The United States is changing its diplomatic policy with China. The headlines, “The president of U.S. will meet the Dalai Lama” and “China will carry out a reprisal against it,” were seen in the International column of the February 13th issue of the Yomiuri Shimbun. The newspaper said, “In a news conference on Feb. 12th, a spokesman for the Chinese Foreign Ministry clearly requested the U.S. to call off the meeting between President Obama and the 14th Dalai Lama, the spiritual leader of Tibetan Buddhism scheduled for Feb. 18th, saying ‘We urge the U.S. to immediately rectify their erroneous decision right away.’

It appears that the Hu Jintao regime is persisting in their uncooperative attitude during the UN Security council’s conference on additional sanctions over Iran’s nuclear issue keeping matters in abeyance as a counter measure during the exchanges with the U.S. after the US military sales to Taiwan. Specifically, it is highly likely that China will delay the conference on the Iranian issue by sending lower level officials and abstaining from voting in the event the sanction plan comes to a vote.”
A year and a few months have passed since the inaguration of the Obama regime, the first Democratic administration in 8 years. President Obama was inaugurated in the midst of the fund bubble which was created when the U.S. forced other countries to adopt their financial system, thus creating advantages for America as a global standard, which allowed for the marketing of housing loan bonds that, even though funded by subprime loans, were assigned a high grade rating in the market, and sold to the global community. As a result of this, the U.S. succeeded in producing an unprecedented buoyant economy from the collection of money from the world as a center of the financial markets.

Additionally, many funds frequently adopted a “yen-carry trade”, borrowing money in yen with low interest to invest in the fund by exchanging the loans to dollars, and managed business using high leveraged money which was twenty to thirty times as much as their equities funded by the low interest nonrecourse loans. With this leverage, even low yielding financial instruments turned into high yield products for them. They sold these derivatives, which were created by computational finance, to investors throughout the world.

During this period, it was not just the United States and Britain, but China also, who reaped double-digit economic growth. With the success of the Beijing Olympics, China became more confident and all at once dashed up the stairs towards great power. Many said that a new era would be led by the U.S. and China, not the advanced nations. After the Lehman shock in 2008, however, when the curtain opened to reveal the second act, there had been a huge and sudden change on the world stage.

“The greatest economic downturn of the century” became a reality, decline in housing prices made the subprime loans collapse, which led to the collapse of derivatives containing the loans. Then, many funds which had been dealing with the derivatives plunged into bankruptcy along with the banks that had invested in those funds. As a result, governments had to inject funds into many financial institutions.
The US-China relations initiated by the Obama regime which were begun in this “prosperous” situation seemed to enjoy a honeymoon period. The U.S. cannot ignore China because it is the nation which possesses the most US Treasury bonds and has an immensely attractive market comprised of 1.3 billion people. About three years ago, it was reported that China had proposed the idea of splitting the Pacific Ocean from East to West and assuming control of their side of it. The continuing close relations between the U.S. and China gave some credibility that the proposal might become a reality.

　Last October, President Obama, in consideration of China, postponed his meeting with the Dalai Lama who visited the U.S. During the next month (November), he made a round of visits to Asian countries and showed how close China and the U.S. were by staying in China longer than Japan. However, the relation changed after the beginning of this year. Google implying their withdrawal from China was a foreshadowing of this change. Since then, America’s behavior has continuously put China on edge such as the plan to sell weapons to Taiwan, amounting to 6.4 billion dollars, revealed on January 29th and setting a meeting with the Dalai Lama on February 18th. We should think several issues are in background influencing those actions.

One of the issues is the risk of China’s economic bubble bursting. After the Lehman shock, China was one of the fastest to recover from the economic downturn, to have stock prices rise, and begin large public investment. That recovery increased the concern about a property “bubble” such as the sudden price jump in real estate prices. China’s central bank tried to control the bubble by cutting down money in circulation by raising the reserve deposit rate by 0.5 % from February 25th.

