Now that Naoto Kan, just three months into his premiership, has survived a leadership challenge, he can concentrate on running Japan. There’s much to be done. The yen, at Y83 to the dollar, is at 15-year highs, the recovery is flagging, and the government has still not figured out how to support the economy while reining in the fiscal deficit. Mr Kan has at least one more pressing item in his in-tray: deteriorating relations with China.
That is a bit surprising. Since 2006, Sino-Japanese relations have been relatively trouble free. Beijing has sought to calm what had been dangerous tensions during the premiership of Junichiro Koizumi. But, in the past few weeks, relations have wobbled. First, the two governments got into a verbal jousting match over Japanese companies operating in China. Then, Yoshihiko Noda, Japan’s finance minister, mused on the injustice of Beijing snapping up Japanese bonds – strengthening the yen in the process – while Japan could not reciprocate because of China’s closed capital account. Finally, and most seriously, the two have clashed over Japan’s arrest of the crew of a Chinese fishing vessel that strayed close to disputed islands.
This is an ironic outcome for Mr Kan’s Democratic party, which came to power promising better relations. These have got worse for two reasons. First, China’s regional presence is looming larger – and not just for Japan. Sino- Indian relations, too, have become noticeably more fractious. Second, the weak and divided Democratic party has been unable to stick to a consistent line on China – or anything else. Individual ministries have made up policy on the hoof.