Courcy’s Intelligence Brief

On 30 March, the Japanese defence ministry’s think tank, the National Institute for Defence Studies (NIDS), published its East Asian Strategic Review 2012.  This follows on from its China Security Report 2011, which was published in February.  Both reveal the rising concern in Tokyo about China’s actions, capabilities, and intentions.  These fears are compounded by a degree of scepticism about the US’s announced refocus on the Asia-Pacific region.  However, there are some intriguing hints about Japan’s latest thinking on Russia.

In last week’s issue we looked at how the Europe-China Research and Advice Network (Ecran) is arguing that China’s 12th five-year plan (12FYP), which started in 2011, is a major opportunity for the EU.  Ecran is a three-year project funded by the European Union to provide advice on China to European policy makers.  In its self-description, it says it is “designed to further enhance the capacity of European policy-makers to monitor and assess current developments in China and their impact on the EU and on EU-China relations”.  The team leader for Ecran is Dr Kerry Brown, who is also Head of the Asia Programme at the UK’s quintessentially establishment-minded Chatham House think tank.  The project has co-opted experts from research institutions across Europe with expertise in China-related areas of study.  In other words, Ecran needs to be taken seriously.

And, as we reported last week, in Ecran’s new report, China, the EU and China's Twelfth Five-Year Programme, there is a passage of remarkable cynicism in which Ecran argues that because China poses no military threat to the European Union and because the EU is not concerned about Chinese military expansionism in the South China Sea, the Indian Ocean, and potentially the Pacific, this is something that can be exploited by the EU for economic gain.

For Japan, of course, the very opposite calculations apply.  Any economic opportunity provided by China needs to be carefully calibrated with Japan’s strategic interest.  And it is exactly China’s 12th Five-Year Plan that is the source of much of Japan’s concern.

While the European Union sees the 12FYP as only offering economic opportunities, Japan sees a far more dangerous possibility.  The NIDS China Security Report 2011 sees the 12FYP as the source of the China’s increasing belligerence in the South and East China Sea.

It says: “The Twelfth Five-Year Plan has made it clear that the government seeks to adopt a maritime development strategy, which suggests that China’s leadership has put great emphasis on maritime affairs in the country’s grand strategy.  It is essential for the government to safeguard maritime rights and expanding interests to attain sustainable economic growth as a premise of strengthening the Party’s ruling position.”

According to NIDS, China’s gross national maritime production for 2010 accounted for 9.6% of GDP and created more than 38m jobs.  The average annual growth rate for the maritime economy for the five years 2006-2010 was 13.5%.  And, of course, exploiting maritime resources is a key part of developing the maritime economy.  The US Geological Survey estimates that oil reserves in the South China Sea amount to 3.78bn tons.  Natural gas reserves around the Spratly Islands are put at 170bn cubic metres.  China’s own estimates are considerably higher, pointing to oil resources in the South China Sea of 36.78bn tons and natural gas resources of 7.55 trillion cubic metres.

Japan is not a claimant to the resources in the South China Sea, but it is in dispute with China over its Exclusive Economic Zone (EEZ) and the boundary of the continental shelf in the East China Sea.  So far, China’s actions in the East China Sea have been relatively constrained compared to its actions in the South China Sea, but this is in part, according to NIDS, because “Japan is positioned right in front of China in the East China Sea, and the United States with its military bases in Japan maintains strong forward-deployed forces”.

The NIDS China Security Report 2011 goes on to warn: “For China...enhancing its military operational capabilities in the East China Sea is seen to be a major agenda that the country needs to address.”  It then adds: “If China’s military power improves in relative terms in the East China Sea as well, it is likely that China will adopt a similar assertive attitude towards this water area as shown in the South China Sea.”

The just-published East Asian Strategic Review 2012 is naturally very supportive of the US’s declared ‘pivot’ towards the Asia-Pacific region, which it says involves three main elements, namely: 1) strengthening ties with Japan and other regional allies of the US, 2) bolstering relations with other partners, including Southeast Asian countries and India, and 3) creating a “multilayered network of relations centred around US alliances and complemented with greater strategic engagement”.

As part of this, the US is not just developing its traditional ‘hub and spoke’ system of alliances but also , in the current jargon, important ‘minilateral’ relationships such as US-South Korea-Japan, US-Japan-Australia, and US-Japan-India.  It is these new minilateral relationships that are upsetting China and creating the impression of a contain-China policy.  But they meet with strong approval from Japan.

Japan’s strong approval, however, is tempered by fears that the US may not be able to deliver on its promises.   The East Asian Strategic Review makes much of the fact that the US is caught between a fiscal crisis and its foreign commitments.  It notes that the US defence budget “could be curtailed by as much as $1 trillion...during the period from fiscal 2013 through 2021”.  Japan’s natural conclusion is that it is “essential” for Japan itself “to promote readiness and sustainability and to build a dynamic defence force” in order to enhance its ability “to respond effectively to the various situations that might occur in the future”.

In other words, Japan has no option but to rearm to protect itself from a rising China.

Interestingly, however, the East Asian Strategic Review 2012 does contain one final intriguing observation, about Russia.  According to the NIDS report, “a turnaround is being observed in Russia’s policy vis-a-vis East Asia as a result of the rise of China”.  The Japanese view is that Russia is now moving away from its former close relationship with Beijing and must be encouraged in this direction by the Western powers, not least by an understanding that the modernization of the Russian economy is “in the common interest of all”.

An alignment between Japan and Russia to balance China has been forecast by many observers since the fall of the Soviet Union, but Russia-Japan relations have continued to be debilitated by the dispute over the Kurile Islands (occupied by Russia since the end of World War II), and by Russia’s desire to stay close to Beijing.  These latest remarks suggest that Tokyo has not yet lost hope of such a development.  JdeC.

NOTE: An agreement between Japan and Russia on collaboration over atomic energy comes into force in May.  The head of Russia’s Rosatom, Sergey Kiriyenko, commented on 3 April: “This opens up some serious new opportunities for us, mostly of a strategic nature...We are exchanging information at present but until the agreement enters into force it wasn’t possible to engage in any engineering matters.  Now we can do that.  Russia delivers fairly large amounts of fuel to Japan and we also have a plan for Japanese uranium to be enriched at Russian factories.  Japanese generating companies are very interested in playing a role developing deposits in Russia and elsewhere.  And this is of interest to us, it means incoming investment.”