Managing Bilateral Economic Differences
The 1978 Long Term Trade Agreement between the People's Republic of China & Japan called for a special bilateral relationship between the two countries, but China's market-oriented reforms & internationalization have affected economic relations with Japan. With China's recognition of international economic interdependence, especially within the Asia Pacific region, & China's shift in its mix of goods, labor, & investments, Japan is no longer China's predominant trading partner. Domestic interests in both countries have affected exports, leading to trade friction. A centralized bilateral mechanism has proved to be unfeasible in the face of decentralized market forces. Japan & China have enormous differences in lifestyles, values, decision-making practices, & politics, but these may lessen as China approaches Japan & the West economically. A multilateral, rules-based framework in which Japan participates can facilitate China's integration into the world economy & resolve Sino-Japanese friction. 5 Tables. M. Pflum