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story.lead_photo.caption Chinese President Xi Jinping applauds ahead of delivering a speech at the Boao Forum for Asia Annual Conference in Boao, China, on April 10, 2018. MUST CREDIT: Bloomberg photo by Qilai Shen.

BEIJING -- Chinese economic overhauler Deng Xiaoping traveled to Tokyo exactly 40 years ago this week to mark the signing of the Sino-Japanese Peace and Friendship Treaty, as the two countries attempted to put the memories of wars behind them.

"In the present turbulent situation, China needs friendship with Japan and vice versa," Deng told the Japanese prime minister at the time, between visits to high-tech factories and marveling at Japan's bullet trains.

Fast-forward four decades, and China has overtaken Japan as the world's second-largest economy and is now producing high-speed trains of its own. But the same thoughts may well be running through President Xi Jinping's mind today.

Now, in the middle of an increasingly bitter trade war with the United States, Xi will on Wednesday welcome Japanese Prime Minister Shinzo Abe for their first bilateral meeting in more than seven years.

"For the first time for a very long time, Chinese leaders are looking for a positive relationship with Japan," said Yun Sun, a China expert at the Stimson Center in Washington, D.C. "With [U.S. President Donald] Trump in power, both Japan and China are feeling the heat coming. It changes their calculations," she said.

Xi will host Abe at a reception, attended by about 500 Japanese business leaders, in the Beijing's opulent Great Hall of the People on Wednesday night, for a celebration marking the 40th anniversary of the treaty.

Then they will have a day of meetings Thursday during which they will pledge to work together on economic cooperation projects in third countries such as Thailand. They expected to reach agreements on more than 30 such infrastructure projects.

It's a far cry from 2014, when friction over a group of disputed islands in the East China Sea raised fears the two countries would become involved in a military conflict. Japanese companies pulled out of China in droves, and the two leaders had a famously awkward encounter at a meeting of the Asia-Pacific Economic Cooperation forum, a forum for 21 Pacific Rim countries.

But over the past year, the two countries have started to repair their relationship, at least superficially.

China's foreign minister and premier have both visited Japan this year, and the number of Chinese tourists following suit is expected to reach a record 8 million this year. Japan was the top destination for Chinese travelers during this month's Golden Week holiday, according to travel website

Then there's the Trump factor.

China is eagerly trying to improve economic relations with a raft of rich countries to try to reduce its exposure to the United States, where Trump has imposed tariffs on $250 billion of Chinese imports and is threatening more.

Chinese Premier Li Keqiang just came back from a trip promoting Chinese market access to European companies, while Beijing is redoubling its efforts to forge a trade deal called Regional Comprehensive Economic Partnership. There are even murmurs that China might try to join the Trans-Pacific Partnership, the 11-country trade deal that Trump pulled out of in his first week in office.

Japan, a neighbor and China's second-biggest export market after the United States, is an important part of this diversification effort.

China has been pressing Japanese companies to announce investment plans and deals in China during Abe's visit, and has generally been pushing for an improvement in the relationship to offset the sharp deterioration with the United States, according to people familiar with the preparations.

This appears to be a tactical move, analysts in Tokyo say.

"Is it fundamental and long-lasting? It could just be a tactical move to deflect tensions coming from the U.S., and drive a wedge between the U.S. and Japan," said Narushige Michishita of Japan's National Graduate Institute for Policy Studies.

But Abe's government is happy to go along with it for its own economic reasons. "Prime Minister Abe wishes to elevate Japan-China relations to a new level," a Japanese government official said, asking for anonymity to preview the sensitive visit.

China is already Japan's largest trading partner and more than 30,000 Japanese companies operate there, pumping more than $3.3 billion in direct investment into the country each year -- and the market is only becoming more attractive.

China's middle class now totals about 250 million people, double the population of Japan. That represents a tantalizing opportunity for consumer goods companies in particular.

But Japan is now walking a tricky balancing act. Abe has poured an enormous amount of energy into developing a personal connection with Trump, and the military alliance with the United States is the cornerstone of Japan's security.

Japan is also concerned about becoming collateral damage in the trade war. "We don't want to see this U.S.-China trade issue to damage the international supply chain," the Japanese official said. "Japanese companies also have stakes and could be negatively affected. We hope that dialogue between the U.S. and China will lead to a diplomatic resolution of these issues."

Luna Lin and Akiko Kashiwagi of The Washington Post contributed to this report.

Business on 10/23/2018

Print Headline: Leaders of China, Japan aim to improve ties during visit

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