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Japan's Abe turns to South East Asia to counter China

Japan's Prime Minister Shinzo Abe (L) and his Vietnamese counterpart Nguyen Tan Dung review the guard of honour during a welcoming ceremony
Japan's Prime Minister Shinzo Abe (L) and his Vietnamese counterpart Nguyen Tan Dung review the guard of honour during a welcoming ceremony

By Linda Sieg and Jonathan Thatcher

TOKYO/JAKARTA (Reuters) - The last time he was prime minister of Japan, Shinzo Abe's inaugural foreign trip was to China. In the job again 7 years later and relations with Beijing now chilly, Abe is turning first this time to the rising economic stars of Southeast Asia.

A hawkish Abe wants them to help counterbalance the growing economic and military might of China at a time when Japan needs new sources of growth for its languishing economy and is debating whether to make its own military more muscular.

But experts warn he will have to tread carefully during his visits to Vietnam, Thailand and Indonesia, beginning on Wednesday, to avoid provoking China by appearing to be trying to "contain" it.

China is also scouring the region in search of investment and trade opportunities and sources of raw materials. But it is also clashing with countries in the region over territorial rows in the South China Sea, as well as with Japan over tiny isles in the East China Sea.

Moreover, Abe may find his hosts keen to avoid upsetting China, now their major economic partner as well.

"The Japanese government is trying to solidify its relations with other countries in the region and strengthen its bargaining power before talking to China," said Narushige Michishita, an associate professor at the National Graduate Institute.

Abe had hoped to go first to Washington after his Liberal Democratic Party's (LDP) big win in an election last month, in order to bolster a security alliance with his country's main ally. But because U.S. President Barack Obama was too busy, Abe will start with members of the 10-nation Association of Southeast Asian Nations (ASEAN).

Japanese companies are already eyeing Southeast Asia as an alternative to investment in China after a long-simmering feud over disputed islands in the East China Sea flared up last year, sparking protests in China and hurting trade.

Abe has made clear that ASEAN's planned integration in 2015, creating a bloc with combined economies worth $2 trillion and a population of 600 million, is a significant lure for a Japanese economy that has been trapped in deflation for decades and whose population is ageing fast and shrinking.

He also says, however, that he wants to go beyond economic ties and expand relations in the security field. He is expected to give a policy speech in Jakarta.

SHARED VALUES

In an echo of the push for a broader Asian "arc of freedom and prosperity" that underpinned Abe's foreign policy during his first term in office - which ended when he quit abruptly - the Japanese leader is also likely to refer to his desire for deeper ties with countries that share democratic and other values.

"Japan's path since the end of World War Two has been to firmly protect democracy and basic human rights and stress the rule of law," Abe told NHK public television on Sunday. "I want to emphasize the importance of strengthening ties with countries that share such values."

One issue that could come up is a maritime "code of conduct" that the United States has urged China and its Southeast Asian neighbors to agree on as a step toward reducing tension.

"Japan should play a more significant, responsible role not only for the prosperity but also stability in this part of the world, especially in its waters," said Kunihiko Miyake, a former diplomat close to Abe.

"Possibly we could work together with Southeast Asia in a possible broad, extended code of conduct in the waters to avoid unnecessary and unintended friction or disputes," said Miyake, now research director at the Canon Institute for Global Studies.

Abe has said repeatedly that he wants to improve ties with China despite his tough stand over the disputed isles. But some warn his rhetoric could been seen as trying to box in China, provoking it and worrying Southeast Asian countries whose economies are increasingly linked to China's.

"What is the point of making an enemy of China?," said Hitoshi Tanaka, a former diplomat who is chairman of the Institute for International Strategy in Tokyo. "It is not smart diplomacy in my view and the last thing the nations named as targets of 'values diplomacy' would welcome."

ECONOMY FIRST

Abe will need to reassure his hosts that he will not let the dispute with China over the islands get out of hand despite his hawkish security stance and his desire to revise Japan's take on its wartime history with a less apologetic tone.

"Prime Minister Abe might be seen as revisionist but this should not influence the dispute as all countries in the region would rather focus on economic development than see this conflict deteriorate," said Damrong Kraikuan, director-general of the Thai foreign ministry's East Asia Affairs Department.

"But the South China Sea will not be the highlight of his visit to Bangkok," he added. "Thailand will take note of what Japan has to say and we will listen, but we have to take other countries into consideration to make progress."

Japan's remains a huge economic influence in ASEAN. It is the group's biggest source of foreign direct investment, after the European Union and almost three times the size of China's.

"Japan is concerned about losing out to China in trade and investment," said Jayant Menon, lead economist at the Asian Development Bank's Office for Regional Economic Integration. "(The visit) sends an important message."

In Hanoi, on the first stop on his trip, Abe announced $500 million in aid for three infrastructure projects, which brought Japan's official development assistance in Vietnam to $1.7 billion during the 2012 fiscal year ending in March.

Japan pledged investments of $4.9 billion in Vietnam in the first 10 months of last year, nearly double the whole of 2011.

Abe will leave for Thailand early on Thursday and travel to Indonesia on Friday.

In the group's biggest economy, Indonesia, net direct investment last year looked to be heading for a record amount.

Japan was ASEAN's second biggest trading partner in 2011, just behind China, according to the group's figures.

Abe's government has already been pushing hard to improve relations in the region. He sent his foreign minister last week to Brunei, Singapore, Australia and the Philippines.

But he will have to tread carefully on the topic of Japan's wartime aggression, which remains sensitive. His government has said it would stick by a landmark 1995 apology for Japan's wartime aggression.

But Abe also wants to issue a statement of his own and has expressed interest in revisiting a 1993 government statement apologizing for military involvement in kidnapping Asian women to work in wartime military brothels.

"Everyone knows that if the new government were to change the basic line then Japan will be isolated in East Asia because China, Korea and even Southeast Asia will make lots of issues out of a change in interpretation (of the past)," Tanaka said.

(Additional reporting by Amy Lefevre in Bangkok, Kiyoshi Takenaka in Tokyo and Rieka Rahadiana in Jakarta; Editing by Raju Gopalakrishnan and Robert Birsel)

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