April is springtime in Beijing. It is also the cherry blossom season in Japan. On April 11, Chinese Premier Wen Jiabao traveled to Japan. It was the first visit by a Chinese Premier in seven years. Wen referred to his visit as an "ice-melting trip", a follow-up to Shinzo Abe's "ice-breaking" visit to China last year. China and Japan are finally welcoming spring after five years of wintry relations.

Last October, Japanese Prime Minister Shinzo Abe visited China and proposed establishing a "mutually beneficial strategic relationship based on common strategic interests". Now, Chinese Premier Wen Jiabao has gone to Japan to pass on China's goodwill and wisdom to the Japanese people and, on the basis of the three political documents, help the two countries to agree on a new document which will strengthen the relationship and lead Sino-Japanese relations into a new era. China and Japan, two countries of great importance in Asia and the world, have made great efforts to "melt the ice" in bilateral and geo-political relations. Just a week before the visit, the volume of Sino-Japanese trade exceeded US$200 million. Sino-Japanese economic and trade cooperation may be what is driving the two countries towards a late spring after a long period of trials and hardships.

Economic and trade cooperation the "ballast stone" of Sino-Japanese relations

Separated by just a narrow strip of water, China and Japan are very complimentary economically. The opening of the Chinese market has stimulated Japanese industries that were slowing or losing their comparative advantage. By taking advantage of cheap Chinese labor, Japanese enterprises have been able to "dynamically transfer their comparative advantage" and regain their competitive edge.

With Abe's "ice-breaking" journey to China last year and Wen's current "ice-melting trip" to Japan, the Sino-Japanese economic relationship is no longer ambiguous. The chairman of the Japanese Chamber of Commerce and Industry in China, Mari Isogai, is very optimistic about this.

Six months ago, the proposal of a "mutually beneficial strategic relationship" helped relieve a lot worries people had about deteriorating relations between the two countries. Since then, the Sino-Japanese friendship has been replaced by "strategic reciprocity," which pushes Sino-Japanese relations to a higher level and increases benefits for both. Asian Studies expert Amako Satoshi calls this period a "post-era of Sino-Japanese relations."

However, even though people have replaced the original criteria of Sino-Japanese relations with "strategic reciprocity", the bilateral relationship will not undergo a fundamental change overnight.

In 2006, the trade volume between China and Japan exceeded US$200 billion. This year, China expects to replace the United States as Japan's largest trading partner. Given the scale of its economy and economic complimentarity, China has many outstanding advantages in the global market. Therefore, to a certain extent, Premier Wen's visit to Japan will have an "ice-melting" effect on the bilateral relationship.

With the development of economic globalization since the end of the Cold War, emerging markets have grown rapidly and become significant players in the global market. The world's resources, including capital and labor as well as other production factors have been restructured and redistributed. In this process, some Japanese industrial enterprises started to lose their comparative advantages and competitiveness.

The opening of the Chinese market has helped to stimulate floundering Japanese industries. By taking advantage of China's cheap labor, they have been able to "dynamically transfer their comparative advantage" and regain their global advantage.

Since 2001, the bilateral trade structure has been further optimized. More than 90% of imports and exports between the two countries are finished products, indicating that economic cooperation between the two countries is characterized by a specific division of labor. To a certain extent, the potential of cooperation has been realized. Japan has become China's third largest trading partner behind the EU and the US. China has become Japan's second largest trading partner behind the US.

The vast Chinese market, its rapid economic development, and low labor costs have brought enterprises from all over the world, including Japan, to China. As of the end of 2006, Japan had invested $57.98 billion in 30,000 projects in China. Half of this money was invested after 2000. In recent years, Japan's investment in China has accounted for approximately 10% of its total foreign investment.

Multi-layer energy cooperation between the two countries

All cooperation in the fields of environmental protection, energy and finance fall into the category of strategic market cooperation. To invest in these areas in China, Japanese enterprises have to be directly involved in the formulation of some government policies. The governments of both countries need to participate in regular, high-level economic dialogue for this to happen.

Premier Wen Jiabao's entourage on his Japan visit includes senior managers of 50 large Chinese enterprises from a variety of industries including oil, electricity and coal. They will speak with senior Japanese entrepreneurs from 50 related enterprises to advise them on how Japanese enterprises can better enter China and cooperate with Chinese enterprises. Wen Jiabao and Shinzo Abe will chair the opening conference for the high-level dialogue, in which participants will decide on a time, place and agenda for the first meeting.

An official from the Agency of Natural Resources and Energy of Japan noted that by sending senior managers of energy and environment enterprises to Japan, China is sending a signal to Japan �C "we will, for the first time, give top priority to economic issues in Sino-Japanese relations, not political issues." This is what Japanese enterprises want too.

Cooperation in environmental protection, energy and finance are part of strategic market cooperation. However, there are a lot of risks involved in this. Therefore, governments of both countries need to create more opportunities for high-level economic dialogue, said Liu Junhong, a research fellow at the Institute of Japanese Studies under the China Institute of Contemporary International Relations.

