China Innovation Power: Far Out-Ranks U.S. And Japan In New Patent Applications

Πηγή: Forbes
By Rebecca Fannin
April 2 2016

his past week, I heard Chen Xu, CEO of the Bank of China, discuss how important innovation is to drive continued growth of the Chinese economy while state owned enterprises diminish in power. He mentioned the disruptive breakthroughs that are coming from such leading tech leaders as social communications titan Tencent and drone maker DJI. He noted that innovation is being driven returnees with degrees from top U.S. business and tech degrees. And he talked about how tech hubs Shenzhen, Guangzhou and Beijing are vying with one another to attract more up and comers to base headquarters in their turf.

In case you missed it, China far outstripped the U.S. in the number of new patent applications, according to the 2015 edition of the World Intellectual Property Indicators. This is the third year in a row that China’s increase has outranked other leading nations.

China recorded 928,177 patent fillings in 2014, trailed by the U.S. at 578,802, Japan at 325, 989 and Korea at 210,292. Most of the growth in patent filings was due to China’s surge of 12.5% compared with a 1.3% increase for the U.S. and Japan at a decline of .7%. Interestingly, Iran topped growth increases globally with a 18.5% gain in patent applications.

Moreover, China has climbed steadily over the past seven years to rank third worldwide for the number of patents in force, at 1.2 million. The U.S. leads with the number of patents at 2.5 million and Japan at 1.9 million.

Turning to specific technology advancements, Japan leads innovation in robotics, with auto makers Toyota, Nissan, Honda leading. The U.S. comes out on top for the most number of new patent applications in nanotechnology and 3D printing. Looking at a longer time span from 2005, China accounted for more than one-quarter of patents globally in 3D printing and robotics, the highest share among all countries.

A look at the Asian region as a whole underscores a shift in innovation to the East. Asia’s percentage of patent applications has grown from 49 percent in 2004 to 60 percent in 2014. Meanwhile, North America has slid from 25.1 percent to 22.9%.

Understanding the China-Japan Island Conflict

Πηγή: Stratfor
By Rodger Baker
Sept 25 2012

Sept. 29 will mark 40 years of normalized diplomatic relations between China and Japan, two countries that spent much of the 20th century in mutual enmity if not at outright war. The anniversary comes at a low point in Sino-Japanese relations amid a dispute over an island chain in the East China Sea known as the Senkaku Islands in Japan and Diaoyu Islands in China.

These islands, which are little more than uninhabited rocks, are not particularly valuable on their own. However, nationalist factions in both countries have used them to enflame old animosities; in China, the government has even helped organize the protests over Japan's plan to purchase and nationalize the islands from their private owner. But China's increased assertiveness is not limited only to this issue. Beijing has undertaken a high-profile expansion and improvement of its navy as a way to help safeguard its maritime interests, which Japan -- an island nation necessarily dependent on access to sea-lanes -- naturally views as a threat. Driven by its economic and political needs, China's expanded military activity may awaken Japan from the pacifist slumber that has characterized it since the end of World War II.

An Old Conflict's New Prominence

The current tensions surrounding the disputed islands began in April. During a visit to the United States, Tokyo Gov. Shintaro Ishihara, a hard-line nationalist known for his 1989 book The Japan That Can Say No, which advocated for a stronger international role for Japan not tied to U.S. interests or influence, said that the Tokyo municipal government was planning to buy three of the five Senkaku/Diaoyu islands from their private Japanese owner. Ishihara's comments did little to stir up tensions at the time, but subsequent efforts to raise funds and press forward with the plan drew the attention and ultimately the involvement of the Japanese central government. The efforts also gave China a way to distract from its military and political standoff with the Philippines over control of parts of the Spratly Islands in the South China Sea.

