Asia-Pacific Region

Section 2. Asia-Pacific Region

1. Internal and External Situations in General

(1) Overview

Despite various uncertain factors, such as the suppression of recent democratic movements in China, the situation in the Asia-Pacific region has generally proceeded toward peace and stability with the normalization of relations between China and the Soviet Union and progress in the talks for a solution to the Cambodian problem.

While the basic structure of confrontation between North and South remains unchanged on the Korean Peninsula, because of improved international status of the Republic of Korea after the success of the Seoul Olympic Games and also the nation's democratization there emerged a new trend toward an improvement of relations between the Republic of Korea and socialist countries - China, the Soviet Union and the countries of Eastern Europe - and toward reopening dialogue with North Korea.

China normalized relations with the Soviet Union for the first time in 30 years through the Sino-Soviet summit meeting held in May 1989.

In the Indochinese peninsula, talks on the Cambodian problem, made progress toward a political settlement among the parties and countries concerned.

In Southwest Asia, relations between India and Pakistan, the major source of tensions in this area so far, showed signs of improvement through talks between the leaders of the two countries. The withdrawal of Soviet troops from Afghanistan was helpful in stabilizing Southwest Asia, while leaving a new problem of securing stability in Afghanistan.

The economic growth of the Asian NIEs is contributing to vitalizing not only the Asia-Pacific economy but also the world economy. The ASEAN countries are continuing steady economic growth through cooperation and coordination within the region.

In Oceania, Australia and New Zealand are endeavoring to vitalize their own economies and strengthen relations with the Asian countries. Intra-regional cooperation is promoted for the island countries in the Pacific.

With growing interdependence among the countries of the Asia-Pacific region, there has been a mounting awareness of the need for Ministerial-level meetings and other forms of intergovernmental cooperation. In the ASEAN Post-Ministerial Conference held in July 1989, views were exchanged on Asia-Pacific cooperation.

(2) Situation in China (Movements for Democracy and Armed Suppression by the Government)

(a) Overview

The student movements demanding democracy, directly triggered by the death of former General Secretary Hu Yaobang, grew into a series of demonstrations of about a million people supporting the students on a hunger strike, but ended in armed suppression by the government.

(b) Developments

(i) Movements for democracy in China

There have been two movements for democracy since the end of 1978 when Deng Xiaoping, Chairman of the Central Military Commission, took power. The first one was a movement of citizens posting their opinions in part of what was later called the "Wall of Democracy" and continued for about a year toward the end of 1979, when the movement was ended by a government ban. The second one took place toward the end of 1986, when students of the University of Science and Technology of China, in Hefei City, Anhui Province, demanded that provincial elections of a deputy to the People's Congress be held by democratic procedures in accordance with the rules. It grew into a nationwide student movement demanding democracy and liberty, and led to the dismissal of then General Secretary Hu Yaobang in January 1987.

The latest movement was vastly different from the preceding two in extent and depth because it involved people in general, high-ranking party members, and intellectuals reflecting the changing awareness of the Chinese people as a result of the ten years of reform and open-door policy, the growing social and economic distortions resulting from the modernization program, and the effect of political reforms under way in the Soviet Union and other socialist countries.

(ii) Student demands

Soon after the death of former General Secretary Hu Yaobang on April 15, 1989, the students produced a wide range of demands: (1)Revaluation of the achievements of Mr. Hu Yaobang, (2) opposition to corruption, (3) better treatment of intellectuals, (4) freedom of the press, and so on.

Because the People's Daily called the student movement a riot in its editorial in the April 26 issue, however, the students' dissatisfaction erupted, generating another demand that the newspaper withdraw the editorial and recognize the student movement as a democratic, patriotic movement. The Chinese government, however, refused to yield to this demand to the end. Another demand for a dialogue with a leader in authority was granted on May 15 immediately before martial law was proclaimed. This student dialogue with Prime Minister Li Peng ended in failure.

(iii) Developments

The student movement that lasted a little over a month and a half can be divided into two parts: the first part was from April 15 to the 70th anniversary of the 5.4 movement on May 4, and the latter part lasted from the hunger strike that began on May 13, two days before Soviet General Secretary Gorbachev's visit to China, to armed force on June 4 after the declaration of martial law on May 20. The first part was characterized by an attitude of restraint on the part of both the students and the government, and the movement even appeared to be coming to an end as then General Secretary Zhao Ziyang made a statement showing a certain sympathy with the students' demands on May 4.

However, the hunger strike that began at Tiananmen Square as a non-violent means of protest at a time when world attention was drawn to Beijing because of Gorbachev's visit to China on May 15, attracted the support of people from all walks of life who are dissatisfied with inflation, corruption, etc. and demonstrations involving about a million people were staged several times, with the participation of the employees of the government, the party organization and the military organization on May 15 and 17. Radical slogans criticizing the supreme leader made their appearance.

Because of these events, martial law was imposed on central Beijing on May 20, and martial law troops resorted to armed force to remove the students and citizens from the square from midnight of June 3 to dawn of June 4, causing many casualties. The incident shocked the world, and the image of China abroad was seriously damaged. The Chinese Government stated that it resorted to the use of force because the early student movement had transformed itself into a riot and then into a counterrevolutionary rebellion.

Chairman Deng Xiaoping appeared in public on June 9 for the first time in 24 days since his meeting with Gorbachev, and met leaders of the martial law force. On this occasion, Chairman Deng Xiaoping delivered an important speech severely criticizing the series of developments as "attempts to overthrow the party, the socialist system, and the People's Republic of China, and establish a bourgeois republic," and attributing the cause to the "flood of bourgeois freedom of thought" over the past years. His speech became a "document of principles to unify the ideas of the entire party" and a text for study training started at places of work. At the same time, a hunt was launched for student movement and labor leaders.

(iv) Fourth plenary session of the 13th Central Committee of the Chinese Communist Party

Following the extended meeting of the Political Bureau held from June 19 to 21, the fourth plenary session of the 13th Central Committee of the party was held on June 23 and 24, where General Secretary Zhao Ziyang was relieved of all of his duties for "committing the error of supporting the riot and breaking up the party" and Jiang Zeming, a member of the Political Bureau, succeeded him. It was stated at the plenary session that the basic policy line of "the central task and two basic points" (the central task: economic construction, two basic paints: the Four Cardinal Principles and the reform and open-door policy) that had been confirmed at the third plenary session of the 11th Central Committee and at the 13th party congress would be maintained.

(v) Responses of other countries (Japan's response is described later)

In view of the importance of human rights, the United States, West European countries, and others responded to the loss of many lives in the armed suppression of June 4 by suspending military cooperation and exchange of high government officials, and setting other sanctions. The Arch Summit of July 1989, issued a declaration on China, criticizing the merciless suppression that ignored human rights, strongly urging China to stop such actions, and expressing hopes that China would resume its reform and open-door policy to avoid isolation, and create conditions enabling the resumption of cooperative relations as soon as possible.

