The Year Ahead in East Asia: China’s Regional Vision and Domestic Politics

History: A Big Issue in 2015

Looking back over the past year, one major issue of contention in East Asia during 2015 was history. It was a year of various major historical anniversaries—70 years since the end of World War II, 50 years since the normalization of diplomatic relations between Japan and South Korea, and 40 years since the end of the Vietnam War. And naturally enough, the moves that were made to mark these anniversaries were strongly related to contemporary domestic and international politics rather than to historical studies.

In East Asia in particular, societies are becoming more polarized, and governments have been attempting to use historical accounts to their own advantage; these developments are causing historical perceptions to turn into domestic issues. In addition, China’s rise has caused a shift in the overall East Asian historical narrative. And so history has become a more delicate matter in the region. The debate in Taiwan over historical views is one example of history becoming a domestic issue. During 2015 we also saw examples of history-related developments that involved international relations, such as the August 14 statement by Prime Minister Abe Shinzō on the seventieth anniversary of the end of World War II , which drew wide attention and comment, and the military parade that China’s President Xi Jinping staged on September 3 to celebrate that country’s victory in the war, an event attended by foreign leaders including Russian President Vladimir Putin and South Korean President Park Geun-hye.

Even so, looking back over the year just ended, I think it bears noting that, particularly on the international stage, history-related issues were handled with relative restraint, and signs could be seen of movement toward future-oriented reconciliation. Of special note was the December 28 announcement by the foreign ministers of Japan and South Korea that the two countries had reached an agreement to settle the contentious “comfort women” issue. At the government level this has been billed a final and irreversible resolution of the problem. But when it comes to differences over historical views, there is probably no such thing as an “irreversible” resolution. It remains to be seen whether the comfort-woman statue in front of the Japanese embassy in Seoul will be removed as the Japanese side expects, or whether it will be possible to avoid further flaps between Tokyo and Seoul over designation of World Heritage sites. Efforts toward reconciliation will need to be kept up during the coming year.

The South China Sea: An Ongoing Major Issue

Another major issue in East Asia during 2015 was China’s increasingly vigorous assertion of its status as a major power. It is already evident that President Xi has adopted a more explicit approach than his predecessor, Hu Jintao, to showing China’s shape as a great power. Domestically, it is being stressed that China’s greatness is benefiting its neighbors as well. But the adoption of this sort of self-image, along with moves to offer a new vision for Asia as a whole and contribute to the creation of international public goods, has been accompanied by an uncompromising posture on issues relating to China’s territorial claims and national sovereignty.

We see the prime example in the South China Sea, where China has not only taken an unyielding stance on its claims to the Spratlys and other disputed islands but has been conducting land reclamation to turn reefs into artificial islands and building airbases. These moves have struck not just the other claimants but nations around the world as being efforts by China to change the status quo.

The United States has responded with a campaign to assert freedom of navigation in the surrounding waters, but this is limited to a defense of international law; Washington has not involved itself directly in the disputes over ownership of the islands and reefs in question. Also, it is keeping up its dialogue with Beijing and conducting joint exercises with Chinese forces. So the US response is unlikely to bring about a change of course by China in the South China Sea.

This matter, however, has already attracted the attention of the international community, and it has generated debate on various specific issues aside from US policy, such as the ability of the Association of Southeast Asian Nations to respond to sovereignty disputes, Japan’s involvement, and the policies that the new administration in Taiwan will adopt regarding the South China Sea. Developments on these fronts will be a key concern during 2016.

China’s Vision of a New Asia

International relations in East Asia are approaching a major turning point. This reflects not only China’s dramatic rise but also its new moves to present its own vision for the regional order and to involve itself in supplying international public goods, notably with the establishment of the Asian Infrastructure Investment Bank. These developments represent a major shift from the previous situation, in which proposals for the regional order came mainly from countries like Japan, Australia, and South Korea. The shape of the Asian order that China is proposing began to emerge with President Xi’s presentation of a new security vision for Asia in 2014, and this has become an ongoing issue.

In 2014 China started revealing its ideas for regional diplomacy, and the following year it brought them together with the expression “One Belt, One Road.” Though there are a significant number of points on which the meaning of this slogan is unclear, the objective seems to have been to present a single phrase that could sum up the various aspects of China’s diplomacy toward the countries around it. The “One Belt, One Road” initiative includes the domestic aspect of avoiding excess production and investment, but it is also seen as ultimately becoming a Chinese rival to the Trans-Pacific Partnership now being formed by the United States, Japan, and other countries in the Asia-Pacific region. Developments in this connection will bear watching in 2016 as well.

