Sino-Japanese relations fell to another low-point after China’s Vice Premier Wu Yi cancelled a scheduled meeting on May 23 with Japanese Prime Minister Junichiro Koizumi and flew home.

The initial excuse given by the Chinese government for Wu’s abrupt departure from Japan was that “emergency duties” required her to return to China. The following day, however, the Chinese Foreign Ministry confirmed the cancellation was to protest Koizumi’s announcement on May 16 that he would visit the Yasukuni shrine, despite Chinese and South Korean opposition.

Fourteen of Japan’s World War II leaders who were convicted and executed for war crimes are symbolically interred at the shrine. China and South Korea condemn official Japanese government visits to the shrine as honouring the wartime regime that was responsible for horrific atrocities against the Chinese and Korean people in the 1930s and 1940s.

The planned meeting between Koizumi and Wu was regarded as a step towards repairing bilateral relations following angry anti-Japanese protests in China in April. The demonstrations erupted over Tokyo’s bid for a permanent UN Security Council seat and official approval of history textbooks in Japan whitewashing its wartime record.

The meeting had been requested by China to discuss Japan’s expansion of a list of Chinese cities whose residents would be eligible for a Japanese tourist visa. But the logic of the nationalist politics being promoted by both sides, particularly by the Koizumi government, has obstructed any reconciliation.

Since coming to power in 2001, Koizumi has deliberately stirred up right-wing nationalist sentiment to divert growing social tensions within Japan, undermine the opposition to militarism and create a social base for a more aggressive Japanese foreign policy in North East Asia and internationally.

Following the approval of revisionist textbooks, Koizumi’s government pushed through the renaming of a national holiday on April 29 to honour the wartime Japanese Emperor Hirohito, as well as reiterating plans to visit the Yasukuni shrine.

Defending a visit, Koizumi arrogantly lectured his critics by quoting the ancient Chinese philosopher Confucius in a parliamentary committee meeting: “People often touch upon the fact that Hideki Tojo [Japan’s executed wartime prime minister] was a Class-A war criminal. But it was Confucius who said, ‘condemn the offense, but pity the offender.’”

Some members of the ruling Liberal Democratic Party (LDP) this month publicly argued for the full rehabilitation of the war criminals interred at the Yasukuni shrine. LDP lawmaker Masahiro Morioka declared that the 14 men, including Tojo, “should no longer be treated as criminals in Japan”.

Morioka, a parliamentary secretary for the Ministry of Health, Labour and Welfare, stated that Japan had apologised “enough” for its wartime aggression in Asia. “The notion that the victor is right and the loser is evil is wrong, and we have no reason to apologise,” he said.

Koizumi was not prepared to openly support these calls at this stage, commenting only that the status of the 14 was “a matter that already been settled” by the war crimes tribunals after 1945.

Even more provocatively, the Koizumi government chose, during Wu’s eight-day visit, to register 20 Japanese citizens as “permanent residents” of Diaoyu Island—claimed by both Japan and China. The move was intended to strengthen Japan’s claim to the uninhabited rocky islets that would greatly expand its maritime exclusive economic zone. Tokyo has also named citizens as residents of another uninhabited island—Dokto Island—currently controlled by South Korea.

Koizumi’s actions have forced the Chinese regime to react. Over the past decade-and-a-half, as its free market policies creates ever greater social inequality, Beijing has increasingly resorted to nationalist appeals to divert class tensions and create a base of support among layers of the urban middle classes. The blatant apologies for Japanese war crimes have provided an easy target for whipping up chauvinist outrage. Beijing gave tacit approval to the anti-Japanese protests in April.

Now, however, the patriotic extremists spawned by Beijing are criticising the regime for being “too soft” on Japan. According to an unnamed Chinese official cited by the Asahi Shimbun on May 26, the government was sufficiently so concerned about the domestic reaction to Koizumi’s remarks over the Yasukuni shrine that it cancelled Wu’s meeting.

“The central party leadership decided that resistance [protests] would have arisen in China if she [Wu] had met Koizumi while it was clear that no progress would be made on the Yasukuni issue,” the source claimed.

Tokyo’s response was not to downplay the cancelled meeting, but to condemn China and aggravate the situation. Japan’s Foreign Minister Nobutaka Machimura, told reporters: “There is not even a word of apology over the sudden cancellation. Such things go against international manners.” Koizumi angrily told journalists on May 23 that he felt “no need to meet someone who doesn’t want to do so.”

