Cool heads and warm hearts needed for regional peace and prosperity

It seems ironic that while President Xi Jinping proposed an "Asia-Pacific dream" at the Apec summit, he also showed an unwilling and defiant face when Japanese Prime Minister Shinzo Abe was going to shake his hand. Contrast that with five years ago, when Xi, as vice-president and head of a delegation to Japan, requested a meeting with the Japanese emperor, even though it was not in his original schedule and, according to protocol, an application should have been filed a month in advance. Then, there are the recent meetings between Abe and Hu Deping, the eldest son of the late Chinese reformist leader Hu Yaobang, and Li Xiaolin - the youngest daughter of former president Li Xiannian - who has known Xi since childhood. This all shows that top Chinese leaders actually want cooperation from Japan. Xi's "cold face" was just one side - mainly a political show for the "angry youth" at home who are full of nationalistic sentiment and willing to vent their anger at foreigners given half a chance. Added to this, China's top leaders are a generation of former Red Guards, brought up on a diet of revolution and war while at school. While the income of ordinary Chinese might have tripled almost overnight, their mindset remains rooted in the past, believing that China is at the centre of things and other "barbarian nations" should bow to it. The nation still practises "power centralisation" and "enriching nationhood to empower the military" - increasing its budget for military spending and maintaining stability faster than its gross domestic product growth. China's neighbours are not used to a large country growing so rapidly. One often hears questions such as: what does a giant like China want from the rest of the world? Will China step over us? What can China bring to world peace, development and civilisation? Even former Singaporean leader Lee Kuan Yew suggested that the US needs to refocus on the Asia-Pacific. Contrary to Chinese wishes, the US is not really interested in "new bilateral power relations". For the moment, the US may be busy dealing with the turmoil in the Middle East and the crisis in Ukraine. But as the world's top power, its best long-term strategy remains to contain the number two, whether it be Russia, the EU, Japan or China. This point has been repeatedly echoed in speeches and essays by US leaders and scholars. Hence we have witnessed a strengthening of US alliances with Japan and South Korea, and a stronger US partnership with the Philippines, Vietnam, Indonesia and India. It is no wonder Chinese foreign policy has been a mess for several years, with rifts with Japan, Vietnam and the Philippines. Even North Korea appears to be leaning away. The only "friend" seems to be Vladimir Putin's Russia, hit by sanctions from the West as a result of the Ukraine crisis. Internal power struggles and other problems such as widespread corruption, suffocating pollution, rising housing prices and inequality, terrorism and racial unrest, have forced Beijing to use nationalism to hold the country together. Diverting public attention to foreigners, and China's "century of humiliation", especially at the hands of the last invader - Japan - has proved an effective strategy, However, nationalism could also backfire, especially if it becomes internal, such as against Hong Kong or other regions. Besides, China's "demographic dividend" may be at an end and, with an ageing population, rising wages and other costs, foreign businesses are starting to relocate elsewhere. Thus, Xi is ready to show the other side of his face - cooperating with Japan and others. The same can be said of Japan. On the one hand, Abe has strategically used the Diaoyu/Senkaku islands dispute to transform the Self-Defence Force into an army, by strengthening the alliance with the US, increasing military spending and calming voices in Okinawa against US military bases, while being especially successful in selling his "arc of freedom and prosperity". On the other hand, his economic "Abenomics" strategy has not been nearly so effective, largely because of an ageing population and high land prices, wages and taxes that have already forced many Japanese businesses to relocate abroad. Japan's economy desperately needs the growing Chinese market, its cheap resources and cheap labour. While the number of visitors to Japan reached 10 million for the first time last year, it is still far from the government's target of 20 million by 2020. Abe is now ready to bow to pressure from the business world. Thus, we witnessed the short meeting between Xi and Abe, with an agreement to set up a crisis management system that is common between nations with territorial disputes. Abe even suggested the two should deepen cooperation to help stabilise East Asia, which certainly does not conflict with Xi's "Asia-Pacific dream". The new Japanese policy of loosening visa approvals is one step that will help millions of Chinese see Japan with their own eyes. While Japan embellishes its history by hiding past aggressions and sex slaves, China has also never really faced its own modern history as numerous civil wars, political movements and class struggles have made it necessary for the governing party to cleanse itself and condition the masses. Citizens in East Asia are able to separate historical grievances from the current territorial disputes, and positive economic exchanges from dirty politics. My dream is to one day see scholars from China, Japan - and even Korea - sit together and write a common textbook on their recent history, settling historical grievances once and for all. Politicians can play politics as we focus on our interests. This is what has happened with tourists from Hong Kong and Taiwan to Japan, whose numbers rose by more than 50 per cent in 2013 compared with the previous year. Tourists from mainland China still have a lot to learn. Globalisation is reshaping demographics. It is clear the rest of the world is marching on. Will East Asia come along, too? Lex Zhao is a professor of economics at Kobe University in Japan. zhao@rieb.kobe-u.ac.jp