China and Japan waltz closer together, signing deals worth $18 billion during Beijing summit

Reporting from Beijing, China —  China’s ceremonial welcome for Japanese Prime Minister Shinzo Abe in Beijing on Friday at the Great Hall of the People would have been out of the question a few years ago.

Chinese protesters in 2012 boycotted Japanese products and smashed cars outside the Japanese Embassy over Tokyo’s move to nationalize disputed islands in the East China Sea.

Two years later, when Abe met Chinese President Xi Jinping on the sidelines of a regional meeting in Beijing, the atmosphere was frigid and the glances awkward.

On Friday, the optics were warmer: Xi and Abe smiled and clasped hands against a backdrop of the flags of China and Japan during the first summit meeting between the leaders of Asia’s two richest economies in seven years. Business deals were signed worth $18 billion.

With both nations facing economic challenges including the Trump administration’s trade tariffs, the summit saw them take a significant step closer to cooperation instead of rivalry — with an invitation extended to Xi to visit Japan next year.

“I believe active trade will deepen ties between the Japanese and Chinese peoples further,” Abe said in a summit that emphasized economic relations, while nudging aside problems involving security and territory.

Xi said China’s relationship with Japan was looking better. He told Abe it was time to shift relations between the neighbors into “a new historic direction” with international “instability and uncertainties growing” — an apparent reference to the trade war.

“Under the new situation, our interdependence with each other has deepened. Also, we are sharing more common interests and concerns in multilateral and wider areas,” Xi said.

“In the past several years, the China-Japan relationship has experienced ups and downs. With the efforts made by both parties, our relationship has been straightened out and come back to a normal track,” Xi said.

Earlier, Chinese Premier Li Keqiang emphasized China’s message that it is continuing to open up its economy to global competition.

“We welcome Japan to take more active participation in the new round of China’s reform and opening-up and continue win-win cooperation,” Li told Abe.

Japan’s fundamental security partnership is with the United States. But Tokyo and Beijing are seeking closer economic ties as U.S. trade affects the regional economy.

Signaling that economic ties were the key to Abe’s three-day visit, he flew in Thursday with a group of about 1,000 business delegates, and the two sides announced Friday that some 500 business deals worth $18 billion had been signed.

Their warming ties come after the Trump administration hit China with tariffs on $250 billion in goods and China retaliated with tariffs on $110 billion in U.S. goods. President Trump has threatened to slap tariffs on an additional $267 billion in Chinese goods by the end of the year.

Japan’s biggest trade partner is China and Japanese companies have massive investments in China, so they face collateral damage from U.S. tariffs on products they manufacture there.

Trump has threatened tariffs on Japan’s auto industry but last month agreed to hold off so that bilateral trade talks can be held. Japan has also seen U.S. tariffs on steel and aluminum.

Some analysts see the trade dispute as marking Trump’s intention to decouple the U.S. economy from China’s, in particular in strategic, high-tech products, a move that has profound implications not only for China’s economy, but also for Japan and other Asian economies.

“There’s no doubt that Trump has helped to push them together, because both feel flummoxed and beaten up by Trump on trade and they have a great economic self-interest on both sides of the Sea of Japan in their economic relationship,” said Richard McGregor, the author of “Asia’s Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century” who is an analyst at the Sydney-based Lowy Institute, a think tank on regional affairs.

“Trump has had a lot of short-term victories on trade, but the long-term impact could be quite corrosive, and this is a prime example of that. If the U.S. is serious about decoupling — in other words, getting core manufacturing capability out of China — then Japan is one of the key countries in that respect, because Japan has enormous investment in China and as a result manufactures many value-added, high-tech goods in China,” McGregor said.

“Are they going to get out [of China] to please Trump because the U.S. taxes certain goods in the supply chain? I think the Japanese don’t have much of an incentive to do that economically.”

Long-standing mistrust, a territorial dispute over islands in the East China Sea and friction in the East China and South China seas have seen years of chilly relations. The relationship hit a nadir in 2012 after Japan bought a group of disputed islands known as the Senkaku in Japan and as the Diaoyu in China from their private Japanese owner.

In recent years, both sides have taken some steps to improve ties, including a Li visit to Japan in May.

But McGregor said it would take more than one summit meeting to fundamentally repair years of tension.

“It could be a historic turning point, but for that to be the case they’ll have to stick at it for a number of years,” he said. “There’s an enormous amount of baggage going back decades.

“That baggage is often added to at different times by the propaganda authorities in China when they want to ramp up animus against Japan. They would have to stop that if there’s going to be a real turnaround in the relationship. Equally the Japanese would have to learn to trust China, which they’re a long way from doing.”

The two sides signed several agreements, including to deepen diplomatic ties, a move to cooperate on maritime search-and-rescue operations and a hotline to avert military clashes in the East China Sea, to make it “a sea of peace, cooperation and friendship.”

The Japanese prime minister’s spokesman, Takeshi Osuga, said Abe told Li that Japan and the rest of the world were watching China closely on human rights issues. China’s detention of about 1 million Muslim minority residents in camps in Xinjiang province has been condemned by rights groups and the United Nations. China portrays the camps as vocational training centers designed to prevent terrorism.

Osuga said closer ties with China did not compromise Japan’s support for universal human rights or its long-standing security relationships.

McGregor said China was also looking for improved ties elsewhere, including with Europe and Australia, after recent tension between Canberra and Beijing.

“China is looking for friends and that also means trying to patch up relations with Australia.” But he said multiple leadership switches in Australia meant that improvements in relations were unlikely before an Australian election due next year.

At Friday’s China-Japan summit, the two sides agreed to work together for the denuclearization of the Korean Peninsula. They agreed to cooperate in finance, trade and innovation. Abe also called on China to strengthen protection of intellectual property, a concern shared by Europe and Washington.

robyn.dixon@latimes.com

Twitter: @RobynDixon_LAT