The largest Japanese daily, the right-wing Yomiuri Shimbun, publicly blamed China for deteriorating relations in an editorial on May 25. The newspaper listed Wu’s actions, the intrusion of a Chinese submarine into Japanese waters last year and the anti-Japanese protests and demanded an apology from Beijing. It defended Koizumi’s visit to the Yasukuni shrine, stating that it was a domestic issue and “should never be settled through interference by another country”.

Concern over economic consequences

The deepening diplomatic tensions are provoking concerns in both countries over the economic consequences of a rift between Beijing and Tokyo. The Chinese leadership is seeking to avoid any pull-out by Japanese corporations as a significant proportion of the country’s economic growth is dependent on Japanese investment.

A survey conducted by Tokyo-based Teikoku Databank of 6,906 Japanese companies noted that after the anti-Japanese protests in April, two thirds expressed concerns over making investments in China. Among companies preparing to invest in China, 30 percent said they were now reconsidering their plans.

Wu, a top Chinese economic official, was in Japan mainly to urge Tokyo to start negotiations on a bilateral trade agreement. While for political reasons her meeting with Koizumi was cancelled, she attended a luncheon with the Nippon Keidanren (Japan Business Federation) before leaving the country. She called for “peaceful coexistence with Japan, friendship stretching to our future generations, cooperation and joint development”.

Japanese business leaders view the strained relationship between Tokyo and Beijing as a grave threat to their commercial interests. The profitability of many Japanese companies is largely bound up with their exports of capital goods to China, fuelled by the boom in manufacturing based there.

Nippon Keidanren is Japan’s most powerful corporate lobby, representing over 1,300 companies. It is headed by the presidents of Toyota, Nippon Steel and Toshiba—all of which have invested billions of dollars into China. Hiroshi Okuda, the chairman of the Keidanren and Toyota Motors, publicly urged Koizumi to put “national interests” above his “personal judgment” in deciding on a visit to the Yasukuni shrine.

A concern in Japanese corporate circles is that Chinese workers in Japanese firms used the protests in April to hold their own demonstrations against low pay and poor conditions. The Chinese regime shares the same fear. It is well aware that, in conditions of deepening social inequality, any protest movement, even a pro-government one, has the potential to trigger a broader movement outside its control. Following the workers’ actions, the anti-Japanese protests were rapidly brought to an end and a number of their key organisers arrested.

Beijing is seeking to encourage Japanese corporations to pressure Koizumi’s government into backing away from the provocative actions. The Chinese government has been working with Japan’s tax agency to establish lower tax rates for Japanese companies operating in China, especially those that import products from parent firms in Japan. It is first time that China agreed to do so with another country’s taxation authorities.

Koizumi is already facing political recriminations in Japan. The opposition Democratic Party of Japan (DPJ), which has generally supported Koizumi in the “war on terror” and other aggressive foreign policies, has condemned the planned visit to Yasukuni shrine for creating a “serious” situation.

The DJP has linked opposition to Koizumi’s unpopular plans to privatise Japan’s postal system with the tensions with China and called for an end to his “tyrannical administration”. DJP head Katsuya Okada declared: “If I become prime minister, I will not visit Yasukuni shrine”.

Even the LDP’s coalition partner, the New Komeito Party, has urged Koizumi to be moderate on the issue of visiting Yasukuni Shrine because Japan is at a crucial stage in negotiations over a permanent seat on the UN Security Council.

These criticisms are purely tactical. Despite opposition from large numbers of Japanese people, both DPJ and Komeito have supported his aggressive foreign policy and right-wing nationalism. Just last month they voted to rename the April 29 holiday in honour of Emperor Hirohito.

There are some signs that Koizumi’s attempts to stir up nationalist sentiment have had an impact among Japanese people. According to an opinion poll in the right-wing Yomiuri Shimbun in mid-May, 85 percent said Koizumi should demand an apology and compensation from China over the anti-Japanese protests. At the same time, however, a survey by Kyodo news agency last week found that 57 percent oppose Koizumi’s visits to the Yasukuni shrine—an increase of 16.9 percent since December.

Based on the experiences of the brutal Japanese wartime regime, there has been a longstanding opposition, particularly in the Japanese working class, to any attempt to revive Japanese militarism and its symbols. These sentiments are reflected in the overwhelming popular opposition to the dispatch of Japanese troops to support the US occupation of Iraq. Now, there are fears that Koizumi’s actions could lead to a military confrontation with China—a possibility that cannot be ruled out. In early May, the Japan Defence Agency confirmed that fighter jets were scrambled 13 times last year to intercept Chinese warplanes allegedly approaching Japanese airspace.