Meanwhile, doubts have arisen over the ability of ASEAN to hold on to its central role as the driver of East Asian regional integration in the face of China’s proposal of a new vision and its vigorous assertion of territorial claims in the South China Sea. This reflects not only the emergence of new frameworks and concepts like the TPP and “One Belt, One Road” but also the fact that ASEAN has found it difficult to deal effectively with the territorial disputes between its members and China. This has led to questioning both of ASEAN itself and of the idea of ASEAN-centered regional cooperation.

The shape of regional cooperation and the regional order will be a focus of attention in East Asia in 2016. Needless to say, developments in this area will be deeply related to domestic political and social conditions in places around the region.

Elections and Democracy Movements

During 2014 and 2015 popular movements for democracy and constitutional government emerged in a number of locations around East Asia, notably the Umbrella Movement in Hong Kong  and the Sunflower Movement in Taiwan. The summer 2015 protests in Japan over the government’s proposed security legislation may also be considered such a movement. In Hong Kong, the issue involved the quest for greater democracy in the territory’s system of government, while in Taiwan the protesters raised issues relating to relics of dictatorship in the political system, problematic legislative procedures, and the lack of accountability or responsiveness to the popular will on the part of a president elected for a multiyear term. In Japan’s case, the protesters asserted that the proposed legislation was unconstitutional.

The new year brings elections in various places around the region, such as the presidential and legislative elections held in Taiwan on January 16, the elections for South Korea’s National Assembly scheduled for April, and Japan’s upper house elections this summer. These elections and the political developments in their wake will be major domestic themes, and they are also likely to affect external relations. In Taiwan’s case, the focus is on how the Democratic Progressive Party, which is expected to defeat the ruling Nationalists in the January 16 voting,(*1) will handle relations with mainland China and deal with the issue of the cross-strait “1992 Consensus”; its decisions will also relate to the broader issue of reflecting the popular will under democracy.

China does not conduct democratic elections, but the country’s top leadership is due to be reshuffled in 2017–18. The process involves the rotation of members of the Politburo Standing Committee and the effective designation of successors to take over from the current president and premier in five years’ time. This year we can expect to see preliminary jockeying in this connection. A key issue will be the nature of the selection procedures. President Xi has been ruling in an authoritarian manner domestically with initiatives like his campaign against corruption. Attention will focus on whether he observes the rules for the selection process that have been built up since the administration of Jiang Zemin (1993–2003).

Reform of China’s Military and State-Owned Enterprises

The domestic situation in China continues to call for watchful attention. In addition to the aforesaid leadership reshuffle, a variety of matters will be on the agenda. Last year the focus was on issues like history, the September military victory parade, and the South China Sea, but military reform also emerged as a key domestic concern.

On September 3 last year, Xi announced a cut of 300,000 in the number of China’s troops. And the November 24–26 session of the Central Military Commission Reform Work Conference decided on a program of military reform. If this is implemented, the People’s Liberation Army will become a centralized military organization serving as a firm bulwark for the Xi administration.

The next focus is likely to be on reform of China’s state-owned enterprises. Major SOEs exist in key fields like security-related industry, broadly defined sovereignty related industry, public works, energy, basic industries, and high technology, and they enjoy various special privileges, such as preferential allocation of funds and preferential granting of approvals and licenses. As a result of their privileged status, they tend to lack efficiency and competitive strength. Even so, the central government and party want to keep these important industries under their control, and the executives of the SOEs serve as a major support base for the administration. But without an overhaul of these enterprises, it will not be possible to achieve structural reform of the Chinese economy.

It was in this context that last September the authorities released a guideline on deepening reform of SOEs. The guideline calls for rigorous implementation of market economics, but it also calls for the strengthening of government supervision over the enterprises and other state-owned assets. The latter call runs counter to privatization. The overall direction of the reform process is likely to be a major issue of debate.

International observers will naturally be watching developments in areas like the pro-democracy movement and independence movements among ethnic minorities. But the major focus during 2016 will probably be on military and SOE reform, along with the upcoming leadership reshuffle. Major uncertainties exist in these areas, and the outcomes are hard to foretell. But given their deep impact on both internal affairs and external relations, developments in these connections will need to be monitored extremely closely.