At the Bo'ao Forum for Asia in March, former Japanese prime minister Yasuo Fukuda met with former Chinese vice-premier Zeng Peiyan and proposed initiating a dialogue between the two countries' business elites.
More than 50 Chinese executives of State-owned and private enterprises, and former high-ranking officials, led by Zeng, started the first round of the dialogue with their Japanese counterparts in Tokyo on Friday, resolving to build a non-governmental platform to increase exchanges between the two countries.
China and Japan still need each other. China, which is in the process of transforming its economic structure, needs Japanese technologies and experience to address issues such as urbanization, industrial upgrade, efficient use of energy and environmental protection. China's huge market still appeals to Japanese corporations as their country is struggling with an aging and shrinking population. And trade relations have for long been a guarantee against serious confrontation between China and Japan.
But this calculus has changed in recent years. Political rift between the two countries and rising labor costs in China have cooled Japanese investment in China. Data from China's Ministry of Commerce show Japan's direct investment in China dropped to $2.01 billion in the first half of this year, a year-on-year decline of 16.3 percent.
Also, Japanese investment in China plunged 38.8 percent in 2014 from the previous year, the sharpest since 1985. The pace of the decline has slowed this year, but the recovery has been sluggish with many Japanese manufacturers putting off their construction and production expansion projects in China.
This trend has been worrying Japanese business leaders, and with ties between the countries beginning to thaw, they seem eager to fly to China to explore new avenues.
Led by the ruling Liberal Democratic Party's senior leader Toshihiro Nikai, some 3,000 people from Japan's tourism and other business sectors, as well as officials from local governments and cultural bodies, visited China in May. Their aim was to seek opportunities to capitalize on the rising number of Chinese traveling abroad each year because of their increasing incomes and the easing restrictions on foreign travel.
For the first time, the Japan-China Economic Association, Keidanren (Japan Business Federation) and the Japan Chamber of Commerce and Industry jointly sent 220 business heavyweights to Beijing early this month.
Some Japanese companies have joined Chinese enterprises in China's new Silk Road projects in inner Asia and the Indo-Pacific littoral, which has been termed Belt and Road Initiative.
Abenomics, Japanese Prime Minister Shinzo Abe's economic policy, features massive injections of cash into the country's economy by Japan's central bank, depressing the value of the yen. This, in turn, has produced a windfall for corporate Japan because the falling value of the yen means that overseas profits will increase when translated into the Japanese currency.
While Japanese enterprises are eager to jump on the Belt and Road Initiative bandwagon, their government, siding with the United States, has been giving the cold shoulder to China's economic projects.
In a recent op-ed article in The New York Times, Yoichi Funabashi, chairman of Tokyo-based think tank Rebuild Japan Initiative Foundation, said Japan should join the China-led Asian Infrastructure Investment Bank. "By distributing financial assistance to states in the Asia-Pacific, the bank will inevitably help shape the region's future economic architecture, as well as, implicitly, its security relations," he wrote. "Japan has a major strategic interest in participating."
There are tangible signs of progress in China-Japan relations, and business leaders of the two countries are committed to keeping their dialogue going. But it is still too early to suggest that bilateral ties will approach the level of global warming.
The author, Cai Hong, is China Daily's Tokyo bureau chief.
