Friday, 20 April 2007

Peace In Our Time?

I was attracted to an article in the Economist that reported on a thawing of diplomatic relations between China and Japan (see article). In recent years, relations had not been as cordial as we might have hoped them to be, and the apparent thaw may imply a significant change that will impact upon the future.

In our work, we have come to the conclusion that the relationship between China and the US is highly likely to be the most important relationship for America over the next two decades. This view of the US, however, is not likely to be reciprocated as the most important relationship for China is likely to be that between China and Japan.

Both nations have a contiguous border in the East China Sea and the Yellow Sea. The borders in that area (which has Taiwan at one end and North Korea at the other) are not settled by treaty, and contain islands over which sovereignty is claimed by both nations. A factor that is complicated further by the presence of oil and gas deposits around the disputed territories. In our simulations to 2025, this area is one of the key flashpoints to disrupt the global system.

In recent years, Japan has become a major contributor to the flow of Foreign Direct Investment into China, and China has become an important supplier of manufactured goods to Japan. In our model of globalisation, the development of a harmonious relationship in East Asia is quite an important factor in the further development of the global economy over the next couple of decades.

In our scenarios, the more nationalistic either China or Japan becomes, the more political conflict is likely to prevail. Equally, the more liberal each nation becomes, the more the process of globalisation is strengthened and deepened. If the story does signify a move towards the liberal, this bodes well for us because it diminishes the liklihood of the process of globalisation being derailed.

We shall carefully watch how events unfold in the coming months.

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