During Premier Wen Jiabao's visit to Japan, leaders will also hold a ministerial-level dialogue on energy policies. The governments of both countries will reach an agreement on Japan's offer to help China by promoting energy saving in the country. According to Japanese media reports, China began to enact a series of energy-saving regulations in 1997. However, it still needs to do more to implement these policies. Going forward, Japan's Ministry of Economy, Trade and Industry will send experts in energy conservation and energy saving law to China, who will work with Chinese officials and experts. Meanwhile, Japan will begin to accept Chinese graduate students majoring in related areas of study.

Japan hopes it can reach an agreement with China on an environmental certification system to adopt a uniform system and standard across Asia. This will help to improve safety standards, quality supervision and effective energy use.

According to industry experts, Japan has the world's leading energy-saving and environmentally-friendly technology. China needs to cooperate with Japan in this area. Of course, such Sino-Japanese economic cooperation is beneficial to both nations. Therefore the Japanese are also willing to work together with China. According to official statistics, 20 of the world's 30 most polluted cities are in China. China's next tax laws are aimed at encouraging foreign investment in energy efficient equipment and technology.

Sino-Japanese cooperation saves Japan 2 trillion yen in foreign exchange annually

Despite small changes in Japan's industrial growth index over the last decade (just 1.5 percentage points) Japan's export and import trade has increased remarkably. In 2005, Japanese exports rose 27% from 2000, and overall trade by 39%. This is the major reason for the Japanese economy's recovery over the last five years.

A turning point in the data is when China became the largest exporter to Japan. In 1980 the value of products exported from China to Japan accounted for just 3.1% of Japan's total import trade. The ratio rose to 5.1% in 1990 and to 14.5% in 2000. In 2005, China replaced the United States as Japan's largest exporter, occupying 21% of the Japanese market.

The rapid growth of the share of Chinese products in the conservative Japanese market demonstrates the rapid improvement of China's trade competitiveness. As a result, Japan's dependence on the Chinese market has grown rapidly. In 1980, the value of products exported from Japan to China accounted for 3.9% of total exports. This situation has not changed much in the 1990s. At one stage the ratio dropped to just 2.1%. In 2000, the ratio rose to 6.3%. By 2005 it had doubled to reach 13.5%.

How will growing Japanese imports of Chinese good influence bilateral relations? Who stands to benefit more? A senior research fellow from Nomura Securities believes that "by improving its trade terms with China, Japan actually facilitated the transfer of a tremendous amount of revenue from China to Japan. As a result, Japan can save as much as 1.9 trillion yen [approximately 123.5 billion yuan] of foreign exchange, equivalent to 0.4% of its GDP and 10 times the size of its direct investment in China in 2002 [statistics from the Japanese Ministry of Finance]."

People in Japanese industry circles generally agree that it was the "special demand from China" that helped industries such as iron, steel and petrochemicals out of the shadow of the economic crisis. Meanwhile, given the aging population and low birth rate in Japan, people have reached a consensus that there are great benefits to be had from taking advantage of labor divisions within China and entering the Chinese market. A few years ago, there were concerns of an "industrial hollowing-out". Today very few people mention this.

"Floating ice" ahead

Although the "ice" between the two countries has been "broken" there are still blocks of "floating ice" in the seas ahead. Disagreements on some touchy issues such as Taiwan and various chapters of history have damaged Sino-Japanese relations, and will not be resolved during a single visit.

Premier Wen Jiabao said in an interview with Japanese media that during his visit, the two countries will issue a joint document which will give a more pragmatic interpretation of the "mutually beneficial strategic relationship" that has been outlined. It has been learned that the forthcoming joint document will cover political, economic, cultural, regional and internal issues of mutual interest and concern. A comprehensive document, it will have an important and far-reaching influence on Sino-Japanese relations.

Media say that the joint document will explain the strategic positioning, meaning, goals and tasks of the mutually beneficial strategic relationship between China and Japan. In addition, it may also touch on the development of gas fields in the East China Sea, Sino-Japanese cooperation in energy-saving and environmental protection, and Sino-Japanese military defense exchanges. It will help to promote investment in China by small and medium-sized Japanese enterprises, increase economic and trade cooperation, and promoting exchanges and cooperation in education, culture and youth activities. Some important issues of common concern such as Taiwan, the reform of the United Nations, a nuclear North Korea and Japanese hostages in North Korea will also be included.

Japanese media have revealed that the joint document will define the relationship as one characterized by "mutual respect". This respect will enable the two countries to surmount differences in social systems and values, as well as contribute to peace and stability in Asia and the world. Currently there are still many problems between China and Japan and they need to talk further about it what it means to "maintain peace and development," the report said.

Any political tensions between these two major Asian powers will create uncertainty in the political environment and affect neighboring countries. Booming non-government economic and trade exchanges are not enough to sustain the relationship. Many large, state-level cooperative projects can only go ahead if political relations are good. Consequently, economic circles in Japan are also looking forward to an improvement in Sino-Japanese relations.

Some experts believe that former Japanese Prime Minister Koizumi focused too much on ethnic conflicts and neglected the comprehensive economic development of Japan. Koizumi has repeatedly visited Yasukuni Shrine, which has had a negative impact on Japan's relationship with China. His actions led to a six-year stalemate in politics and economics.

The two countries have experienced many trials and hardships. Now, let us listen to the echo of the footsteps of China and Japan as they work to maintain and develop their friendship.

By People's Daily Online