(3) Cambodian Problem

(a) Overview

The Cambodian problem caused by Vietnam's military intervention in December 1978, is a long-standing confrontation between the Coalition Government of Democratic Kampuchea composed of the anti-Vietnamese factions - the Sihanouk faction, Son Sann faction, and Khmer Rouge on the one hand, and the Vietnam-backed "Heng Samrin regime" on the other hand, has for a long time been stuck in a stalemate, both politically and militarily. From 1988, however, the Khmer parties and others involved in the Cambodian problem, such as the ASEAN countries began to show active moves, and from the beginning of 1989, in particular, new developments relating to the peace process of Cambodia emerged. The Cambodian problem with the continued presence of Vietnamese troops in that country, the prolongation of the refugee problem and displaced persons, and the increased presence of the Soviet Union in Indochina is the gravest problem for the security of Thailand and other ASEAN countries but a possibility has emerged of putting an end to this serious conflict that has continued for more than 10 years, depending on the future progress of the peace process.

(b) Developments

(i) Following two meetings between Prince Sihanouk and Mr. Hun Sen (the Prime Minister of the "Heng Samrin regime") in December 1987, and January 1988, the first Jakarta Informal Meeting (JIM) was held on the initiative of Indonesia in July 1988, and Prince Sihanouk and Mr.Hun Sen met for the third time in November. However, both parties failed to agree on the central key issues, such as the formation of an interim political system responsible for general elections in Cambodia and international supervision of the Vietnamese troop withdrawal.

(ii) In 1989, the countries having a major influence on the Cambodian problem began to step up their efforts. For example, Thai Foreign Minister Siddhi visited Vietnam, a Vice Foreign Ministers meeting between China and Vietnam was realized, Thai Prime Minister Chatichai invited Prime Minister Hun Sen of the "Heng Samrin regime" to visit Thailand, and there was a dialogue between China and the Soviet Union at the highest level. In February 1989, the second Jakarta Informal Meeting was held. Against this backdrop, Vietnam, together with Laos and the "Heng Samrin regime," announced in their joint statement of the three Indochinese countries, on April 5, that Vietnamese troops would be pulled out of Cambodian territory by the end of September 1989.

(iii) From May 2 to 4, 1989, Prince Sihanouk and Prime Minister Hun Sen of the "Heng Samrin regime" met for the fourth time in Jakarta. At this meeting, both parties showed a more flexible attitude on the problem of an interim political system of future Cambodia, and achieved a certain extent of rapprochement. They agreed on holding an international conference on Cambodia in the face of the announced withdrawal of Vietnamese troops in September (the conference was held at the end of July), and a meeting among the Khmer factions prior to the International Conference.

The Cambodian problem, in a stalemate for more than 10 years showed speedy developments in 1989. One of the reasons was a growing atmosphere of dialogue around the world since 1988, which gave an impulse for settling local conflicts, such as the withdrawal of Soviet troops from Afghanistan, and the rapid improvement of relations between China and the Soviet Union as shown in the first Sino-Soviet summit meeting (May 1989) in 30 years between the two countries. These global trends toward easing tensions produced an effect on the peace process of Indochina.

Secondly, it may also be pointed out that Vietnam, having growing interest in seeking enhanced cooperation with the countries of the West in order to get over the difficulties of its domestic economy and to find a way out of its international isolation, began to take a positive position toward reaching a political settlement.

(d) Japan's Position

(i) Despite the growing hopes of achieving peace in Cambodia, there still remain unsettled problems, namely, how to monitor and verify the withdrawal of Vietnamese troops, how to form a provisional political system for Cambodia after the pullout of Vietnam, or how to carry out free and fair elections. These still pose important problems for the peace process, which must be discussed at the International Conference in Paris and elsewhere.

(ii) Japan, regarding the Cambodian problem as the regional conflict closest to itself, and fully aware of the importance of the problem has continuously been supporting the efforts of the ASEAN countries toward a peaceful settlement. It has also called on Vietnam to contribute to resolving the problem. Furthermore, Japan has expressed on various occasions its willingness to actively cooperate in the peace process and in the reconstruction of Indochina once a comprehensive political settlement has been achieved.

(iii) On the occasion of Prime Minister Takeshita's visit to ASEAN countries in April and of the ASEAN Post-Ministerial Conference of July, Japan expressed its belief that the following are essential to a sustained peace in Southeast Asia and the true stability of Cambodia: (1) the securing of the complete withdrawal of Vietnamese troops under United Nations supervision and the prevention of any return to the inhumane policies of the past associated with the Pol Pot regime, (2) the holding of a free and fair election enabling the Cambodians to achieve self-determination, (3) establishment of a truly effective International Control Mechanism under the auspices of the of United Nations, and (4) achieving a comprehensive political settlement which encompasses all of the above-mentioned aspects.

(4) Development of Asia-Pacific Cooperation

The Asia-Pacific region is so diverse that it is difficult to make a sweeping generalization. On the whole, however, the region is developing as the world's most vigorous and dynamic area due to such factors as sustained domestic-demand-led growth in Japan and other developed countries, the increasing exports of the Asian NIEs, and the coordination and steady development of the ASEAN countries.

The Asia-Pacific region is expected to play an increasingly important role as the 21st century approaches. There has been a spate of proposals for closer cooperation among the Asia-Pacific countries and a number of discussions are actively under way. (See Chapter II, Section 1, Item 2 Asian-Pacific Situation.)

(5) Trends of the Asian NIEs

The economic advances of the Asian NIEs in recent years have made great contributions to the vitalization of not only East Asia but also the global economy. However, the export environment has been taking a turn for the worse for the Asian NIEs that have achieved economic growth mainly through exports. Because of the lowering of export competitiveness resulting from the appreciation of their currencies in foreign exchange markets, rising wages, and of the suspension of preferential duties for the Asian NIEs by the United States in January 1989, the economic growth of the Asian NIEs slowed down somewhat in 1988 as compared with the previous year. The Asian NIEs are trying to diversify their export markets to overcome the problem, striving to increase exports to Japan, other NIEs and ASEAN countries, apart from the United States which has been their principal market. They are also actively building up economic relations with China and other Communist countries. While endeavoring to upgrade their industrial structure and transform their economy to be domestic-demand-oriented, the Asian NIEs are increasing investments in ASEAN countries and shifting their production bases to them, thus contributing to the promotion of "international horizontal division of labor" in Asia.

2. Situations of Main Countries and Areas

(1) Korean Peninsula

(a) Overview

Against the background of prevailing dialogues in East-West relations between the United States and Soviet Union, and the new international situation arising from changes in the Soviet Union and other socialist countries, as well as the amazing expansion of the national strength and democratization of the Republic of Korea (ROK), developments toward easing of tensions on the Korean Peminsula have been observed, Prominant illustrations of these developments were the reopening of North-South dialogue and the improvement of relations between the Republic of Korea and socialist countries since the July 7 Declaration by President Roh Tae Woo in 1988.

However, the basic situation of severe political and military confrontation between North and South along the demilitarized zone remains unchanged. North-South dialogue came to a standstill particularly in 1989 due to North Korea's approach to the opposition parties in the South and the incidental hardening of public opinion there. The Chinese situation appears to have produced a subtle effect on the Korean Peninsula, which is one of the focal points in the Asia-Pacific region.

(b) Political Situation in the Republic of Korea

President Roh Tae Woo has been steadily promoting democracy at home with an attitude of "tolerance and patience." Partly because the opposition parties maintain a responsible, self-controlled attitude in the National Assembly where the ruling party forms a minority, politics based on "dialogue and compromise' has taken root.

A political truce was agreed on between the government and opposition parties in order to place top priority on security during the period of the Seoul Olympics in September and October 1988, and ensure their success. After the Seoul Olympics, the mid-term evaluation that had been the largest political issue was virtually postponed indefinitely in March 1989, owing to self-serving motives of both the ruling and opposition parties. The major pending problems of corruption at the time of the Fifth Republic (the period of the Chun Doo Hwan Administration) and of the Kwangju incident were actively discussed in the National Assembly, and various actions were taken, including the arrest of the elder brother of former President Chun and a statement of apology by former President Chun himself (in November 1988). Parliamentary bargaining has been going on between the ruling and opposition parties and there have been arguments over whether or not former President Chun should be called to testify in the National Assembly. Because of a consensus that the problems should be dealt with according to democratic rule, a situation leading to political unrest has been avoided.

On the other hand, the process of democratization produced apparent uncertainty in the ROK society since that has resulted in the escalation of demands and the violence of some people. The greater part of the people in general appear to be opposed to the radical student movements that are growing in violence, the open support for the position of North Korea voiced by some students, and the emergence of opposition organizations that make radical assertions.

Labor-management disputes dealt a particularly heavy blow to the nation's economy. In 1989, tens of thousands of workers are reported to have taken part in labor disputes at Hyundai Heavy Industries and in the Masan and Changwon areas. Production and exports were affected by frequent labor disputes across the country, which together with the revaluation of the won slowed down economic growth for January-March 1989, to 5.7 percent (annual rate), compared with over 12 percent for 1986-1989, and reduced trade surpluses.

The ROK government appeared to see a certain degree of friction and confusion as inevitable in the process of democratization, but with public opinion pointing to stability, began to tighten control on the radical leftist revolutionary forces, seizing the occasions of the visit to North Korea of the Rev. Moon, an opposition leader, in March 1989, and the Tongwi University incident in Pusan in April 1989, in which six policemen were burned to death by student radicals. A clandestine visit of Assemblyman So Gyong Won (of the Party for Peace and Democracy) to North Korea in August 1988, was disclosed, and a woman university student took part in the World Youth and Student Festival held in Pyongyang. These events triggered criticism of the appeasement posture toward the North shown in the July 7 Declaration and the competence of the security authorities. Under this situation, a sense of vigilance against North Korea has risen among people in general as well as the opposition parties, along with a growing trend toward a return to conservatism, thus producing a delicate effect on North-South dialogue.

While carrying on democratization at home, the ROK government began to actively improve relations with socialist countries under its so-called against the background of amazing economic achievements and the improvement of its international stature symbolized by the success of the Seoul Olympics. China, the Soviet Union, and most of the other socialist countries participated in the Seoul Olympic Games, and in February 1989, the ROK entered into diplomatic relations with Hungary, the first socialist country that it formed official ties with. China, in consideration of the position of North Korea, made clear its policy of the separation of politics from the economy, limiting relations with the ROK to the economic field only. However, ROK-China trade amounted to more than $3 billion in 1988. It is yet too early to predict what effect the situation in China will produce on Sino-Korean relations, and the ROK government appears to be pushing ahead with its China policy while keeping a close eye on developments in that country. The Soviet Union has clarified its stand of improving relations with the ROK since it referred to the ROK for the first time in the Krasnoyarsk speech in September 1988. It has promoted relations with the ROK not only in economic areas, as symbolized by the opening of trade offices in Seoul in April 1989, and in Moscow in July 1989, but also in the field of politics to a certain extent, as can be witnessed by the invitation of Democratic Party President Kim Young Sam to the Soviet Union in June 1989. Relations with other Eastern European countries have also been improved. As of July 1989, trade offices were opened by the ROK in Poland, Yugoslavia, and Bulgaria, and by those countries in Seoul. Some observers predict establishment of diplomatic relations with Poland and Yugoslavia in the near future. "Nordpolitik"

Despite trade friction, relations between the ROK and countries of the free world have been improving against the background of its economic success and democratization. Regarding U.S.-ROK relations, the general public's feeling toward the United States is considered basically as good as before, although the rise of anti-American sentiments from extremist students demanding withdrawal of U.S. troops stationed in the ROK, and of farmers opposing to U.S. demands for liberalization of trade of farm products require attention. Some U.S. Congressmen are discussing partial reduction of the U.S. armed forces in the ROK. The U.S. government, however, reaffirmed its commitment to the ROK during the visit of President Bush to that country in February 1989, and the U.S.-ROK annual security consultative meeting in July. The ROK government and even the opposition parties are cautious about the reduction or withdrawal of U.S. forces, indicating that the American forces in the ROK are likely to maintain the status quo as matters stand.

(d) North-South Dialogue

The July 7 Declaration by President Roh Tae Woo was an epoch-making one proposing the promotion of exchange of people and trade with North Korea in all fields on the basis of an idea of transforming the non-productive confrontation between North and South into a relationship in which both countries would prosper as an ethnic community. This provided an opportunity to reopen North-South dialogue which has been suspended since January 1986. A preliminary meeting for a North-South National Assembly conference has been held seven times since August 1988, and preliminary meetings for a high-level North-South conference and North-South gymnastics meetings were held toward the end of 1988 and at the beginning of 1989. At the United Nations General Assembly in October 1988, the ROK President and a Vice Foreign Minister of North Korea delivered a speech for the first time in history.

These developments raised hopes for the stability and easing of tension on the Korean Peninsula.

In February 1989, however, North Korea denounced the annual U.S-ROK joint exercise, "Team Spirit 89," and announced a suspension of the North-South dialogue. Without positively responding to the normal North-South dialogue, North Korea unilaterally invited ROK opposition people to Pyongyang - the Rev. Moon in March and National Assemblyman So Gyong Won whose secret visit to North Korea was brought to light in June. The ROK government and public opinion reacted strongly to these North Korean moves, intensifying their mistrust and wariness of North Korea. Reacting sharply to the arrest by the ROK government of the people who visited North Korea, Pyongyang demanded the release of the Rev. Moon and others detained and revocation of the National Security Law with the result that the North-South dialogue has deteriorated and grown tense. The ROK has become more cautious, believing that the basic strategy of North Korea toward North-South dialogue is intended to stir up unrest in the ROK as in the past. The future of the North-South dialogue is not expected to go smoothly.

(e) North Korean Situation

In North Korea, the leadership setup of President Kim Il Sung and his son, Secretary Kim Jung Il, seems firmly established, and the transfer of political power to Secretary Kim Jung Il appears well on the way.

North Korea appears to be faced with economic difficulties due to a technological lag, outdated production facilities, and a huge military buildup expenditure. North Korea appears basically cautious about introducing an open-door policy to overcome economic difficulties by such means as reforms and the induction of capital and technology from the West, fearing that such measures could undermine the existing leadership setup. The latest developments in China will no doubt have a subtle effect on the future of North Korea.

No marked change can be seen in the basic internal and external policies of North Korea. In reaction to the ROK efforts to enhance its international position through the Seoul Olympics and "Nordpolitik," North Korea went all out to host the World Youth and Student Festival in July 1989, so as to improve its international standing, and approached some Western countries in an effort to reinforce its diplomacy. North Korea seems to be working hard on China and the Soviet Union, with which it has traditionally maintained friendly relations, with a view to restraining the improvement of relations between them and the ROK.

(2) China

(a) Politics

The student democracy movement that lasted from April to June 1989, ended with the armed suppression by the government and the dismissal of General Secretary Zhao Ziyang, who was responsible for reforms and the open-door policy, at the Fourth Plenary Session of the 13th Central Committee.

For China, however, which has been pushing ahead with modernization with the emphasis on building up the economy through reforms and the open-door policy, there appears to be no alternative to this policy, and it will no doubt continue its modernization efforts, with many ups and downs.

(b) Economy

In 1988, the Chinese economy grew 11.2 percent in GNP, compared with the planned increase of 7.5 percent, in a rather overheated condition, and a sharp rise in demand far above supply caused serious inflation. The plenary session of the third Central Committee of the 13th National Congress of the Chinese Communist Party held in September 1988, decided on a two-year policy of adjustment based on the suppression of inflation, improvement of the economic environment, and restoration of economic order, and concrete measures were taken to control investments in fixed assets, compress collective buying power, check the flow of currency, and reinforce control on illegal actions in the distribution market. The second session of the 7th National People's Congress held in March 1989, also expressed resolve to implement those measures, but there have been no signs of a slowdown in inflation, and these economic measures do not appear to have been fully effective. The suppression of the student movement by the force of arms in June injured China's international reputation. This, combined with the economic deadlock at home, is likely to negatively affect external trade, investments in China from abroad, and external loans.

Till the middle of May 1989, China had undertaken active diplomacy, normalizing relations with the Soviet Union, against the background of a prevailing pattern of dialogue between the United States and the Soviet Union and among other countries. In that process, China proposed establishment of a new international political order based on the "Five Principles of Peaceful Coexistence" and announced four principles of ASEAN diplomacy.

In December 1988, Prime Minister Gandhi of India visited China, becoming the first Indian prime minister to visit that country in 34 years, and announced restoration of friendly relations between India and China. The Cuban Foreign Minister visited China in January 1989, and the Mongolian Foreign Minister in March of the same year to improve relations with China. The Vice Ministers for Foreign Affairs of Vietnam and Albania also visited China, noteworthy developments irrespective of the results achieved. A meeting of Indonesian President Suharto and China's Foreign Minister Qian Qichen in Tokyo (in February 1989) provided an opportunity to start talks to normalize relations between China and Indonesia. On the other hand, certain developments were observed in relations with countries having no diplomatic ties with China; a general increase of indirect trade, flow of people and other business relations were witnessed with the ROK, and a special envoy of the King of Saudi Arabia visited China.

However, the rapid turnabout of China's internal situation produced direct effects on its external relations. Amidst the denunciations of China by countries of the West, China hardened its attitude toward the outside world, and U.S.-China relations, in particular, are expected to cool off. China countered strongly, saying it would not yield to diplomatic and economic pressures from the outside, while emphasizing on the other hand that its own, independent foreign policy would remain unchanged.

(d) Hong Kong

A second hearing of "Basic Law" draft had been under way since February 1989, and pending matters between the United Kingdom and China had been showing progress toward settlement at the Anglo-Chinese Joint Liaison Committee, but the June incident in China caused the talks to be postponed.

(3) Southeast Asia

(a) ASEAN (Association of Southeast Asian Nations)

The ASEAN held the first Meeting of the ASEAN Heads of Government in 10 years in December 1987, and endeavored to follow it up in 1988, but no significant progress was witnessed.

In the area of politics, ASEAN took the initiative in solving the Cambodian problem by holding the Jakarta Informal Meeting (JIM I, II), but no major progress has been seen other problems. In the economic field, improvement plans such as those relating to ASEAN Preferential Trading Arrangements and ASEAN Industrial Joint Ventures that had been agreed on at the ASEAN Summit Meeting were hardly taken up at the ASEAN economic ministers meeting held in October 1988, indicating the difficulty of economic cooperation among the ASEAN countries.

The ASEAN Post-Ministerial Conference held in Brunei in July 1989, adopted a joint appeal emphasizing the need for a comprehensive political settlement to the Cambodian problem, and thus affirmed the common stand of this problem among the ASEAN countries. At the ASEAN, issued the statement on the Multilateral Assistance Initiative for the Philippines (MAI), appealing to each country to make significant contributions to the MAI. The fact that the Foreign Ministers approved the establishment of sectoral dialogue relations with the Republic of Korea (ROK) deserves attention as it points to a strengthening of cooperative relations between ASEAN and dialogue partners. Mr. Rusli Noor, adviser to the Indonesian Foreign Minister, was elected Secretary-General of the ASEAN Secretariat. (He assumed office on July 16 for a 3-year term.)

(b) ASEAN Countries

(i) Indonesia

Indonesia remained politically stable in 1988. (Note 1) In 1989, the matter of presidential succession aroused heated discussion and students staged demonstrations over the issue of compulsory land purchase, etc.

In the area of diplomacy, President Suharto met Chinese Foreign Minister Qian when he visited Japan to attend the funeral of Emperor Showa in February 1989, and agreed to proceed with normalization of diplomatic relations between Indonesia and China. Indonesia held the second informal meeting at Jakarta in February 1989 in an effort to solve the Cambodian problem.

In the economy area, a series of deregulation packages (Note 2) was announced to support the activities of the private sector aimed primarily at promoting the export of non-oil and gas products. The negative business list for investments was released in May 1989.

The Indonesian government adopted such economic measures as an industrial restructuring plan to outgrow its dependence on petroleum as well as the above-mentioned deregulation packages, and stated that it would repay its debts without resorting to rescheduling despite its financial and international payments balance difficulties. These measures constitute the basis of confidence in the Indonesian economy on the part of the World Bank, Japan, and other member countries of the Inter-Governmental Group on Indonesia (IGGI). As a result, private investments in Indonesia steadily increased, and the participating countries and organizations of the IGGI meeting held in June 1989, expressed their intentions to extend aid totaling $4,300 million,

(ii) The Philippines

In internal politics, the process of establishing a democratic political system by the Aquino Administration, starting with the promulgation of the new Constitution in 1987 and followed by the inauguration of a new Congress and local election, was virtually completed with the Barangay (smallest local administrative unit) election in March 1989. In August 1988, Vice President Laurel left the ruling coalition. On the other hand, the parties supporting President Aquino merged into a single party called the "Laban ng Demokratikong Pilipino" (LDP), which contributed to the stability of the Aquino Administration.

In the area of foreign relations, an agreement was reached with the United States after the talks to review the U.S.-Philippines Military Bases Agreement in October 1988. At the same time, the Philippine government carried on active diplomacy mainly in its relations with Japan and the ASEAN countries. Developments involving the relations with socialist countries include the visit of Foreign Secretary Raul Manglapus to Vietnam in November 1988, and the Soviet Union in July 1989, and the visit of Soviet Foreign Minister Shevardnadze to the Philippines in December 1988.

Economically, the Philippines registered a high growth of 6.7 percent in 1988, mainly through the growth of the manufacturing and service industries, and investments from abroad sharply increased, thus indicating steady recovery. However, financial difficulties arising from the accumulated external debt remained to be one of the difficulties in pursuing the economic reconstruction of the country. To extend a helping hand, the advanced countries agreed to reschedule the debts at the Paris Club meeting held in May 1989, and in July, on Japan's initiative, the Meeting of the Consultative Group for the Philippines was held in Tokyo by the World Bank to successfully launch the Multilateral Assistance Initiative (MAI) for the Philippines.

(iii) Malaysia

In February 1988, the United Malay National Organization (UMNO), the first ruling party led by Prime Minister Mahathir, faced the crisis of having its legal position as a political party negated by a court in a lawsuit over the election of party leaders. However, a new party, UMNOBARU, was organized by Prime Minister Mahathir soon afterward, and most of the anti-Mahathir faction members had joined the new party by early 1988. Thus, the new party has virtually succeeded to the former UMNO.

Malaysia was active in the area of diplomacy, sending personnel to take part in the United Nations' peacekeeping operations and being elected a non-permanent member of the United Nations Security Council (term: 1989-1990).

Economically, Malaysia recorded growth of 8.1 percent in 1988, reflecting the rising prices of primary products and the continued increase of exports. The manufacturing industries have been accounting for a larger percentage of GDP than the agricultural sector since 1987.

(iv) Singapore

Singapore again achieved high economic growth, of 11.0 percent in 1988, supported by continued good performance in the manufacturing, commercial and tourism sectors.

Against this background of a growing economy, the government dissolved the National Assembly in September 1988, before the expiration of the term, and held general elections, which ended in a landslide victory for the ruling People's Action Party which won 80 of the 81 seats. The new Cabinet organized after the general elections was composed entirely of young politicians except for Prime Minister Lee Kuan Yew.

(v) Thailand

The Prem Administration which had governed Thailand for over 8 years was replaced by Gen. Chatichai in 1988 who came into power as a result of general elections for the first time in 12 years. Internal politics continued to be calm and stable owing to Prime Minister Chatichai's flexible and sound management, the steady growth of the Thai economy, and the absence of any confrontation between the government and the military.

The Thai economy continued to expand steadily thanks to the thriving agricultural industry, increasing exports, and inflow of foreign capital, achieving an annual economic growth of 11 percent (Thai estimate) in 1988. On the other hand, the rapid economic growth affected the country's consumer commodity prices and trade balance, raising the consumer price index by an estimated 4.5 percent in 1988 and increasing the trade deficit to $3,800 million, more than twice the figure of the year before.

In the area of diplomacy, Thailand continued to put emphasis on the solidarity of the ASEAN and coordination with the countries of the West. As a frontline state, Thailand has traditionally taken a hard-line policy toward Vietnam and the "Heng Samrin regime" on the Cambodian problem. Prime Minister Chatichai seems to be slightly changing his position, however, under the slogan, "Indochina: from war zone to trade zone," aiming at economic expansion of Thailand in the Indochinese region.

(i) Vietnam

Vice Prime Minister Do Muoi took office as Prime Minister in June 1988, and continued to go ahead with economic and social reforms under the leadership of General Secretary Nguyen Van Linh, but the economic problems were so deep-rooted that no marked improvements were seen. The government sharply devalued the currency rate and took interest measures to deal with the rapid inflation.

The Vietnamese government revised its Constitution at the end of 1988 in the hope of improving relations with China and the West. In April 1989, Vietnam announced complete withdrawal of its troops stationed in Cambodia by September 1989 and has since been taking a positive attitude for expanding relations with the West, including the United States. There are increased numbers of exchanges of visitors, especially in the private sectors. Regarding relations with China that were aggravated over the Cambodian problem, the amendment of the Constitution in which China had been regarded as a hostile party and the meeting at the vice foreign ministerial level were watched with interest. However, improvement of the relationship between Vietnam and China will largely depend on the developments of the situation in Cambodia and require a certain period of time.

(ii) Myanmar (formerly Burma)

Anti-government demonstrations, which took place in March 1988 against the background of the deterioration of the economy, spread nationwide in the following months and forced Ne Win to withdraw after 26 years in power. The Sein Lwin regime and the Maung Maung regime that followed tried to control the situation, but only succeeded in aggravating it. Under such circumstances, the National Army led by General Saw Maung carried out a coup d'etat seizing full power on September 18, and the State Law and Order Recovery Council was set up. The present regime committed itself to holding general elections based on a multi-political party system and liberalizing the economic system which has been isolationist. General elections are scheduled in May 1990, and as many parties as over 200, including the National Unity Party, formerly the Burma Socialist Program Party, and the National Democratic League led by opposition leader Ms. Aung San Suun Kyi are eagerly involved in political activities.

In the economic area, the government enacted the Foreign Investment Law, legalized border trade with China and Thailand in October 1988, and passed the State-owned Economic Enterprises Law in March 1989, thus promoting a notable opening-up policy. Further, at the end of March 1989 the present Administration formally announced the abolishment of the socialist economic system. In June 1989, it changed the English name of the country from Burma to Myanmar.

(4) Southwest Asia

(a) Overview - India and Neighboring Countries

In Southwest Asia, the countries neighboring India have a sense of caution against what they believe to be the growing weight of India in the region, and occasional discord is observable between India and its neighbors in recent years. Instances of such discord between India and neighboring nations include the mounting tensions between India and Sri Lanka over the problem of withdrawal of the Indian Peace-Keeping Force (IPKF) from Sri Lanka, the problem of revision of the Commerce and Passage Treaties between India and Nepal following their expiration in March 1989, and India's position on international flood measures in Bangladesh. Hope for the stability of South Asia, which was enhanced by the holding of the summit meeting of the South Asian Association for Regional Cooperation (SAARC) has been overshadowed by the friction between India and Sri Lanka, and it is doubtful whether the SAARC summit meeting scheduled to be held in Colombo in November 1989 will ever take place.

India-Pakistan relations, which traditionally constitutes the greatest potential for friction in the history of Southwest Asia, began to show signs of improvement through dialogue between Prime Ministers Bhutto and Gandhi. Prime Minister Gandhi visited Pakistan and China in December 1988, becoming the first Indian premier to visit the former in 28 years and the latter in 34 years. These are welcome developments for the stability of Southwest Asia.

(b) Developments in Southwest Asia

(i) The Inauguration of the Bhutto Government and New Developments in India-Pakistan Relations

Following the sudden death of President Zia ul-Haq in a plane accident in August 1988, general elections that allowed participation of political parties were conducted peacefully and democratically in November 1988 for the first time in 11 years. The Pakistan People's Party (PPP) won the most seats, and PPP Chairperson Bhutto was designated Prime Minister with Acting President Ishaq Khan elected as new president.

Prime Minister Bhutto faces important internal problems, including the one of how to deal with opposition parties that command considerable power in the local and federal assemblies. The question of economic reconstruction is another such problem, and future developments should be closely watched. In foreign affairs, the government, while following traditional lines on Afghan and other issues (pro-Western, pro-Islamic, pro-Chinese, and nonaligned), is striving to improve relations with India as witnessed in the summit talks with Prime Minister Gandhi in December 1988 and July 1989. Thus, we are beginning to see bright signs in the relations between the two countries, the relations that could be the greatest cause of unrest in Southwest Asia. This is a development to be welcomed as a first step toward stabilization of the Indian subcontinent. After visiting, China, one of the friendliest nations to Pakistan, Prime Minister Bhutto chose the United States for her second official overseas visit and went there in June 1989, not only to maintain but also to promote relations with the country. The Pakistani Prime Minister talked with U.S. officials mainly about the question of aid to Pakistan for fiscal 1990 in connection with the suspicion that Pakistan possesses a nuclear explosive device.

(ii) Internal Politics of India

The Gandhi Government continued to face difficulties in internal politics arising from suspected corruption among those close to the prime minister in the year before, a rebellion inside the ruling party, and an alliance of opposition forces.

However, internal discord within opposition parties combined with a decline in the leadership of Mr. V.P. Singh, the principal leader of the opposition forces, caused the opposition to lose impetus. Prime Minister Gandhi, on the other hand, successfully conducted diplomacy, receiving General Secretary Gorbachev in India in November 1988, and visiting China and Pakistan in December 1988 and again visiting Pakistan in July 1989. With the steady economic growth working in his favor, he is preparing for the general election to be held within 1989 under the slogans of fighting poverty and people's participation in politics.

The successful launching of an intermediate range ballistic missile (Agni Missile) in May 1989 demonstrated the progress India has been making in missile development. It also raised concern among other nations, which feared that it could lead to proliferation of missile systems in the Third World. It also draws attention as it may potentially affect the stability and peace of Southwest Asia.

(i) Racial Problem in Sri Lanka

President Premodosa (former Prime Minister) of the ruling United National Party, who won the office at the presidential election of December 1988, exerted active efforts to achieve a political settlement of the ethnic problem. He directly negotiated with the Tamil radicals (Liberation Tigers for Tamil Eelam: LTTE) and came to an agreement with them in June. Subsequenthy, the President asked for complete withdrawal of the Indian Peace-Keeping Force as he had pledged during the presidential election campaign, but India refused to inplement unilateral withdrawal within a time limit. This raised tension between the two countries, but they came to a compromise that part of the IPKF would be pulled out by the end of July, leaving the subsequent withdrawal schedule subject to negotiations between India and Sri Lanka. The radical Sinhalese Popular Front (JVP) is stepping up their antigovernment activities, raising fears that the situation involving the two countries will become even more confused.

(ii) India-Nepal relations

The treaties on commerce and transit between India and Nepal expired in March 1989, as a result of a breakdown in negotiations on their revision. The expiration adversely affected Nepal in the form of petroleum product shortages particularly because the country is heavily dependent on external trade. In addition to the difference of views - India asserting that the two treaties should be unified while Nepal contending that they should remain separate - a number of long-standing issues between the two countries are believed to have compounded the problem, thus causing the breakdown in the treaty negotiations. The problem does not seem likely to be settled soon.

(5) Oceania

(a) Australia

Since his inaugurationin March 1983, Prime Minister Hawke has pursued an economic liberalization line, something revolutionary for the Labor Party. The Australian economy showed generally steady growth against the background of the recovery of market prices of wool and other primary products and the favorable expansion of the world economy. Reflecting increased exports for the first half of 1988, the trade balance recorded a surplus for the first time in 4 years. (However, huge deficits were registered in both the trade balance and the balance on current account for the latter half of the year.) On the other hand, the economic policy based on economic rationalism, laying stress on the market mechanism and thus calling for increased competitiveness ont he part of the domestic manufacturing industries, directly affected the people's living in the form of welfare budget reductions, wage increase controls, and a lowering of the actual standard of living. Int he State Assembly election of New South Wales and a federal by-election, signs of a popularity shift away from the Labor Party were observed for a time. Re-election of Prime Minister Hawke at the next general elections depends on how he will be able to respond to the lingering dissatisfaction of the people with the lowering of living standards.

Since its defeat in the general elections of 1983, the opposition parties have remained in the doldrums despite the trend of alienation from the Labor Party. Thge approval rating of the Liberal Party dropped as a result of the immigration stand of Mr. Howard, head of the party, calling for a reduction in the number of immigrants from Asia. Both the Liberal Party anbd National Party replaced their leaders in May 1989 in an effort to fight their way out of the present difficulties and reorganize themselves in preparation for the next federal general election.

In the area of diplomacy, the Hawke Administration had been attaching importance to relations with the United States through the ANZUS treaty and with the countries of Asia and the Pacific. Particularly in recent years, Australia appears intent on promoting economic relations with the Asia-Pacific region as an East Asian-Pacific nation, and establishing its position as an important member of the region. For this purpose, Australia has actively carried on Asia diplomacy at head-of-government level. It proposed an Asia-Pacific Intergovernmental Consultation Program in January 1989, and approached the countries in the region to prepare for its realization. U.S. Vice President Quayle visited Australia toward the end of April 1989, whent he leaders of the two countries reaffirmed their ties through the ANZUS treaty.

(b) New Zealand

The Labor government of Prime Minister Lange continued to actively carry on reforms through the sale of government assets, integration and disbandment of government offices, and other measures in 1988 to rebuild the New Zealand economy. Although soaring inflation began to slow down, the employment problem requires close watching as unemployment remains at a two-digit level. The ruling party lags behind the opposition parties in terms of the support of public opinion, and future economic and political developments should be watched attentively.

In the area of diplomacy, New Zealand endeavored to strengthen relations with Australia and, as in the case of Australia, to direct increasing attention to the countries of Asia and the Pacific. In point of relations with the United States, Prime Minister Lange visited the United States in April 1989 and hinted that New Zealand might withdraw from the ANZUS Council which was in an inactive state, raising controversy at home and abroad.

Recent developments in the South Pacific point generally to a return to peace and quiet as symbolized by the restoration of calm in the Fiji situation. However, the economic and social frailty of the island countries remains basically unchanged. A coup d'etat scare in Vanuatu, a riot on Bougainville Island of Papua New Guinea, and the assassination of Jean-Marie Tjibaou, chairman of the Kanak Socialist National Liberation Front (FLNKS) in New Caledonia indicate elements of uncertainty in the area.

3. Relations with Japan

(1) Overview

As a country of the Asia-Pacific region, Japan has been striving to promote political dialogue and strengthen personal exchanges, and expand economic cooperation with the region in order to make contributions to the peace and prosperity of the region.

(2) Korean Peninsula

(a) Overview

It is needless to say that the peace and stability of the Korean Peninsula is vitally important to the security of Japan. For this purpose, the prosperity and stability of the Republic of Korea (ROK) is of utmost importance, and it is desirable that progress be made in North-South dialogue and that a balanced interflow and better relations be promoted between the countries concerned. Japan's stand on the problem of the Korean Peninsula has been that it should be primarily resolved through dialogue between the authorities of North and South. Despite the limitations on the role that it can play, Japan has maintained an attitude of contributing as much as possible to improving the environment for promoting the North-South dialogue.

