Japan in Asia: Economic diplomacy in the new geopolitics

The regional economic landscape in Asia has profoundly changed over the past two years as the United States has turned inward, withdrawing from the Trans-Pacific Partnership (TPP) and curtailing its engagement in the region, while China has become more proactive in seeking to disseminate its own economic standards. Japan has responded to these changes by bolstering its regional economic diplomacy to offer stability and fill the leadership void left by the United States. The increase of protectionism spurred by U.S. unilateral measures and China’s quest for self-sufficiency in critical technological sectors will inevitably put pressure on the operation of global supply chains critical to Asia’s economic integration model. Japan and other Asian states will need to respond to these challenges to the viability of global supply chains. In Southeast Asia, Japan is carefully examining the prospects of expanding membership in the TPP and the possible outcomes of the Regional Comprehensive Economic Partnership negotiations. Meanwhile, Japan-China economic relations seem to be warming up with Japan recently expressing conditional support of Belt and Road Initiative projects, but at the same time Japan is interested in curbing China’s market distorting policies, such as state-owned enterprise subsidization and forced technology transfer.

On September 17, the Center for East Asia Policy Studies and the U.S.-Japan Research Institute hosted a panel of experts to discuss the opportunities and challenges of Japan’s regional economic diplomacy in Asia. They examined how Japan’s efforts are being viewed by its neighbors, particularly China and ASEAN; whether new and existing trade frameworks can be utilized to stabilize and reinforce the regional economy; and how Japan and other Asian actors can respond to challenges to the existing economic order.