For decades, Tokyo and Beijing generally abided by a tacit agreement to keep the islands dispute quiet. Japan agreed not to carry out any new construction or let anyone land on the islands; China agreed to delay assertion of any claim to the islands and not let the dispute interfere with trade and political relations. Although flare-ups occurred, usually triggered by some altercation between the Japanese coast guard and Chinese fishing vessels or by nationalist Japanese or Chinese activists trying to land on the islands, the lingering territorial dispute played only a minor role in bilateral relations.

However, Ishihara's plans for the Tokyo municipal government to take over the islands and eventually build security outposts there forced the Japanese government's hand. Facing domestic political pressure to secure Japan's claim to the islands, the government determined that the "nationalization" of the islands was the least contentious option. By keeping control over construction and landings, the central government would be able to keep up its side of the tacit agreement with China on managing the islands.

China saw Japan's proposed nationalization as an opportunity to exploit. Even as Japan was debating what action to take, China began stirring up anti-Japanese sentiment and Beijing tacitly backed the move by a group of Hong Kong activists in August to sail to and land on the disputed islands. At the same time, Beijing prevented a Chinese-based fishing vessel from attempting the same thing, using Hong Kong's semi-autonomous status as a way to distance itself from the action and retain greater flexibility in dealing with Japan.

As expected, the Japanese coast guard arrested the Hong Kong activists and impounded their ship, but Tokyo also swiftly released them to avoid escalating tensions. Less than a month later, after Japan's final decision to purchase the islands from their private Japanese owner, anti-Japanese protests swept China, in many places devolving into riots and vandalism targeting Japanese products and companies. Although many of these protests were stage-managed by the government, the Chinese began to clamp down when some demonstrations got out of control. While still exploiting the anti-Japanese rhetoric, Chinese state-run media outlets have highlighted local governments' efforts to identify and punish protesters who turned violent and warn that nationalist pride is no excuse for destructive behavior.

Presently, both China and Japan are working to keep the dispute within manageable parameters after a month of heightened tensions. China has shifted to disrupting trade with Japan on a local level, with some Japanese products reportedly taking much longer to clear customs, while Japan has dispatched a deputy foreign minister for discussions with Beijing. Chinese maritime surveillance ships continue to make incursions into the area around the disputed islands, and there are reports of hundreds or even thousands of Chinese fishing vessels in the East China Sea gathered near the waters around the islands, but both Japan and China appear to be controlling their actions. Neither side can publicly give in on its territorial stance, and both are looking for ways to gain politically without allowing the situation to degrade further.

Political Dilemmas in Beijing and Tokyo

The islands dispute is occurring as China and Japan, the world's second- and third-largest economies, are both experiencing political crises at home and facing uncertain economic paths forward. But the dispute also reflects the very different positions of the two countries in their developmental history and in East Asia's balance of power.

China, the emerging power in Asia, has seen decades of rapid economic growth but is now confronted with a systemic crisis, one already experienced by Japan in the early 1990s and by South Korea and the other Asian tigers later in the decade. China is reaching the limits of the debt-financed, export-driven economic model and must now deal with the economic and social consequences of this change. That this comes amid a once-in-a-decade leadership transition only exacerbates China's political unease as it debates options for transitioning to a more sustainable economic model. But while China's economic expansion may have plateaued, its military development is still growing.

The Chinese military is becoming a more modern fighting force, more active in influencing Chinese foreign policy and more assertive of its role regionally. The People's Liberation Army Navy on Sept. 23 accepted the delivery of China's first aircraft carrier, and the ship serves as a symbol of the country's military expansion. While Beijing views the carrier as a tool to assert Chinese interests regionally (and perhaps around the globe over the longer term) in the same manner that the United States uses its carrier fleet, for now China has only one, and the country is new to carrier fleet and aviation operations. Having a single carrier offers perhaps more limitations than opportunities for its use, all while raising the concerns and inviting reaction from neighboring states.

