China-Japan freeze has cooled economy

The relationship between China and Japan seems to be moving in the direction of losses for both.

China is not simply a bystander. When the Chinese media stays wary of the Abenomics, the Chinese economy also bears the risk of being dragged down by the declining Japanese economy.

The biggest two economies in Asia are inextricably linked. If either of them weakens, the other will suffer the consequences. Moreover, Asian and even the global economy will be affected.

Statistics show that in 2013 China's share of Japan's exports was 18.1 percent, and it made up 21.7 percent of Japanese imports. Behind these figures are the jobs of thousands of workers in both countries.

Another prominent feature of the economic relations between the two is that both hold important positions in the global production chain. Many goods exported from either China or Japan to a third country are co-produced by both.

This means that Chinese production and Japanese production cannot live without each other. Either vanishing would lead to rising prices of the other's products, such as electrical appliances and machineries, or the products going out of stock altogether.

After developing for more than 30 years, China is no longer just a manufacturing hub for famous Japanese brands. Rather, it has its own innovation capabilities.

Some Chinese enterprises, especially those in automobiles, electronics and machineries production, are now competing with Japanese companies. They have posed a challenge toward "made in Japan" products across the world.

But the future development of manufacturing industries in the two countries can only survive through deepening cooperation. Zero-sum competition suits the interests of neither side.

The increasing investment in Japan by Chinese enterprises echoes such a trend. In 2011, Lenovo formed a joint venture to produce personal computers with NEC, a Japanese electronics firm. In the same year, Haier Group bought the white goods business of Sanyo Electric Co.

According to statistics from Japan's Research Institute of Economy, Trade and Industry, by the end of 2013, the amount of Japanese bonds, mostly Japanese government bonds (JGBs), held by China reached 14.3 trillion yen ($13.5 billion). China has become the largest foreign sovereign holder of JGBs.

In Southeast Asia, China supports and expects to take part in railway projects that link the south and the north, and Japan has shown interest in building railways that connect the east and the west. These railway projects will benefit all Southeast Asian countries as well as both China and Japan.

Although bilateral trade has seen some decline, the Chinese and Japanese economies still have huge complementary potentials. Against the backdrop of the current gloomy global economy, to dig out these potentials suits the fundamental interests of both sides.

Some Chinese scholars claim that China has the ability to make Japan suffer more in the economic battle between the two countries. Such a viewpoint does not take into consideration the feelings and interests of ordinary workers from both sides. They also failed to foresee the global significance of the economic cooperation between the two countries.

The significance of bilateral economic relations not only lies with the public, as they closely relate to the interests of ordinary people. It also lies in its political implications. It indicates whether China can establish its status as a major power by setting up an economic order in Asia.

Even when China's strength was far behind that of Japan's, Chinese leaders such as Mao Zedong, Zhou Enlai and Deng Xiaoping firmly held the steering wheel that decided the direction of Sino-Japanese relations.

Back in 1975 when Deng Xiaoping took charge of the work of the CPC Central Committee, he clearly pointed out that this bilateral relationship must be taken into consideration from the high level of political prospects.

Now it is time that both sides keep a sober mind on how their relationship should move next. This relationship has moved from "cold politics and hot economy" to "cold politics and cold economy." Is this desirable? And who truly benefits from it?

Difficulties remain in resuming political ties. But it is not unlikely that the two sides can enhance economic cooperation. They should seek more cooperation opportunities to speed up the negotiations of a free trade zone among China, South Korea and Japan, and create favorable conditions for the integration of companies from both sides.