"China: Competitor or Partner?"

May 22, 2002

Mr. Yotaro Kobayashi
Chairman of the Board, Fuji Xerox Co., Ltd.
Chairman, KEIZAI DOYUKAI (Japan Association of Corporate Executives)

1. Introduction

◆As its economy expands and global status improves at a rapid pace, China is expected to play an increasingly important role on the international stage. In that sense, I agree with Senior Minister Lee that the United States and such a China will come to play "defining roles" in the 21st century.

◆ Against this backdrop, Japan, together with ASEAN countries, would like to actively participate in forming a more comprehensive regional framework, involving not only the United States and China but also themselves.

◆ In my opinion, there are three aspects on which Japan can work to construct such a framework.

2. Taking Advantage of China's Strengths

◆First, while Japan must continue with sweeping structural reforms to revive its economy, some in Japan perceive China's growing strength as a threat, partly because of fear that it will exacerbate the so-called industrial "hollowing out", especially in the manufacturing sector.

◆ We must wait and see how and to what extent each Japanese company leverages China both as a market and production base and whether that will ultimately impact Japan's overall economy.

◆ In addition, China's accession to the WTO means stronger economic ties, but it also increases the probability of a "muddling through" period, when contentions regarding issues such as intellectual property rights and dumping may arise, followed by invocation of safeguard.

◆ I would like to note with some reservation that the trade sanctions within the WTO rules should not always be discouraged as working counterproductively.

◆ I believe that the Japanese private sector should instead take advantage of the perceived Chinese threat in a good sense, using it as a springboard for us to once again create new technologies and products.

◆ The government should play a role in creating an environment where Japan can fully exert its potential and translate it to economic growth by introducing taxation reforms and deregulation.

3. Increased Grass-Roots Human Interaction

◆ Secondly, despite some difficulties entailing Japan's relationship with China and the rest of Asia, I cannot stress enough the importance of continuous human interaction among Asian nations to promote mutual understanding and construct plus sum relationships in the long run.

◆ One way of such human interaction is for Japan to contribute to human resources development in Asia by accepting able individuals from overseas in its universities and corporations.

◆ This will also provide opportunity for Japanese companies to inform our Asian neighbors of Japanese-style stakeholders-oriented management. Such a management style should also be introduced in local Japanese affiliates overseas.

◆ More importantly, we should place much greater emphasis on Asian language education, especially Chinese, as a second most important foreign language after English in Japan to increase greater awareness toward our Asian partners and to foster long-lasting, deep understanding between Japan, Japanese people and the peoples of Asia.

4. Shift Toward a Normal State

◆ Lastly, on the fundamental national identity front, I believe that Japan now needs to move gradually and carefully, but with calmness, toward being a "normal state." I mean normal in all normal senses, but very special in Japan's belief in the value of peace and its responsibility in preserving peace in the world.

◆ And, I personally feel that in recent years our Asian friends have gradually started warming to this idea.

◆ Of course, there are those who oppose it, saying that Japan is yet to earn a place of trust and confidence among people, particularly in Asia, to allow such a shift.

◆ I would like to know what our friends feel and think on the matter, and I would naturally emphasize the importance of our efforts to develop better understanding with friends in Asia on all fronts-economic, social, and cultural-while we pursue the path of becoming a normal state. There is no need to hurry.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.