Japan, by contrast, has seen two decades of economic malaise characterized by a general stagnation in growth, though not necessarily a devolution of overall economic power. Still, it took those two decades for the Chinese economy, growing at double-digit rates, to even catch the Japanese economy. Despite the malaise, there is plenty of latent strength in the Japanese economy. Japan's main problem is its lack of economic dynamism, a concern that is beginning to be reflected in Japanese politics, where new forces are rising to challenge the political status quo. The long-dominant Liberal Democratic Party lost power to the opposition Democratic Party of Japan in 2009, and both mainstream parties are facing new challenges from independents, non-traditional candidates and the emerging regionalist parties, which espouse nationalism and call for a more aggressive foreign policy.

Even before the rise of the regionalist parties, Japan had begun moving slowly but inexorably from its post-World War II military constraints. With China's growing military strength, North Korea's nuclear weapons program and even South Korean military expansion, Japan has cautiously watched as the potential threats to its maritime interests have emerged, and it has begun to take action. The United States, in part because it wants to share the burden of maintaining security with its allies, has encouraged Tokyo's efforts to take a more active role in regional and international security, commensurate with Japan's overall economic influence.

Concurrent with Japan's economic stagnation, the past two decades have seen the country quietly reform its Self-Defense Forces, expanding the allowable missions as it re-interprets the country's constitutionally mandated restrictions on offensive activity. For example, Japan has raised the status of the defense agency to the defense ministry, expanded joint training operations within its armed forces and with their civilian counterparts, shifted its views on the joint development and sale of weapons systems, integrated more heavily with U.S. anti-missile systems and begun deploying its own helicopter carriers.

Contest for East Asian Supremacy

China is struggling with the new role of the military in its foreign relations, while Japan is seeing a slow re-emergence of the military as a tool of its foreign relations. China's two-decade-plus surge in economic growth is reaching its logical limit, yet given the sheer size of China's population and its lack of progress switching to a more consumption-based economy, Beijing still has a long way to go before it achieves any sort of equitable distribution of resources and benefits. This leaves China's leaders facing rising social tensions with fewer new resources at their disposal. Japan, after two decades of society effectively agreeing to preserve social stability at the cost of economic restructuring and upheaval, is now reaching the limits of its patience with a bureaucratic system that is best known for its inertia.

Both countries are seeing a rise in the acceptability of nationalism, both are envisioning an increasingly active role for their militaries, and both occupy the same strategic space. With Washington increasing its focus on the Asia-Pacific region, Beijing is worried that a resurgent Japan could assist the United States on constraining China in an echo of the Cold War containment strategy.

We are now seeing the early stage of another shift in Asian power. It is perhaps no coincidence that the 1972 re-establishment of diplomatic relations between China and Japan followed U.S. President Richard Nixon's historic visit to China. The Senkaku/Diaoyu islands were not even an issue at the time, since they were still under U.S. administration. Japan's defense was largely subsumed by the United States, and Japan had long ago traded away its military rights for easy access to U.S. markets and U.S. protection. The shift in U.S.-China relations opened the way for the rapid development of China-Japan relations.

The United States' underlying interest is maintaining a perpetual balance between Asia's two key powers so neither is able to challenging Washington's own primacy in the Pacific. During World War II, this led the United States to lend support to China in its struggle against imperial Japan. The United States' current role backing a Japanese military resurgence against China's growing power falls along the same line. As China lurches into a new economic cycle, one that will very likely force deep shifts in the country's internal political economy, it is not hard to imagine China and Japan's underlying geopolitical balance shifting again. And when that happens, so too could the role of the United States.

Lack of Trust, Volatile Context and Strategic Shift jeopardize China-US Military Relations' improvement

Chief of Staff of the US Army George Casey (L) and Ge Zhenfeng, China’s People’s Liberation Army (PLA) Deputy Chief of the General Staff salute during the US national anthem during a welcome ceremony at PLA Headquarters in Beijing on 20 August 2009. China called on the United States to reduce and eventually halt air and sea military surveillance close to its shores.

Πηγή: Diplo News

By Charles Rault
August 28 2012

Cai Yingting, a Deputy Chief of the general staff of the People's Liberation Army (PLA) of China, arrived in the United States Monday for an official visit. He met with U.S. Deputy Secretary of Defense Ashton Carter at the Pentagon. In separate talks, he also met with Admiral James Winnefeld, Vice Chairman of the Joint Chiefs of Staff, and General Lloyd Austin III, the U.S. Army's Vice Chief of Staff.

Cai's visit took place as tensions have grown over the increase in military relations between the United States and a number of countries in the Asia-Pacific area, South Korea (ROK) and Japan in particular. In July, a short report published by the Chinese Ministry of Defense explained that "the US uses military exercise diplomacy to accelerate its eastward shift of strategic focus," and that the Obama administration has taken the initiative of this new approach that shifts America's strategic focus eastward. It further listed the multiple joint trainings and joint exercises carried out by the US in the region, in addition to RIMPAC 2012which drew much attention from Chinese officials.

The report reads that "in Northeast Asia, there was the US-ROK "Key Commitment" joint exercise and the US-Japan-Australia "Against North" joint military exercise; in the waters of the Yellow Sea, the US and the ROK held a joint anti-submarine training; in the South China Sea area, the US and the Philippines held the "Shoulder to Shoulder" joint military exercise; in Southern Asia, there was the "Cobra Gold" joint military exercise held by seven countries including the US, Thailand, the ROK and Japan, as well as the "Malabar" joint military exercise held by the US and India," And for the report to conclude bluntly that these military exercises have highlighted US deployed intention to realize the "stability under the US rule", and transform the 21st century into a "Pacific Century of the United States."

In such a context, Cai's statements seem optimistic since he has told his counterparts at the Pentagon that China and the United States have made key and positive progress in developing bilateral relations since the Obama administration came to power in 2009. "The top leaders of the two countries, President Barack Obama and President Hu Jintao, have reached important consensus to establish a new type of big power relations," he said. Yet it appears that both Chinese leadership and state media suspect President Obama of flexingmuscles in Asia with a view to strengthening his national security leadership while running a campaign for a second term at the White House.

At least, the United States' stance is clear and the shift China interprets as a long-term threat has been overtly and publicly supported both by the White House and by the US Department of Defense. The US Defense Strategic Guidance of January 2012 pointed out South Asia, along with the Middle East, as the "primary loci" of the threats which challenge US national security. Hence the "necessity" to "rebalance toward the Asia-Pacific region", the Guidance reads (PDF, p. 2); and the expansion of US "networks of cooperation with emerging partners" in the region. The Philippines, Singapore, Thailand and Vietnamare these emerging partners which have particularly intensified their military relations with the United States for the last months.

China has responded to the US strategy by running a state media campaign which denounces the "illegal" aspects of parts of US cooperation with allies like Japan and by pointing an accusing finger at the deploying of more military forces which "goes against the world's pursuit of peace." Also, it has been closing ranks with Russia by setting the stage for expanded military cooperation through a six-day joint military drill in April and the praise of Russian military technologies which is "gradually narrowing the gap with the military equipment of the US-led NATO."

Despite China's affirmation of "positive progress", Cai and his American counterparts acknowledge that much remains to be done for the two countries to enjoy mutual trust and concrete cooperation between their armed forces. Cai justified the need for "concrete efforts" by the "US arms sales to Taiwan" and what Beijing perceives as threats against China's sovereignty and security like the possible application of the 1960 US-Japan Treaty of Mutual Cooperation and Security to Diaoyu Islands which are the scene of a mounting diplomatic confrontation between China and Japan.

US Defense Secretary Leon Panetta is expected to visit China next month.

Japan, China to Help Europe Solve Crisis Via IMF, Azumi Says

Japanese Finance Minister Jun Azumi

Πηγή: Bloomberg
By Toru Fujioka
Feb 19 2012

Japanese Finance Minister Jun Azumi said his nation and China will work together to help Europe solve its debt crisis through the International Monetary Fund.

