The new US president will substantially change the geopolitical calculus for East Asia’s two biggest players.

Figurines of G20 country leaders at the 2016 Hangzhou Summit. Photo via Getty Images.

Japan’s foreign policy will now be dominated by the need to maintain positive relations with the US

Prime Minister Shinzo Abe’s November meeting with Donald Trump has been an important first step in building a relationship with the new administrations, and initial contacts with key Trump officials (most notably Michael Flynn, the new national security adviser) have encouraged some in Tokyo to believe that a major bilateral row over defence burden sharing is unlikely. Abe will take some reassurance from initial signs that a number of key former Bush administration Asia hands are being considered for senior level positions, and a tougher US posture on security policy towards China may be an opportunity for closer coordination between Tokyo and Washington.

A key issue to watch for is whether Trump will call for a material and visible Japanese commitment to bolster security in the South China Sea; Abe, for his part, will be looking for an early reassertion of US support for Japan’s strategic interests in the East China Sea and the defence of the Senkaku/Diaoyu islands. In return for such support, Japan may offer the US a commitment to deploy Terminal High Altitude Area Defence (THAAD) missile batteries on Japanese territory, paralleling a similar recent agreement between the US and South Korea, helping in turn to guard against the increased threat from North Korea.

President Trump is unlikely to follow through on his campaign suggestion to push Seoul and Tokyo to develop their own nuclear weapons capabilities. Even if he were, Japan’s deep-seated nuclear allergy (the product of the nuclear bombing of Hiroshima and Nagasaki) makes it inconceivable that any Japanese leader would contemplate agreeing to such a move, even in the face of a de facto nuclear North Korea or a South Korea where public opinion is more amenable to the idea of the South acquiring nuclear weapons.

In the short-term, Japan’s economic prospects have been buoyed by expectations of the Trump administration’s anticipated commitment to deregulation, tax cuts and major infrastructure spending, which could offer new export opportunities for Japanese companies capitalizing on a low yen, facilitated by the rise in US relative interest-rates.

This new optimism, reflected in growth predictions for the Japanese economy of some one per cent (according to the OECD), are offset in part by worries about trade protectionism, particularly as this affects Japanese overseas production facilities in China and Mexico that export to the US market. With the Trans-Pacific Partnership (TPP) almost certainly dead, the Abe government will focus on alternative regional trade deals such as RCEP (Regional Comprehensive Economic Partnership) – a set back for Abe, not only in light of the amount of political capital he invested in TPP, but also given TPP’s anticipated role in offsetting China’s geopolitical influence in East Asia.

Abe’s first overseas visits this year have been to the Philippines, Australia, Indonesia and Vietnam, but he is also pushing for a follow-up meeting with Trump shortly after the 20 January inauguration. In light of the strength of isolationist sentiment among the US electorate, and also with European countries (most notably a post-Brexit Britain), focusing on domestic challenges, some in the Abe administration see the new environment as an opportunity to boost Japan’s role as a advocate of international order and the rule of law, while also acting as a key intermediary between the US and other key Asian partners.

The Trump presidency offers China huge uncertainty, but also great opportunity

China has already experienced Trump’s capricious nature through his telephone call with Taiwan in December. The importance of observing the One China policy and sticking to the narrative of ultimate reunification remains a huge plank of the People’s Republic’s legitimacy and is not something it can bargain away, so it will be dismayed at renewed unpredictability on this issue.

But in some areas, China will be presented with a new leadership role – on climate change, for instance, or global peacekeeping, where it is already the largest contributor to UN forces. China will resist US attempts to dismantle the Iran non-proliferation deal because it does not want to see the Middle East collapse into more disarray, forcing China to play a greater role than it feels prepared for. The Trump administration is also likely to want to force China to unilaterally act on the North Korea issue, despite the latter’s clear desire to try to work within partnerships that include the US and others.

The US under Trump will almost certainly focus on China’s non-convertible currency, and on the lack of market-set conversion rates. It will place pressure on China to devalue, with Chinese policy makers needing to walk a tightrope between this and losing control of a key area of policy.

Xi may choose to address the US’s economic concerns by granting more open access to some of China’s economy in return for a greater role in the security of the region. China desires regional dominance, and there is the chance that a more isolationist, transactional US leadership will create new spaces it can fill, assisted by partners like the Philippines, which is now articulating its self-interest as meaning closer relations with China and less commitment to America. All of this, however, will happen in a context in which domestic US politics will increasingly be tempted to paint China as a threat.

There will also be temptation on the Chinese side to strengthen the appeal of nationalism in order to distract from domestic issues and make clear to Chinese people that their best bet for a good future is to be part of a unified, powerful and rising China under Communist Party rule. While the domestic receipts from this message will obviously suit the Party leadership, the dangers of its misinterpretation to the outside world are high – particularly to a US in which a large number now subscribe to the idea of a China threat, and the notion that China will somehow need to be dealt with economically, and perhaps even in other ways.

One issue on which Beijing is unlikely to hold its breath is Trump’s potentially cosy relationship with Russia. Russia’s economy is one-fifteenth the size of China’s and with the One Belt, One Road initiative, China has shown it can effortlessly move into Russia’s traditional economic sphere. Attempts by the US at triangulation will need to recognize that China is an immensely more important political, economic and trade partner to the US than Russia is, or is ever likely to be.