Chapter III.
Regional Developments

A. Asia and the Pacific

a) The People's Republic of China and its vicinity

Both the 50th anniversary of the foundation of the People's Republic of China (October) and the Macau Handover (December) fell in 1999, a year in which China maintained a comparatively stable domestic political situation through careful leadership and a heavy emphasis on stability and solidarity, despite issues such as state-owned enterprises reform and growing unemployment. The Government dealt quickly and quietly with sit-ins by the Falun Gong group around the Zhongnanhai compound (home to many Communist Party and key Government institutions, as well as central Government leaders) in April, as well as demonstrations outside the U.S. Embassy and other locations in protest over the accidental U.S. bombing of the Chinese Embassy in Yugoslavia in May. The 10th anniversary of the Tiananmen Incident was also carried off uneventfully in June. The October celebrations of China's 50th anniversary included events such as China's first military parade in 15 years, strongly impressing watchers at home and abroad with the stability of the Jiang Zemin administration. In August, China also successfully launched the Long March 13, a long-distance surface-to-surface missile.

On the economic front, China achieved 7.1% GDP growth (as opposed to the expected seven percent), but the situation remains serious in regard to such issues as state-owned enterprises reform, combating unemployment and dealing with massive bad debts. Bad management on the part of some non-banks also became apparent. The Fourth Plenum of the Chinese Communist Party Central Committee in September reaffirmed the Government's commitment to an improvement over the next three years in the business performance of the many medium-sized and large companies currently running a deficit, while long-term goals and guidelines up to 2010 were also indicated.

Diplomatically, China worked on its omnidirectional diplomacy toward the West, its neighbors and Third World countries as a means of securing a peaceful international environment and favorable economic cooperative relations with other countries, necessary steps in achieving China's ultimate goal of building up the Chinese economy, and advancing realistic diplomacy under the banner of "independent foreign policy of peace." At the same time, resisting unilateral control by the United States over the post-Cold War international order, China envisages the international community as a multi-polar structure comprising not only the United States but also other "poles" such as Russia, Japan and the European Union, and seems to be emphasizing ties with these major powers.

While setting store upon relations with the United States, China has become increasingly wary of developments such as U.S.-led North Atlantic Treaty Organization (NATO) handling of the Kosovo situation, and Japan's passing of laws related to the Japan-U.S. Defense Guidelines, regarding these as manifestations of U.S. hegemony. During Premier Zhu Rongji's visit to the United States in April, no conclusion was reached in U.S.-China negotiations on China's accession to the World Trade Organization (WTO), which, accompanied by the NATO air-strike on Kosovo and accidental bombing of the Chinese Embassy in Yugoslavia in May, led U.S.-China relations to sour. Some improvement has since emerged, however, due to the U.S.-China Summit Meeting in September at the time of the Asia-Pacific Economic Cooperation (APEC) Informal Leaders' Meeting, as well as the conclusion of the above-mentioned negotiations on WTO accession in November.

In terms of China's relations with countries in its vicinity, the June visit to China by Kim Yong Nam, President of the Presidium of the Supreme People's Assembly in North Korea, reopened high-level exchange between China and North Korea for the first time in seven years, while in October, Chinese Minister for Foreign Affairs Tang Jiaxuan visited North Korea. China-Russia ties also became closer as a result of visits to China by Russian Foreign Minister Igor Ivanov in June and President Boris Yeltsin in December. In addition, China engaged in active "peripheral diplomacy." For example, a terrestrial border convention was signed with Vietnam in December, while President Jiang Zemin visited the United Kingdom, France and elsewhere, and a five-country Summit was also held with Russia, Kyrgyz, Kazakhstan, and Tajikistan. China worked to build ties with neighboring countries, announcing at the ASEAN Post-Ministerial Conference (PMC) in July that it was prepared to conditionally sign the protocol to the Treaty on the Southeast Asian Nuclear Weapon-Free Zone.

In Hong Kong, the "one country, two systems" principle (which provides for a high degree of autonomy except for diplomacy and defense) has basically been functioning smoothly under the Hong Kong Special Administrative Region (SAR) Government since the handover of Hong Kong in 1997. The unemployment rate remains high due to the impact of issues such as the Asian economic crisis, but the growth rate has bounced back above zero, with signs of recovery emerging.

On 20 December, Portugal returned the administration of Macau to China, which established a Special Administrative Region operating under the same "one country, two systems" principle as in Hong Kong. Edmund Ho became the region's first Chief Executive.

In terms of consultation between China and Taiwan, which is modulated by private liaison institutions, the October 1998 visit to China by Koo Chen-fu, Head of the Taiwan Straits Exchange Foundation, gave rise to hopes of an autumn 1999 visit to Taiwan by Wang Daohan, Head of the Chinese Association for Relations Across the Taiwan Straits. However, since Taiwan's leader Li Denghui described bilateral relations as a "special state-to-state relationship" in July, talks have closed down completely. Central Taiwan experienced a major earthquake in September which produced more than 2,300 victims, but has since worked steadily toward reconstruction based on support from Japan and other countries. (Elections were held in March 2000 to select a new leader, bringing Chen Shui-bian to this post.)

