it comes to Japan, China seems torn. On security issues, it is becoming increasingly hawkish -- witness its recent declaration of an Air Defense Identification Zone (ADIZ) over the Senkaku (Diaoyu) Islands in the East China Sea. But on economic ties -- from Japanese imports to Japanese investments -- it is becoming increasingly dovish. In short, China has started to delink economics from politics.

This represents a big reversal from last year, when the Middle Kingdom believed that it could use Japan’s dependence on the Chinese market to wrest territorial concessions from Japan. In the summer and fall of 2012, riots and boycotts of Japanese products -- some of them encouraged by the Chinese government -- spread across China after Yoshihiko Noda, who was then Japan’s prime minister, bought from their private Japanese owner some of the Senkaku (Diaoyu) Islands, which are controlled by Japan but also claimed

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