ABSTRACT

This chapter argues that Sino-Japanese economic relations are determined, by and large, by domestic Chinese politics and Japan’s long-term political interest in a stable China, and not primarily by Japan’s pecuniary interests. It shows that financially Japan has fared less well in the China market than is commonly assumed. The chapter discusses the problems afflicting Sino-Japanese economic relations, and presents a critical examination of economic complementarity in Sino-Japanese relations. It offers a brief interpretive analysis of China’s plant and contract cancellations and their ramifications for future Sino-Japanese economic relations. Some of the major constraints afflicting Sino-Japanese economic complementarity are problems of logistics, infrastructure, and the general political uncertainty surrounding Chinese energy supplies to Japan. China’s unilateral suspension and subsequent cancellation of numerous plant and import contracts with Japanese manufacturers and trading houses in 1979 and 1980-1981 greatly soured the basis of trust underlying Sino-Japanese economic relations.