The post-Cold War geopolitical balance inNortheast Asia has been askew for the last twoyears. While most students of foreign policywould attribute this imbalance to a morenationalistic and assertive Japan, particularlysince Prime Minister Shinzo Abe came to power in December 2012, that is only part of the reasonfor the recent drift away from Japan. Economics and security are beginning to reassertthemselves in the regional calculus, which has begun pushing relationships in unexpecteddirections.

Abe will attempt to use this year’s APEC Leaders Summit to reset relations with several of Japan’sneighbors. While a photo opportunity and a vague public commitment to improve relations mayprovide a mild form of short-term relief, it will do little to address the underlying issues that havebeen gradually transforming the region. Japan’s relationship with each of its Northeast Asianneighbors will not be dramatically altered by one meeting, however hard Abe has been lobbyingover the past few months. Nevertheless, the summit provides an opportunity to see thetransformation the region is currently undergoing.

Japan and China have for the last few decades enjoyed an improving bilateral relationship,underwritten by an economic symbiosis between heavy Japanese investment in China, and cheapChinese labor for Japanese companies. Unfortunately for their relationship, the fundamentals ofthis relationship are beginning to change. While the shift in Japanese investment from China toSoutheast Asia has been attributed in large part to their dispute over the Senkaku/Diaoyu Islandsand China’s insistence that Japan more formally accept responsibility for atrocities committedduring the Second World War, that is only part of the story.

In fact, Japanese investment is moving to areas where labor is cheaper. As China rebalances awayfrom an export dependence to a consumption-driven economy, its labor costs will have to rise tomeet inflation, otherwise the ruling Communist Party of China will likely need to contend withconsiderable unrest.

Another result of China’s economic growth miracle has been its ability to sustain annualdouble-digit increases in military spending for well over a decade. This, more than any other

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factor, has created growing tenisions with Japan, as well as many Southeast Asian countries.China now has the ability to contest disputed airspace and maritime territory with Japan, whichalready has a military comparable in size to France and with substantial surface vessel andsubmarine firepower. The increasing size of both countries’ naval assets, combined with Japan’srecent push to normalize its Self-Defense Forces, have shrunk the East China Sea and, in theabsence of clear protocol and lines of communication, have ramped up the likelihood for conflict.

The relationship between South Korea and Japan has deteriorated over roughly the same timespan, but the reasons for this are more difficult to assess. Publicly Seoul is unhappy with Japan’srecent questioning of the Kono Statement, and argues that Tokyo hasn’t taken full responsibilityfor Imperial Japan’s use of “comfort women” in Korea. There is also the delicate matter of thedisputed Dokkodo/Takeshima Islands, which is a much more volatile and nationalistic issue inSouth Korea than it is in Japan.

However, while these issues have received more media attention over the last few years, they arenot new problems. Abe’s more nationalistic approach certainly does not help matters, yet theseissues obscure the fact that Japan and South Korea are two very similar countries experiencingthe same set of problems. Their rapidly aging populations are creating structural economicfissures that both are attempting to address through government spending. While Japan isfarther along in the process, South Korea is taking largely the same course.

This situation is not drawing them closer together, however, as they compete globally in theautomotive, shipbuilding, and consumer electronics sectors. It is further exacerbated by the factthat South Korea is outperforming Japan in these industries, which leaves Tokyo with less roomto maneuver as Japanese companies seek protection from strong regional rivals.

Finally, there is the specter of increasing Russian influence in the region. As Moscow andWashington continue to spar in Europe over Ukraine, Russia’s once dominant hand in Europeanenergy markets is likely to decline as the U.S. makes Europe a prime target for its new shale gasindustry over the next five years. In response, Russia has already signed a natural gas deal withChina that is highly favorable to Beijing. It is also reviving talk of an underwater pipeline to Japanlinking Sakhalin Island with Japan’s northern island of Hokkaido, which could supply almost 20percent of Japan’s total natural gas imports. Even without the Japanese pipeline, cheaper naturalgas to China could drive down the premium that all of Northeast Asia currently pays.

A greater role for Russia could further offset regional politics, as Japan has shown it is willing tocontinue negotiating with Russia despite Moscow’s continued tensions with the U.S. and EU.

In short, there should be no expectation of a dramatic statement or initiative to improve tiesbetween the region’s leaders at APEC this month. For all of Abe’s well-publicized diplomacy overthe last few months, even a cordial meeting with all three of his regional counterparts will notchange the long-term trajectory of their relationships. A more fundamental realignment of theirinterests will need to take place before that can happen.

Clint Richards is an Associate Editor at The Diplomat.

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