Europe needs a bigger so-called firewall of added funding to contain the crisis, even as Greece shows some improvement in solving its financial woes, Azumi told reporters in Beijing today after meeting Chinese Vice Premier Wang Qishan. Azumi, who met Chinese Finance Minister Xiu Xuren during his visit, also said he asked China to make its currency more flexible.

“We shared the view that Europe needs to make more efforts to create a bigger firewall,” Azumi said. “We also agreed to act together as the IMF will probably ask the U.S., Japan and China” to help boost its lending capacity.

The IMF proposed last month to boost its lending funds by as much as $500 billion to insulate the global economy against any deterioration of Europe’s sovereign crisis. That would be similar to a G-20 decision in April 2009 to triple the fund’s resources as part of plans to pull the world out of recession. At that time, the U.S. and Japan each contributed $100 billion, the EU $178 billion and China $50 billion.

“Showing China and Japan are united to support the debt crisis is good news for European markets,” Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo, said before today’s meeting. “It may still take some time for the two to decide specifics as Europe hasn’t reached agreement on a solution within the region.”

China Involved

China is willing to get “more deeply” involved in resolving Europe’s debt crisis, and the continent must send a clearer message to show how it’s working to strengthen its finances, Premier Wen Jiabao said at a joint press conference on Feb. 14 in Beijing with EU President Herman Van Rompuy.

China should expand the flexibility of the yuan now that investors are divided over the prospects for the currency’s appreciation, said Wu Xiaoling, a former deputy governor at the People’s Bank of China.

“The uncertainties in global financial markets present opportunities for the yuan’s exchange rate reform,” Wu said at a financial forum in Shanghai yesterday. “China should take the opportunity to make full use of the current trading band and improve flexibility in the yuan.”

Little Movement

While China allows its currency to trade 0.5 percent against the U.S. dollar on either side of the reference rate, the yuan hasn’t moved more than 0.15 percent from the fixing this month, data compiled by Bloomberg show.

Expectations for a fall in the Chinese currency’s value have reversed, with non-deliverable forward contracts now forecasting no change or some appreciation, the central bank said in its quarterly monetary policy report posted on its website on Feb. 15.

The meeting of world’s second- and third-largest economies follows China’s decision yesterday to cut the amount of cash that banks must set aside as reserves after Europe’s debt crisis and a cooling property market threaten economic growth. Euro- area finance chiefs are slated to meet tomorrow to consider a 130 billion-euro aid package for Greece.

Reins Loosen

China’s Reserve requirements will fall by 50 basis points effective Feb. 24, the People’s Bank of China said on its website last night. Before that move, the ratio for the nation’s largest lenders stood at 21 percent.

The yuan strengthened 0.04 percent to close last week at 6.2991 per dollar in Shanghai, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards rose 0.17 percent to 6.2845 in Hong Kong, a 0.2 percent premium to the spot rate.

China’s Wen and Japanese Prime Minister Yoshihiko Noda agreed in December to promote direct trading of yen and yuan without using dollars and to encourage the development of a market for the exchange, to cut costs for companies.

Japan has applied to buy about $10 billion of Chinese bonds, a Japanese finance ministry official said today in Beijing. Japan aims to begin buying the bonds soon, he said, speaking on condition of anonymity because of ministry policy.

The European Union wants Group of 20 nations to pledge more resources to the International Monetary Fund to fight the global financial crisis, according to a planning document prepared for a Feb. 25-26 meeting of G-20 finance chiefs and central bankers.

“Japan and China are prepared to support the IMF’s important role in addressing the European sovereign debt crisis, on the basis of further efforts by the EU and Euro area members and in cooperation with G20 and IMF members,” according to a statement issued by the Japanese finance ministry after Azumi and Wang met.

Japan Protests China's East China Sea Gas Drilling

Πηγή: Natural Gas Asia

By AP

Feb 1 2012

Japan has accused China of unilaterally exploring gas deposits in the East China Sea, in violation of an agreement to jointly develop disputed areas.

Chief Cabinet Secretary Osamu Fujimura told reporters Wednesday that Japan protested to China after a flare was seen Tuesday at a Chinese structure at an undersea gas deposit. Japan has made similar complaints several times in the past.

"We have detected a flare, a sign that it is highly likely that there is a gas development going on," Fujimura said. "Any unilateral exploration is unacceptable."

The deposit, known as Kashi in Japan and Tianwaitian in China, sits near a median line of the two countries' overlapping exclusive economic zones.

Japan and China agreed in 2008 to suspend unilateral digging in that field while continuing talks, but talks have stalled since 2010, following a diplomatic spat stemming from a maritime collision near disputed southern islands claimed by both countries, as well as Taiwan.

Fujimura said China's activity around the disputed field violates the agreement.

A Foreign Ministry official in charge of China affairs said later Wednesday that Beijing justified its activity, repeating its claim that China has sovereignty over the area.

Days earlier, Beijing accused Tokyo of naming a group of uninhabited southern islands in nearby waters that both countries claim.

Four of the islands are in the disputed Senkaku, or Diaoyu, chain in the East China Sea. The islands, also claimed by China and Taiwan, have been a flashpoint in diplomatic relations.

Beijing said Tokyo's naming attempt is "illegal and invalid," the ministry official said on condition of anonymity because of sensitivity of the issue. Tokyo responded by saying the islands are an integral part of Japan.

Japan's Cabinet Office has said it will use the names for new maps, adding that the islets are within Japan's established exclusive economic zone and will not change any maritime boundaries.

The islands are surrounded by rich fishing grounds and are regularly occupied by nationalists from both sides.

Japan and China have often quarreled over the islands, the contested gas fields and lingering animosity over Japan's occupation of China in much of the first half of the 1900s.

Focus of Russia's resource diplomacy may shift to Far East

Πηγή: Asia News Network
By The Yomiuri Shimbun

Jan 28 2012

The Republic of Sakha, also known as Yakutia, in eastern Siberia is the coldest inhabited area on Earth, with the mercury sometimes dropping to minus 50 deg C.

It also is home to the gigantic Chayanda gas field, located within the taiga biome of coniferous forests. The field has an estimated 1.24 trillion cubic metres of recoverable gas reserves, equal to 13 years of Japan's imports of natural gas.

A project will get under way this year to lay a 3,000-kilometer pipeline from the Chayanda field to Vladivostok in the Russian Far East.

"When the pipeline is completed, we'll be able to meet any supply requirements for gas from Japan, China and South Korea," Vladimir Vasilyev, deputy executive director of a subsidiary of state-run gas corporation Gazprom, said proudly.

In preparation for the full-scale start of gas exports from Siberia to Asian countries, a Japan-Russia joint project is under way to construct a liquefied natural gas plant in Vladivostok.

Following feasibility studies scheduled to be completed this month, work will begin on basic design of the plant, with an eye to beginning operations around 2020.

A senior Gazprom official said the plant will "serve as an LNG supply center for not only Japan but all of Asia".

Construction of the huge pipeline extending to Vladivostok from the gas field is a national project promoted by Prime Minister Vladimir Putin as an embodiment of his Asian strategy. Putin is considered certain to win Russia's upcoming presidential election in March, returning him to his former post.

Putin will try to maintain economic growth, an indispensable element in achieving a stable administration. So there is a strong possibility he will shift the focus of his diplomacy to Asia, a growth center of the world. The best weapon in this regard is natural resources.

"It sounds like an interesting idea," Putin reportedly said last August when he was briefed by an executive of the country's oil and gas industry about a plan to build a pipeline linking Sakhalin in the Russian Far East with Japan, where there were concerns about energy shortages in the aftermath of the Great East Japan Earthquake.