In October 1988, President Roh Tae Woo suggested a six-party meeting (the United States, China, the Soviet Union, Japan, North Korea, and the ROK) in his United Nations speech, but his proposal has failed to produce results because North Korea rejected it on the grounds that it would lead to "cross recognition" and "a rigidification of the division of the Korean Peninsula." Recently, however, academic exchange and the flow of people have increased at the private level, if not at the government level, and Japan welcomes and supports these developments as conducive to promoting mutual understanding among the countries concerned.

(b) Japan-ROK Relations

Promoting friendly, cooperative relations with the Republic of Korea, which upholds the basic values of freedom and democracy, is the major premise of Japan's policy vis-a-vis the Korean Peninsula. Relations between Japan and the ROK are extremely good. There have been continual dialogues between Japan and the ROK as exemplified by the visit of Prime Minister Takeshita to the ROK in September 1988 to attend the opening ceremonies of the Seoul Olympics and the Fourth Foreign Ministers' Regular Consultation held in Tokyo in April 1989. The visit of President Roh Tae Woo to Japan, which had been originally scheduled for the autumn of 1988, was postponed twice for reasons of the illness of Emperor Showa and internal factors in Japan respectively, and the early realization of his visit remains to be accomplished. To further solidify the relations between the two countries, it is important for Japan to (1) sincerely deal with the problems arising from the past, including the problem of Korean residents (third-generation) in Japan, the problem of Koreans in Sakhalin, and the problem of atom-bomb victims in the ROK, (2) further deepen mutual understanding between the peoples of the two countries through increased academic and cultural exchange and flow of young people, and (3) structure a cooperative relationship from a global standpoint. In July 1988, the 21st Century Japan-ROK Committee (Wisemen's Conference) was organized to exchange views on Japan-ROK relations from a medium- and long-range point of view. The discussions of the committee will be summarized in a proposal to the governments of the two countries.

Redressing the trade imbalance between Japan and the ROK has long been a problem. Due to the high appreciation of the yen and other reasons, Japan's imports from the ROK sharply increased in 1988, - 46.3% over 1987 compared with an increase of 16.7% registered by Japan's exports to the ROK in 1988 - with the result that Japan's trade surplus decreased from $5,200 million in 1987 to $3,600 million in 1988. This points to a balance of trade through expansion. It is expected that the economic relations between Japan and the ROK will be further strengthened through technological transfer and improvement of market access.

In view of the new developments on the Korean Peninsula, including the July 7 Special Declaration by President Roh Tae Woo, and taking into consideration the international political balance (relations of North Korea and the ROK with Japan, the United States, China and the Soviet Union), Japan called on North Korea to participate in a government-level dialogue publicly for the first time in July 1988 to improve relations with North Korea, and has since been endeavoring to bring it about prior to the Seoul Olympics, in September 1988. Japan lifted the measures that it had imposed on North Korea after the Korean Airline incident, expressed Japan's policy on the Korean Peninsula publicly for the first time in January 1989, and unconditionally accepted the visit of a labor party delegation of North Korea to Japan. In March 1989, Prime Minister Takeshita expressed in the Diet deep regret of the Japanese people and the government to all the people of the Korean Peninsula for the acts that Japan had committed in the past, and hoped for early realization of a government-level dialogue between Japan and North Korea. However, North Korea has not responded, claiming that Japan is taking a "hostile policy" and a "pro-ROK policy through and through" Regarding the No. 18 Fujisan Maru issue, the most serious issue pending between Japan and North Korea, there has unfortunately been no progress toward a solution despite approaches through diverse channels, making use of such occasions as the visit of General Secretary Yamaguchi of the Japan Socialist Party to North Korea in September 1988, the visit of former General Secretary Tanabe of the Japan Socialist Party to that country in March-April 1989, and the visit of the Soviet Foreign Minister to Japan in December 1988. The Japanese government intends to continue making utmost efforts to secure the early release and return home of the two Japanese.

(3) China

(a) Overview

The year 1988 was a memorable one, being the 10th anniversary of the conclusion of the Japan-China Peace and Friendship Treaty. During the past decade, relations between Japan and China improved steadily through friendly exchanges at different levels. The relations between the two countries continued to be favorable after the turn of the year as symbolized by the visit of Premier Li Peng to Japan in April. However, the armed suppression by the Chinese authorities of the movement staged by students and citizens calling for democracy from April to June 1989 gave rise to denunciation of China mainly by countries of the West, and also had a considerably adverse effect on relations between Japan and China.

A Foreign Ministry spokesman issued a statement on June 4 to the effect that the loss of many lives due to this armed suppression on June 4 was a matter of grave concern. On the following day, June 5, the Chief Cabinet Secretary expressed regret, and on June 7 the administrative vice foreign minister called the Chinese Ambassador in Tokyo to his office and requested that the Chinese government exercise self-control, stating that the action taken by the Chinese government could not be tolerated from a humanitarian standpoint. Concerning the subsequent stepping-up of control on students and citizens by the Chinese government, the Foreign Minister declared at a Foreign Affairs Committee meeting of the House of Councillors that "though it is an internal problem of China, it is incompatible with the basic values of Japan as a democratic nation."

On June 7, Japanese nationals in Beijing were advised to leave the country. With the situation deteriorating, the dispatch of missions for technical and development cooperation was postponed, experts stationed in China returned home to Japan, and a meeting of the Japan-China Scientific and Technological Cooperation Committee was postponed. The relations between Japan and China were thus adversely affected.

(b) Economic Relations

Japan-China trade recorded an all-time high of a total $19,330 million in 1988, and the trade imbalance that had been pronounced since 1984 was significantly improved through trade expansion. The situation remains similar for the period of January-May 1989. Japan's direct investments in China amounted to about $296 million in 1988 as a result of Chinese efforts to improve the investment environment, the signing and taking effect of the Japan-China Investment Protection Agreement (signed by Prime Minister Takeshita during his visit to China in August 1988 ,and taking effect in May 1989). Both the number and amount of investments increased mainly in the manufacturing industries in line with China's foreign capital induction policy. The sudden change in the Chinese situation since April will no doubt have a certain effect on trade, investments, etc. that had been steadily growing in economic exchange between the two countries.

China has had an extremely close cooperative relationship with Japan as exemplified by the fact that China has been the largest recipient of Japan's Official Development Assistance (ODA) almost every year and that about 70% of the binational ODA received by China has come from Japan. Economic cooperation (excluding technical cooperation) with China amounted to about \170 billion in fiscal 1988. When Prime Minister Takeshita visited China in August 1988, he stated that Japan was ready to extend third yen credits amounting to about \810 billion over six years from fiscal 1990.

In 1988, about 370,000 people visited Japan (up 12% over 1987) from Taiwan, and about 917,000 Japanese visited Taiwan (up 15.9% over 1987). Exports and imports between Japan and Taiwan sharply increased to a total of $23,100 million, up 25% over the preceding year, with a surplus of $5,600 million on the part of Japan.

