Strategic trends, namely how relations among the three big powers of the region (China, Japan and the United States) will unfold, will define future developments in East Asia.

China is doing well; it hosted the Olympic Games earlier this year and the world continues to talk about the nation's excellent achievements. Despite the global financial crisis, China is forecasting economic growth of 8 percent for next year. This is a reduction from the current 11 percent, but still a very good achievement considering the circumstances.

Yet the crisis has yet to fully unfold and the extent of its damage remains something of a mystery. For China, global funds and foreign direct investment will be limited and exports will be curtailed because of the deep recessions that developed nations are facing. That is why China's new policies, which will encourage domestic consumption and inject money into the banking system, are very wise.

However, China's internal problems are huge, as Prime Minister Wen Jiabao himself admitted in a recent interview with Newsweek (Oct. 6, 2008). Poverty, a schism between coastal (urban) and inland (rural) populations, demographic and environmental problems (water, climate, desertification, energy, etc.), and how to properly govern with such rapid economic growth are all areas of concern.

The big question for China is how to maintain economic growth, while ensuring political stability and good governance. But the real challenge is preventing future crises: How can China keep its leadership united and not only determine but also enact the right policies for its future? This will require the support of the military and the obedience of local governments and party leaders.

These are big challenges, but the Chinese leadership aptly demonstrated its ability to make positive decisions, with the support of the people, during the dramatic earthquake in Szechuan last May.

They are aware of the problems. On the issue of good governance and the public sphere, they are trying a long-term, gradual approach, starting with elections in villages. The other big challenge is how to keep corruption under control. Questions have been raised as to whether efforts to stem corruption are too slow and tentative, and if the political system will allow a dramatic effort to get rid of such a systemic problem.

For the Chinese leadership, stability is of paramount concern. If the nation is to continue to develop so rapidly, rising demand, unemployment, poverty and inequality must be dealt with.

Rapid growth has become an important source of legitimacy for China's now pragmatic leadership. Socialism has been practically abandoned (except rhetorically) in favor of a nationalist ideology that uses the Confucian tradition as a basis for Chinese identity.

Following several years of tension related to former Japanese prime minister Koizumi's visit to the Yasukuni shrine (which was seen as being extremely insensitive given past imperial ambitions), China has now established more cordial relations with Japan, since, with more US$200 billion worth of bilateral trade annually, both need each other economically.

While it is true that China has not paid sufficient attention to democratic developments in Japan post-World War II and its establishment of peaceful relations in the region and around the world, Japan needs to do more to recognize its past atrocities, including the "Nanking" massacre, and the abuses of Chinese prisoners by the Group 871 in Manchuria, as well as the so-called "comfort" women, with more consistency and openness.

Hopefully, a willingness to study history together and exchange large numbers of youth can slowly overcome prejudices on both sides. Meanwhile, relations between the two peoples have become quite intense: Four million Japanese visit China annually on more than 700 flights between the two countries weekly, more than 250 cities and prefectures have sistership relations and 70,000 Chinese students currently study in Japan.

But trust has to be created on both sides. East Asian regional cooperation organizations have been helping with this, but more could be done.

For Japan, trust will require greater transparency in Chinese policies, especially defense, along with political development toward good governance and pluralism. For China, it is Japan's commiserations on history, especially regarding the period since 1936, that are important.

The writer is vice chair of the Board of Trustees, CSIS Foundation, Jakarta.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia