Japan’s “dual hedge” foreign and security policy has begun to unravel, undone by two emergent trends that look set to intensify. The convergence of technology, the economy and security combined with China’s new aggressiveness is eroding the foundation of Japan’s long-standing, fundamental and hitherto successful foreign security policies.
For decades, Japan used a double hedge to balance relations with the United States and a rising China. It relied on the US to backstop its national defense and ensure regional security and stability. At the same time, it used growing business ties to consolidate relations with China and tap the world’s most dynamic market. For years, that strategy worked. Today, however, it is unraveling, undermined by two trends beyond Japan’s control: China’s new nationalist and irredentist aggressiveness and the new closer intertwining of technology and security. The former forces countries that engage with Beijing to look more closely at whether those relations shift the calculus and encourage a government that seems bent on rewriting the regional status quo; the latter forces those countries to recognize how engagement facilitates that transformation.
Cynics charge that Japan is trying to have it both ways: satisfy the US to shore up its security, without going so far as to alienate China and incur its wrath. It’s an old story, one that Eric Heginbotham and Richard Samuels characterized almost 20 years ago as a “dual hedge.”1 With this policy, Tokyo sought to edge closer, despite its “peace constitution,” to the US on security affairs to ensure its defense against a rising China. Simultaneously, Japan sought to deepen economic ties with China to take advantage of Beijing’s growing influence in Asia, to stimulate its own economy and balance against economic overdependence on the US. That relationship had been riven by trade friction in the 1980s and early 1990s. This strategy, never overtly acknowledged as such, was supposed to provide insurance against Japanese vulnerabilities on both fronts and against the two dominant powers in each area. This basic strategy has been in place ever since and worked pretty well. Unfortunately, the hedge may be approaching the limits of its effectiveness and will reach a crisis at some point.
Japan’s hedge against China, realized by moving closer to the US militarily, has been at the forefront of Japanese security policy over the last few years. That mindset guided former Prime Minister Abe Shinzo’s unprecedented moves to shore up Japanese defense policies, even under its peace constitution and against formidable anti-militarist sentiment. Measures included passing a controversial National Secrets Law, establishing a National Security Council, relaxing the ban on selling weapons to allies, and most importantly, securing legislation that allows Japan to come to the defense of allies (“collective self-defense”), within limits, if Japan’s survival is threatened.
Less well-known is Japan’s hedge against the US in economics and trade. After the 1980s, when trade friction with the US was reaching its height, Japan undertook initiatives, such as quietly co-leading with Australia the establishment of APEC, to use multilateralism to mitigate the effects of its bilateral trade dependence on the US. After the Tiananmen Square incident, Japan was less severe in its response than other democratic countries. In subsequent years, its trade with China increased greatly. By 2019, China provided 23 percent of Japan’s imports, more than doubling the US share (11 percent). In the same year, China slightly trailed the US as a destination for Japan’s exports (both took 19 percent). If Hong Kong is included, China surpassed the US with over 23 percent of Japan’s exports.
New forces Undermine the Hedges
The first nine months of US President Joe Biden’s administration have served the US-Japan alliance well. The US secretaries of state and defense made Japan the first stop on their first foreign trip; their meetings in Tokyo were all seen as successes. Japanese Prime Minister Suga Yoshihide got the first summit between Biden and a foreign leader, a meeting that confirmed the strength of the US-Japan alliance and the two countries’ economic relationship, especially in relation to China. In security matters, the US reaffirmed its stance that the Senkaku Islands fell under Article 5 of the US-Japan Security Treaty, a reminder and warning to China of the potential consequences of pressing too hard its irredentist claim to the islands. Japan for its part agreed to include in the joint statement the two leaders’ concerns about “peace and security” in the Taiwan Strait. In the economic arena, both countries agreed to promote supply-chain resilience and to co-operate to regulate new and emerging technologies with particular attention to developing 5G network technology to counter China’s growing influence in this area. The summit was touted as heralding the emergence of a “shared vision” to counter China’s increasing dominance of the region. In subsequent meetings — the first summit of leaders of the Quadrilateral Security Dialogue, the Cornwall G7 summit, and the US-EU and US-NATO summits — Biden pushed a similar line that aligned well with Japanese interests.
There were also several examples of a new technology-economy-security nexus in the Biden-Suga summit. There has long been a recognition of the potential military applications of new technology, an understanding that has guided strategic trade control programs. But there are new dimensions to this threat, such as the vulnerabilities inherent in digital communications networks, which has manifested in resistance to the inclusion of Chinese providers like Huawei in some national telecommunications grids. There is also concern about the ability and willingness of countries to use economic and technological dependence as a tool of coercion. In addition to the 5G discussion, there was a broad look at the Competitiveness and Resilience Partnership, in which Japan and the US will co-operate on everything from clean energy to vaccines to counter Chinese attempts to use these fields to show foreign policy leadership. These initiatives also underscore the importance of economic statecraft in foreign policy generally and in addressing the China challenge in particular. This new emphasis on economics works well for Japan as it could help avoid domestic controversy over developing a more forward leaning “hard security” posture.2 Yet China is still crucial to Japan’s economy, and there has been an increasing perception among elites in Tokyo that the US may be on the decline, as China ascends. Thus, Japan is not oblivious to the damage that could be done to its relationship with China and has tried to limit the impact. In the declaration from Suga’s meeting with Biden, China was not referred to as a rival, and the Taiwan statement was boilerplate that has been used before, not the stronger statement that the US reportedly wanted. Nor has the Japanese government taken a strong stance on human rights, especially regarding the Uyghurs and Hong Kong.
China’s aggressive behavior in the Western Pacific is a second trend that is undermining Japan’s dual hedge. China plays an ever-expanding role in Australia’s economy, yet Canberra remains a staunch ally of the US. Tokyo has seen the costs of this economic relationship as China has retaliated strongly against Australian efforts to strengthen security ties in the Pacific with the US, as well as punish Canberra for its willingness to say “no” to Beijing on other issues.
Australia is a warning to Japan of why its dual hedge may not continue to be viable and a sign that this strategy may soon face a crisis. If China becomes more aggressive in the Pacific — threatening even the Senkaku Islands — Japan will likely be forced to choose between capitulation to China to maintain its economic growth, or facing economic retaliation to maintain and expand its military ties with the US.
Trying to Stem the Unraveling
Japan’s dual hedge has always been based on dual fears. The first is that it would be forced to adopt a more passive role in the Pacific (perhaps resembling Sweden) and thus forfeit US protection against China while having to itself rearm substantially, triggering domestic polarization; the contrary fear was becoming an even stronger and more vocal ally of the US in a more divided Asia-Pacific just as the US was losing its dominance, thereby forfeiting China’s trade, supply chains and possibly even its tourists, and threatening its economy. Given the intensity of its economic and domestic political ties with China, this could become Japan’s greatest crisis of the post-war era.3
Japan may be preparing for such a crisis by moving from a “dual hedge” to a “multi-hedge” strategy. After China in 2010 cut off access to rare earth elements so crucial to high technology, Japan worked assiduously to diversify its economic relations. When President Donald Trump pulled the US out of the Trans-Pacific Partnership trade agreement, then Prime Minister Abe revived it without the US. In 2019, Japan helped forge the world’s largest comprehensive trade agreement, when it signed a deal with the EU. Trade with South Korea, Taiwan and the Association of Southeast Asian Nations have also increased over time.
On security matters, Japan has been an active booster of the Quad, expanding and strengthening ties with Australia and India, in tandem with those of the US. It is facilitating capacity building with Southeast Asian governments and provided them with equipment.4 It is working ever more closely with European partners as well.5
And while there is still a long way to go, Tokyo has improved its own defense capabilities.
