Japan's Abe turns to Southeast Asia to counter China

TOKYO/JAKARTA Tue Jan 15, 2013 4:42pm EST

Japan's Prime Minister Shinzo Abe speaks during a news conference at his official residence in Tokyo January 11, 2013. REUTERS/Issei Kato

Japan's Prime Minister Shinzo Abe speaks during a news conference at his official residence in Tokyo January 11, 2013.

Credit: Reuters/Issei Kato

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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 visit to Indonesia, Thailand and Vietnam this week to avoid provoking Bejing by appearing to "contain" China.

Beijing is also scouring the region in search of new investment and trade opportunities and sources of raw materials. But it is also clashing with countries in the region in 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 this time after his Liberal Democratic Party's (LDP) big win at the polls last month, in order to bolster the security alliance with his country's main ally. But because U.S. President Barack Obama was too busy, he will start with members of the 10-nation Association of Southeast Asian Nations (ASEAN).

Japanese firms are already eyeing Southeast Asia as an alternative to investment in China after a long-simmering feud with Beijing 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 mere 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 TV on Sunday. "I want to emphasize the importance of strengthening ties with countries that share such values."

Abe has said repeatedly that he wants to improve ties with Beijing despite his tough stand over the islands dispute. But some warn his rhetoric could been seen as trying to box in China, provoking Beijing 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 now 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 islands row with China 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.

That is a position Japan wants to keep in what has become one of the world's fastest growing regions.

"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 Vietnam, Japan pledged investments of $4.9 billion in the first 10 months of last year, nearly double the whole of 2011. In Thailand, from January-September, foreign investment almost tripled to around $8.1 billion.

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

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

"The visit comes at a very important time ... Despite the serious (global) economic situation, Japan keeps helping Indonesia. And Indonesia is a market and source of raw material to Japan," said Arbi Sanit, a political analyst at the University of Indonesia.

"It is a more compassionate relationship, not simply one of economic rationale," he said.

Abe's young 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. Manila, for one, has welcomed signs of Japan's willingness to play a bigger regional security role.

Finance Minister Taro Aso went to Myanmar early this month as part of Japan's push to tap the potential of the country's opening up to the outside world.

Nevertheless, Abe will have to tread carefully on the topic of Japan's wartime aggression, which remains a sensitive issue.

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)

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