The president of a Japanese development company involved in the pipeline plan said, "We think Russia will surely go ahead with the project if arrangements are made by the Japanese side."

Putin is calling for Japan to also participate in the Chayanda development project.

Russia has been edging into the Japanese energy market in recent years. Russia accounted for 4.3 per cent of Japan's gas imports in 2009, but this percentage doubled to 8.6 per cent in 2010. Russia also provided 7 per cent of Japan's crude oil imports in 2010.

Putin will pursue natural resource diplomacy toward Tokyo. Joining Russian projects would provide a good chance for Japan to acquire resources and development rights, but there is also the danger that its energy security will be influenced by Russia.

Many in Japan have a strong aversion to relying too much on Russia, as the two countries have long been at odds over four Russian-held islands off Hokkaido.

According to diplomatic sources, opinions are divided on the matter within the Japanese government, with some favouring more cooperation with Russia to break away from its heavy reliance on the Middle East. Others feel Japan should not rely on Russia for more than 15 percent of its energy imports. Hence Japan's stance on the matter has not been decided.

Gazprom's head office in Moscow has a control centre to supervise all its pipelines. On a map of the Eurasian continent displayed on a huge screen, the European portion glitters with brilliant fluorescent colours indicating its extensive network of pipelines. The Far East and Siberian side remains dark.

Putin's ambition is to brighten the entire map.

The Trans-Pacific Partnership and the Rise of China

Obama’s Trade Representative Ron Kirk informed U.S. Congress on December 14th, 2009, that the President “intends to enter into negotiations of a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement with the objective of shaping a high-standard, broad-based regional pact.”

Πηγή: Foreign Affairs
By Bernard K. Gordon

Nov 7 2011

On October 14, in a speech to the Economic Club of New York, U.S. Secretary of State Hillary Clinton heralded the United States’ so-called pivot toward Asia, announcing, “The world’s strategic and economic center of gravity is shifting east.” Her remarks were part of a recent U.S. effort to reaffirm the United States’ role as a Pacific power, a response to worries among Asia-Pacific states about the rise of China and the United States’ long-term commitment to the region. U.S. President Barack Obama will reinforce this message later this month when he visits several Asian capitals and hosts the Asia-Pacific Economic Cooperation forum in Hawaii. Central to this regional policy is trade: with Congressional approval of the U.S.-Korea Free Trade Agreement now behind him, Obama seeks to cement the United States’ economic role in Asia by finalizing the Trans-Pacific Partnership agreement, a free trade pact currently being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam.

When the negotiations are completed, the TPP agreement will bring most import tariffs on trade within the group to zero over a ten-year period. In addition to the merchandise traditionally included in previous such pacts, the TPP will cover services, intellectual property, investments, and state-owned enterprises, among other areas. Given its expansiveness, U.S. Trade Representative Ron Kirk has touted it as a “twenty-first century” agreement that will lead to a flourishing of regional trade.

But if the TPP were to remain as it is presently constituted -- without Japan’s inclusion -- the agreement would not be the economic boon many hoped it would. The TPP group accounts for only six percent of U.S. trade, about the same fraction as U.S. trade with Japan alone. Japan is a major importer of U.S. goods and services, and particularly of expensive advanced-technology products, such as jet engines, numerically controlled machine tools, and biotechnology products. And in contrast to the U.S. trade deficit with China, which is rising sharply, the trade imbalance with Japan is declining steadily. Washington understands all this, and has called for broadening the TPP to include Japan. Clayton Yeutter, a former U.S. trade representative, and the international trade lawyer Jonathan Stoel recently wrote in the Wall Street Journal that with Japanese participation, “trade in the Asia-Pacific region will explode. It could easily triple or quadruple.”