Some see a model for Japan in Britain’s post-Tony Blair military defense strategy: It promoted defense engagement in peacetime through bilateral and multilateral security relations enhanced by economic collaboration, all in the service of a military diplomacy that increased the nation’s role in world affairs while deterring potential adversaries.6 Others will claim that Japanese policy is the continuation of the longstanding pursuit of “comprehensive security” that marries security and economic development.7
A Supplement, Not a Substitute
Japan’s dual hedge seeks to avoid “the alliance dilemma,” in which a smaller ally tries to stave off both abandonment by, and unnecessary entanglements with, its bigger ally. The dual hedge aims to avoid both and provide a degree of autonomy while remaining in the alliance. Other US allies use dual hedges as well. Britain and Germany have courted Russian and Chinese direct investment while remaining staunch allies of the US. Australia has seen a boom in Chinese trade and investment as it maintains an alliance with the US. South Korea is often accused of letting its economic relationship with China overshadow its alliance with the US, but close observation reveals this is a difference of degree and not of kind with other US allies.
Most of these countries are not in the same geostrategic position as Japan, however. Even after Brexit, Britain still has the EU, it isn’t on the front lines of Russian aggression, and it certainly isn’t being directly threatened by China. Russia is closer geographically to Germany, but is embedded in the EU (an economic hedge) and NATO (a security hedge). The Quad is in no way a real alliance hedge like NATO, and India’s commitment to collective military activity is doubtful. Perhaps the country in the most similar position to Japan in this part of the world is Australia. But Australia is not a major military power and is even more dependent on Chinese trade than Japan (almost 30 percent of trade compared to Japan’s 20 percent). Its major export is coal, a very influential industry in Australian politics.
Japan’s hedging strategy, whether bilateral or multilateral, therefore, will be stretched to its limits — and beyond. There is no replacement for the US as a security partner. Japan can thicken the weave of security partnerships, but no country can substitute for the US when it comes to critical existential guarantees. And while there is no substitute for China as an economic partner, the centrality of new technologies to that relationship and the interconnectedness of security and those same technologies means that the economic relationship will become increasingly tense and a source of new friction between the two countries. At most, multilateral hedging and “defense diplomacy” are tinkering with the dual hedge at its edges, a supplement not a substitute. Japan has been able to skillfully straddle both poles of this dilemma because economics and security were kept in separate compartments and China allowed it. But with both poles intertwining and China’s new aggressiveness this will become more and more difficult. Expect more dilemmas and crises for Japan.
Notes
1 Eric Heginbotham and Richard J. Samuels, “Japan’s Dual Hedge,” Foreign Affairs, Vol. 81, No. 5, September-October 2002, pp. 110-121.
2 Akira Igata and Brad Glosserman, “Japan Is Indispensable Again,” Foreign Affairs, July 15, 2021, www.foreignaffairs.com/articles/united-states/2021-07-15/japan-indispensable-again
3 Tobias Harris, “The Surprising Strength of Chinese-Japanese Ties,” Foreign Affairs, May 4, 2021, www.foreignaffairs.com/articles/china/2021-05-04/surprising-strength-chinese-japanese-ties
4 See for example, Luis Simón and Tomohiko Satake, “Rules-based Connectivity, Maritime Security and EU-Japan Co-operation in the Indian Ocean,” Elcano Royal Institute for International and Strategic Studies, May 2020, www.realinstitutoelcano.org/wps/portal/rielcano_en/contenido?wcm_global_context=/elcano/elcano_in/zonas_in/ari70-2020-simon-satake-rules-based-connectivity-maritime-security-eu-japan-cooperation-indian-ocean and John Bradford, “Southeast Asia: A New Strategic Nexus for Japan’s Maritime Strategy,” Center for International Maritime Security, Sept. 21, 2020, cimsec.org/southeast-asia-a-new-strategic-nexus-for-japans-maritime-strategy/
5 Jeffrey Hornung, Allies Growing Closer: Japan-Europe Security Ties in the Age of Strategic Competition (Santa Monica, California: RAND Corporation, 2020), www.rand.org/pubs/research_reports/RRA186-1.html
6 Alessio Patalano, “Japanese Military Diplomacy: Abe’s Security Legacy?” in The Abe Legacy: How Japan Has Been Shaped by Abe Shinzo by Guibourg Delamotte, James Brown and Robert Dujarric (Lexington Books, an imprint of Rowman & Littlefield, forthcoming 2021), pp. 161-189.
7 Tsuneo Akaha, “Japan’s Comprehensive Security Policy: A New East Asian Environment,” Asian Survey, Vol. 31, No. 4 (April 1991), pp. 324-340.
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