The rise of housing prices in the U.S. and Europe from 2000 to the peak in 2006 was remarkable as prices doubled in that 6 year period. However, in the next two years, prices dropped dramatically by more than 30 percent, which led the collapse of the subprime loans. When we look at these last two years, it would seem that market forces have been correcting the previously over inflated property bubble in both Europe and the U.S. On the other hand, the drop of housing prices was not quite as severe in China even after the Lehman shock and is already turning around into an upwards trend. That is to say that, the liquidation of the property bubble in China is likely to happen from now.

This will also restrain the unbelievable speed at which China is rising. After the end of the Cold War, the US’s unilateral domination was expected to continue forever. However, “the 9/11 terrorism incident” damped down their domination. The events of 9/11have resulted in the U.S. continuing fruitless wars in Islamic regions such as Afghanistan and Iraq and in order to form a cordon around the region, the U.S. has focused on mending their relationships with China and Russia.

Meanwhile, during the past 10 years, China has kept military expenditure at more than 10 percent the total of which increases in line with their economic growth. Although the U.S. broke off diplomatic relations with Taiwan when establishing relations with China in 1979, they reestablished relations with Taiwan through enacting the Taiwan Relations Act. The Act clearly showed America’s position, that although they do not recognize Taiwan as a nation, neither will they allow China to invade or annex Taiwan. The U.S. is pursuing a policy of maintaining the military balance between China and Taiwan, and to this end the U.S. has no hesitation to export weapons to Taiwan.

As long as China had diplomatic relations with the U.S., even though China may have the desire to invade Taiwan, invasion was inconceivable because China was inferior to the U.S. in terms of military might and Taiwan had achieved air and naval supremacy. To make up for this inferiority, China has created a threat by setting up intermediate-range ballistic missiles along the coastal region near Taiwan and has carried out military exercises and missile training to deter Lee Teng-hui’s dominance in Taiwan’s presidential election in 1996, which led the U.S. to dispatch aircraft carriers to the Taiwan Strait. However, currently, China’s naval power and air power are strengthened beyond comparison to what they were in the past.

China’s nuclear submarines infest the waters from the Taiwan Strait to the seas close to Japan and they seek to possess their own aircraft carriers. China has also deployed a large number of fourth-generation fighter aircraft giving them air superiority, which surpasses Taiwan’s Air Force. Now, China holds sea and air supremacy.

Against the backdrop of economic strength and military power, China has started to regard itself as a great nation and has become more and more overbearing. The U.S. restored the regional military balance, by exporting weapons to Taiwan and the decision to have a meeting with the Dalai Lama seems to be a message to China as if to say, “It’s still too early for the era led by China and the U.S.”

Hu Jintao who is aligned with the Democratic Party, may be contemplating a reversal and realign himself with the Republican Party. Japan too, must get a firm grip on the current situation. It was fine for Japan to only focus on its economic growth without thinking about national security until the end of the Cold War. Japan should not be over reliant on the U.S. just because it has the Japan-U.S. Security Treaty. The United States, the world’s most powerful country, has become weaker both militarily and economically. Failure by Japan to have a clear understanding of the relationships between the U.S., China, and Japan will lead to irreparable mistakes in the future.

　The other day, Mr. Keihachiro Shimizu, a professor emeritus at Chiba University, sent me his book titled, “The Global Focus on ‘Japanese Civilization’ and its True Worth” I would like to quote a passage from the book, “The Jomon period, Established the Oldest and Most Advanced Civilization.” “Based on the ‘Kojiki’ and ‘The Chronicles of Japan,’(Nihon Shoki) the history of Japan began with the throne of the Emperor Jinmu after the era of Gods and Goddesses and it continues to this day. But recently, the importance of the Jomon period, which was more than ten thousand years ago, has come to the forefront due to new archaeological finds and studies. It has become clear that the bedrock foundation and core components of Japanese civilization were already formed in the Jomon period. Recently, the oldest Jomon ware, used 16.5 thousand years ago, was found in the Oodaiyamamoto ruins in Kanita town, Aomori prefecture.”

