Nor is fear in some Asian quarters — greatly exaggerated, again by foreign observers — of renewed Japanese militarism and Tokyo’s growing strategic alliance with the U.S., a real issue. Japan’s strategic reorirnetation is, largely the direct result of Chinese policy,. That policy, after all, includes an enormous outlay for armaments, concealed by a factor of at least three in official figures. And, of course, Japan — since 1998 — has faced the specter of a North Korea, China’s closest collaborator, which flew unannounced missiles over their islands.

All this comes to mind because Tokyo is resuming its Official Development Assistance [ODA] to China. ODA is international bureaucractic gobbledygook for grants, technological transfers, concessional loans, subsidized private investment, etc. — what we Americans call “aid” — to less developed [UNspeak for backward] countries. Tokyo, for some time, argued China no longer fell into that category and after some $30 billion, it was time to quit.

It’s no secret to Chinese economists Japanese-Chinese trade and investment [an estimated $1.68 billion in 2001 alone] favors Tokyo. True, China-Japan trade has been a considerable factor in Japanese recovery from a decade of stagnation. But the terms of trade favor Japan. Japanese companies outsource high labor content manufacturing to China for sale to Japan and third countries [$20 million in 2002], leaving behind low cost labor payment and high energy and pollution costs to the Chinese. Profit is largely transferred through higher cost Japanese [even Korean manufactures acting as middle man] component imports. And although the Japanese have had their problems [who hasn’t?] with intellectual property rights, Japanese industry is at least for the time being keeping the upper hand in technological development, moving some manufacturing back to Japan with leapfrogging more efficient technology

Chinese leverage — understanding criticality of Japanese investment [along with Taiwan, the U.S., Korea and the Europeans] is absolutely necessary — is limited to political and propaganda manipulation Waving the bloody shirt, theYasukuni campaign has been the loudest and perhaps most effective, ironically, playing on the sensibilities of most Japanese of a new generation and its left-leaning media, extremely susceptible to any reawakening of memories of the horrors perpetrated by Japanese militarists.

Recently, however, Beijing’s tune changed. As with Taiwan where a new campaign, especially with opposition politicians, has turned nicey-nicey replacing bombast which reelected independence-minded President Chen Shui-bian. [Ah! The vagaries of democracy. When Chen’s son was arrested recently on charges of influence peddling and prosecutors threatened Mrs. Chen, Beijing’s controlled media trumpeted accusations of corruption on the Island. The campaign screeched to a halt when a visiting an opposition KMT Taiwan legislator, noted for his pursuit of the scandal, had his speech canceled to students at the University of Beijing hours before he was scheduled. It apparently suddenly occurred to the folks in charge talk about Taiwan democracy exposing possible corruption at highest levels just might have Mainland application.]

Beijing has an out to change its Japan line with Koizumi’s announced withdrawal from politics this fall. A mood change finds Japan agreeing to Yen74 billion [$651 million] in low-interest loans. Beijing permits its foreign minister to talk to his Japanese counterpart ending China’s boycott. A nasty dispute over possible East China Sea gas deposits appears under serious negotiation. Meanwhile, of course, Japanese-Chinese trade [China is now Japan’s No. 1 trading partner] booms along with Japanese investment, even with some Japanese penetration, of Chinese domestic markets; for example, automobiles, a market Europeans thought they had cornered..

Does that mean Chinese-Japanese tension, the two most powerful rivals in the region, is over? Not on your life. Nor is the danger abated long-term. That cliché which never seems to die about booming trading partners never going to war is bogus: take a look, for example, at U.S.-Japanese trade figures in 1940. But it does mean Yasukuni is the phoniest of issues, however much history and bitterness is wrapped up in it for those who remember.

Sol W. Sanders, (solsanders@cox.net), is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International. He writes weekly for World Tribune.com and East-Asia-Intel.com.