The United States was not always so bullish on trade with Japan. The idea of a U.S.-Japanese free trade agreement was first proposed by U.S. ambassador to Japan Mike Mansfield in the late 1980s, but, given fears about Japanese economic supremacy, few in the United States gave the idea serious consideration. Tokyo dismissed it as well, mainly because its economic outlook at the time centered on global multilateral trade rather than on regional trade agreements.

All that has now started to change. U.S. Deputy Secretary of State William Burns said in Tokyo in October that the United States would “welcome Japan’s interest in the TPP, recognizing of course that Japan’s decision to pursue joining will be made based on its own careful considerations of its priorities and interests.” For its part, Tokyo seems ready to join the talks. Japanese entry has been on the table since October 2010, when then Prime Minister Naoto Kan and his foreign minister, Seiji Maehara, both endorsed it. Of course, all trade issues were put on hold in March 2011 by the triple disasters of earthquake, tsunami, and nuclear meltdown. But Tokyo spent recent months testing the waters, and Prime Minister Yoshihiko Noda is expected to announce this week that Japan will join the negotiations.

Japan’s new interest in the TPP stems from three factors. First is the fear generated by the U.S. free trade agreement with South Korea. Japan’s export industry has long been worried about near-identical Korean products in foreign markets, and Seoul’s access to U.S. consumers will only grow once the pact is implemented.

The second element is the declining political clout of Japanese agricultural interests. This group was long opposed to a free trade agreement with the United States because it feared that Japan’s small-scale and highly protected farmers would be overrun by lower-priced imports. But agriculture now accounts for less than 1.5 percent of Japan’s GDP, which has also meant a sharp decline in farm-related employment. The need to rebuild the economy in the wake of the March disasters amplified calls for reform of Japan’s outdated farming sector. This has eased the way for Japan’s exporters, led by the business federation Keidanren, to step up their pro-trade agenda.

The final factor is China’s new foreign policy assertiveness. An early sign was Beijing’s revival, in 2010, of claims to islands in the South China Sea, an issue that has roiled relations between China and its neighbors since the mid-1990s. In 2002, China and its neighbors in the Association of Southeast Asian Nations agreed to resolve the claims multilaterally, but China later insisted on dealing bilaterally with each neighbor. China’s foreign minister argued at the time, “China is a big country and other countries are small countries, and that’s just a fact.”

Japan bore the brunt of Chinese belligerence in September 2010, when a Chinese fishing trawler rammed one of its coast guard boats. When Japan arrested the trawler’s captain, Beijing demanded that Japan apologize and release him, and it stopped exports to Japan of crucial rare-earth minerals. Maehara, then foreign minister, called China’s reaction “hysterical”; now a central player in the Noda government, he is among Japan’s most popular politicians. In a recent speech in Washington, reflecting Tokyo’s assessment, he expressed worries about how China’s rise “alters the power balance of the game in the region.”

Such statements show that Japan has come a long way from where it was in 2009, when former Prime Minister Yukio Hatoyama urged Japan to integrate more with Asia and to adopt a policy of “equidistance” between Beijing and Washington. The Noda government has instead reinforced its already close ties with Washington, and many Japanese now argue that Japan must join in the booming transpacific trade to escape the economic doldrums of the past two decades. “Japan should harness the energy of the Asia-Pacific region,” Noda said at a Democratic Party of Japan meeting in August, “and use it for economic recovery.”

The U.S. ambassador in Tokyo, John Roos, recently remarked that Japan’s inclusion in the TPP would be a “game changer.” He is right. A transpacific trade agreement with Japan on board would be a victory for the principle of an open international system. Moreover, as an adviser to Prime Minister Noda stated earlier this month, Tokyo joining the TPP talks would help it “consolidate a strategic environment that gives China the impression that Japan is a formidable country that can’t be intimidated.” Nations of the region need not succumb to the inevitability of a Pacific dominated by China. A Trans-Pacific Partnership composed of Japan, the United States, Australia, and the group’s smaller economies represents a healthier alternative -- one that realists would recognize as a step toward a classic balance of power.