(4) Mongolia

Shifting its diplomatic emphasis to Asia against the background of improving relations between China and the Soviet Union, perestroika in the Soviet Union and other favorable factors in the international situation, Mongolia began to regard Japan as its second partner after the Soviet Union. When Foreign Minister Uno visited Mongolia in May 1989, views were exchanged on the relations between the two countries, thus opening a new page in the history of Japanese-Mongolian relations.

(5) Southeast Asia

(a) ASEAN

Japan took new measures in 1988, including the creation of the ASEAN-Japan Development Fund and Japan ASEAN Exchange Projects, in line with Japan's basic policy toward the ASEAN as stated by Prime Minister Takeshita when he attended the Japan-ASEAN summit meeting of December 1987.

Prime Minister Takeshita who visited the ASEAN countries except Brunei from the end of April to early May 1989 delivered a speech entitled "Japan and ASEAN: Thinking Together and Advancing Together" in Jakarta, emphasizing the "continuity and consistency" of Japan's basic policy toward the ASEAN, which was understood by ASEAN. His visit enhanced relations between Japan and ASEAN in breadth and depth.

In July 1989, Foreign Minister Mitsuzuka attended the ASEAN Post-Ministerial Conference held in Brunei.

(b) ASEAN Nations

(i) Indonesia

Relations with Japan continued to be marked by frequent visits of VIPs. Prime Minister Takeshita, who visited Indonesia on his tour of the ASEAN countries, stated that Japan would provide a fund amounting to $2 billion to Indonesia in fiscal 1989, thus further promoting relations between the two countries.

Japan's trade with Indonesia was characterized by an increased diversity of imports from Indonesia apart from the traditional import of energy resources. Japan's investments in Indonesia decreased in 1988 to less than half of the previous year, but began to recover at a steady pace owing in part to the improvement of the investment environment.

(ii) The Philippines

Japan has maintained the policy of extending as much support as possible to the Aquino Administration for its nation-building efforts. On the initiative of Japan, the Meeting of the Consultative Group for the Philippines was held in Tokyo by the World Bank in July 1989, and there the Multilateral Assistance Initiative for the Philippines began to take concrete shape.

In parallel with the increased exchanges between the two countries, economic relations between Japan and the Philippines also showed progress. Japan's imports from the Philippines soared by 50% in 1988 over 1987, while Japan's investments in the Philippines jumped by 238% in 1988 over the year before.

(iii) Malaysia

In response to the "Look East Policy" (a policy of developing the country by learning from the development, labor ethics, etc. of Japan and the Republic of Korea) proposed by Prime Minister Mahathir in 1981, Japan has been actively cooperating with Malaysia by accepting industrial and technical trainees and students. Reflecting the Malaysian government's policy to encourage investment, the high appreciation of the yen in recent years, etc., Japan's investments in the country sharply increased by 137% in 1988 over the preceding year.

(iv) Singapore

Dialogues at high levels, including the head-of-government level, continued during 1988, and relations between Japan and Singapore thus made smooth progress.

(v) Brunei

Foreign Minister Mohamed Bolkiah visited Japan in May 1989, and other VIPs exchanged visits between Japan and Brunei. The relations between the two countries remained good.

(vi) Thailand

The relations between Japan and Thailand were generally good, with frequent exchanges of high-level official visits.

In trade, Thailand's exports to Japan sharply increased 40.7% in 1988 over the preceding year, but its trade deficit with Japan amounted to $2,410 million due to a big increase in Japan's exports, especially of capital goods to Thailand resulting from a huge increase of Japanese investments. The rush of Japanese investments in Thailand that began in the latter half of 1986 has been continuing. In 1988 they amounted to a total of 18,300 million bahts, accounting for about 50% of all foreign investments of that country.

(i) Vietnam

Since the military intervention of Cambodia by Vietnamese troops at the end of 1978, relations between Japan and Vietnam has generally stagnated. Recently, however, there has been steady progress in the exchange of visits, not only at government level for political dialogue but also in the field of culture and science, to promote mutual understanding. Trade between the two countries has been steady, if at a low level. In 1988, Japan's imports from Vietnam exceeded its exports to that country for the first time.

(ii) Myanmar (formerly Burma)

Japan followed with great care the developments after the military came into full power, in September 1988. Judging that the present regime met the requirements for the recognization of government under international law (establishment of effective rule over the country, and the will and ability to abide by international law), Japan recognized it on February 17, 1989, as regards the economic assistance to Myanmar, Japan takes the stand that it will gradually resume the activities of on-going projects, which had been virtually suspended since the middle of 1988, after government recognition, but that it will not consider extending new aid projects for the time being.

(6) Southwest Asia

Japan has traditionally maintained friendly relations with the countries of Southwest Asia, but mutual exchange has not been always active. In the 1980s, a new form of relations encompassing a wide range of fields, including culture and social activities, began to emerge from the traditional relations which centered around economic cooperation.

(7) Oceania

(a) The year 1988 deserves special attention from the standpoint of strengthening relations between Japan and Australia because it was in 1988 that Japan took part in the bicentennial ceremony of Australia, that the long-pending beef issue was settled, and that Prime Minister Takeshita visited that country. The 10th Japan-Australian Ministerial Committee met in January 1989 and agreed to develop a "constructive partnership" based on the peace and prosperity of the Asia-Pacific region, the maintenance and strengthening of a free and open world economic system, the earth's environmental protection, and a diversification of the Japanese-Australian relationship. According to the agreement reached between the heads of the two governments when Prime Minister Takeshita visited Australia in July 1988, a "Japan-Australia Lifestyle and Cultural Exchange Initiative" will be held in many parts of Japan in the autumn of 1989 to introduce the general aspects of the Australian lifestyle, culture, etc.

Relations between Japan and Australia have also become closer in the field of investments. Japan became the largest investor in Australia in fiscal 1987/1988. However, some regions of Australia have begun to show increasing objection to Japan's direct investments in tourism, real estate, etc.

Trade and other relations between Japan and New Zealand have continued to be satisfactory.

(b) Japan's relations with the island nations in the South Pacific continued to be strengthened. In the communique adopted at the September 1988 meeting of the 19th South Pacific Forum (SPF) held in Tonga, Japan's increased assistance to the South Pacific was highly rated. Japan was invited to the first dialogue between SPF and other donor countries held in July 1989, which proved to be a significant occasion for an exchange of views.

Japan established diplomatic relations with the Federated States of Micronesia and with the Republic of the Marshall Islands in December 1988.

to table of contents

Note 1: Major developments include the disbandment of the Operations Command for the Restoration of National Security and Order (KOPKAMTIB), which had held the supreme power for defense and national security, and the creation in September of the Coordination Board for Strengthening National Stability (BAKORSTANAS) whose main function is regulatory. The former Governor of the Province of East Java was elected the new president of GOLKAR at a caucus held in October.

Note 2: Deregulations on financial and banking business (October 1988), commerce, industry, agriculture, and marine transportation (November 1988), capital market and banking institutions (December 1988)