“The possibility that a considerably advanced civilization existed in the prehistoric age, owing to the discovery of clay vessels and poles in Sannai-Maruyama ruins, studies of Peterograph, judging from words the ancient people engraved on rocks (see ‘KannahihuminoKai’ by Nobuhiro Yoshida, published by Central Art Co.), and analyses of ‘Hotsumatsutae’(see ‘Hotsumatsutae’ by Zennosuke Matsumoto, published by
the Mainichi Newspaper) seems very possible. In addition, there is a possibility that the Japanese people were already cultivating rice six thousand years ago, based on the fossils of rice found in geological strata of the Jomon period in the Asanebana shell mound in Okayama city.
According to ‘A Study of Japan’s Ancient History of Cereals’ written by Sadaaki Ikata, ‘The ancient people improved rice plants grown naturally and spread the methods of cultivation to the continent as Japonica rice throughout Northeast Asia.’”

“Although the traditional theory says Japan learned rice cultivation from overseas, this is an indication that it was Japan’s original method and the probability is supported by the new findings. Also, Japanese culture and the founding of Shinto, along with the Japanese language, which is a totally independent and unique language, not having any common linguistic groups in the neighboring countries, is a clear indication that Japan’s culture was spontaneously born in Japan, during prehistoric times by the indigenous ethnic group, and was not taught by any other country.

This Godlike spiritual culture should be called the ‘fossil of human civilization.’ Japan is the only country tracing its culture through history from the era of the Gods to the present. Therefore, the Japanese civilization should be treated as ‘a hidden treasure’ and be made much of. As the last civilization preserving its original roots in present day society, it is the last society on Earth that may be able to save the world from the holocaust. Being as such, the Japanese civilization is given such an important ‘mission.’”

　Furthermore, Shimizu said that 21st century should be “Pax Japponica” following the ninetieth century’s “Pax Britannica” and the twentieth century’s “Pax Americana.” Looking at modern history, Japan was the first country to insist on racial equality and became the driving power for ending colonial occupation by the Western nations through the Japanese-Sino War, the Japanese-Russo War, and WWI and WWII, from which a world was created where many countries attained independence and the first black president was elected in the United States. Also, Japan is regarded as the “Galapagos of Civilization” having a mild and livable climate, and surrounded by the sea. The spirit, “respecting peace,” that human beings had, still lives on in Japanese culture.

On the other hand, monotheistic religions born in the desert, in a severe environment, such as Judaism, Christianity, and Muslim, are strict to other religions and cultures. From this influence, the Western countries have repeated war again and again and ended up with nuclear weapons. Now is the “time to get tired of the last war” as written in “Einstein’s predictions,” isn’t it?

The prediction follows, “the world culture begins in Asia and returns to Asia. At that time, we need to go back to Japan, Asia’s high crest. We thank the Gods. For creating such a precious country.” As he said in his prediction, Japanese culture such as: sushi, kimono, flower arrangement, tea ceremony, and hospitability are popular all over the world. The Japanese culture, which has been nurtured in a land which has an advantage in geopolitics, is different from any other culture and the political scientist Samuel Huntington classified Japan as an independent culture in “The Clash of Civilizations and the Remaking of World Order.” The heart of Japanese civilization is the Emperor and the continuation of the same blood line.

Not blaming others unilaterally and thinking that part of the responsibility is in ourselves are features of Japanese culture. China and Korea have kept blaming Japan’s behavior in the last war with using the feather as an underhanded way. As people have a “peaceful mind” at the core of their being, the way that China and Korea manipulate, twist, and shamelessly take advantage of that, makes them look like Westerners thugs pillaging the peaceful Galapagos Islands.

It’s time for the Japanese people to unlearn the attitude of not refuting out of humility. Taking a broad view, we should reexamine history and grab back our self-esteem and confidence. I strongly believe that with that self-esteem and confidence, we could spread the peaceful mentality to others in the world in the 21st century as Pax Japonica, the century of Japan, which would lead to a peaceful world.