Mongolia came under the diplomatic spotlight in 1999, visited in turn by Korean President Kim Dae Jung in May, Japanese Prime Minister Keizo Obuchi and Chinese President Jiang Zemin in July. In terms of domestic politics, however, the entire cabinet has resigned three times since 1998, leading to discussion on amendment of the Constitution as a means of restoring political stability.

b) Korean Peninsula

In the ROK, the Kim Dae Jung administration has performed particularly strongly since its inauguration in 1998 in overcoming the economic crisis and in the foreign policy arena. On the domestic policy front, however, the bitter stand-off between the ruling and opposition parties showed no sign of resolution in 1999, and with a string of scandals involving ministers emerging in spring, public support for the administration has waned. Friction also occurred within the coalition over the introduction of a cabinet system, a pledge between coalition partners, but this scheme was delayed indefinitely in summer 1999 in response to pressure to focus on overcoming the economic crisis. On the other hand, looking ahead to National Assembly elections in April 2000, the ruling party attempted to introduce a medium-sized constituency system, but this met with fierce resistance from the opposition, and no compromise was reached or legal amendments introduced before the end of 1999. President Kim Dae Jung decided to reorganize his party, the ruling National Congress for New Politics (NCNP), into an organ with nationwide coverage, co-opting the wide-ranging participation of eminent figures to this end, including former opposition party supporters. While it was rumored that the NCNP's coalition partner, the United Liberal Democrats, would also be absorbed into the new party, this was shelved at the end of the year, with attention instead focused on the direction of election cooperation.

Where ROK economic conditions had been harsh since 1997, rebounding domestic demand and robust exports underpinned a recovery to pre-crisis levels in 1999. The GDP for 1999 topped nine percent, while foreign reserves rose to US$74.05 billion, leading President Kim to declare on 2 December that the crisis was officially over.

In the area of foreign policy, ROK ties were strengthened with Japan and the United States particularly in the context of policy toward North Korea. Prime Minister Obuchi visited the ROK in March, while President Kim conducted his second visit to the United States in July, in addition to which a string of tripartite consultations, Summit Meetings (at the September APEC Meeting), and Foreign Ministers Meetings (at the ASEAN PMC in July) took place. President Kim also actively pursued diplomacy with Russia, which he visited in June.

As to North Korea, many aspects of the situation remain unclear. Concerning politics, General Secretary of the Korean Workers' Party Kim Jong Il maintains total political control of the country, and while the food and economic situation remains bleak, no signs have yet been observed of resistance which could threaten the current regime. Further, since 1998, North Korea has been working toward the goal of becoming a "Powerful Nation" (a world power in terms of its thought, military and economy). In its military affairs North Korea pursues a military-focused policy known as a "military first policy." In terms of military capacity, the country possesses around 1.1 million troops, with most of its strength concentrated in its ground forces. North Korea is highly likely to have deployed Nodong missiles, and may also be working to develop longer-range ballistic missiles. Concerning the economy, the Government seems to be making some attempt to address economic issues, as demonstrated by the first announcement in five years of accounts and a budget at the April Supreme People's Assembly, as well as formulation of a national economic planning law which is thought to have been instigated by General Secretary Kim Jong Il himself. At the same time, energy and foreign currency shortages remain severe, and in terms of agriculture too, while the Government is working on double-cropping and greater potato production, the food situation is still critical. In terms of foreign policy, the Government has positioned relations with the United States as a priority security issue, continuing U.S.-North Korea consultations. In North-South relations, North Korea has criticized President Kim's "engagement policy" and has taken a negative stance on the dialogue between the authorities of both sides, but is at the same time promoting exchange with the ROK private sector. North Korea has endeavored to redress its relations with China, with President Kim Yong Nam, Presidium of the Supreme People's Assembly making a Summit-level visit to China in June. Further, Foreign Minister Paek Nam Sun attended the UN General Assembly in September, where he took the opportunity to meet with foreign ministers and other officials from a number of countries, further evidence of an active diplomatic approach by North Korea.

c) Southeast Asia

The accession of Cambodia in April to the Association of Southeast Asian Nations (ASEAN) realized "ASEAN10," which ASEAN has wished for since its establishment in 1967. ASEAN, which now includes Laos, Myanmar and Cambodia only four years since Vietnam joined in 1995, has developed into a regional cooperative entity which encompasses the entire Southeast Asian region.

The most important challenges for ASEAN, having realized ASEAN10, will be how to maintain and strengthen the unity of the expanded association including the new members and to promote relations with non-Southeast Asian countries including Japan. While the Asian countries were gradually shaking off the impact of the currency and financial crisis and moving toward a growth trajectory, ASEAN discussed broad topics such as the strengthening of ASEAN regional cooperation and regional situations at the 32nd ASEAN Ministerial Meeting (AMM) in July in Singapore and the 31st ASEAN Economic Ministers' Meeting (AEM) again in Singapore in September among others. Furthermore, at the Third ASEAN Informal Summit in Manila in November, the leaders of the ten ASEAN member states came together to discuss such issues as regional security, trade and finance, social issues and the international economic situation. At the Summit, based on the explanation of Indonesian President Abdurrahman Wahid about the situation in Aceh, ASEAN leaders expressed full respect for Indonesia's sovereignty and territorial integrity. As for the pending issue of territorial rights in the South China Sea, leaders reaffirmed the need for a regional Code of Conduct but could not adopt the Code and instead noted further consultations will be made. In terms of economy, leaders agreed with regard to the ASEAN Free Trade Area (AFTA), to bring forward the target year for import tariff elimination to 2015. They also agreed to establish a ministerial level consultation framework (the ASEAN Troika) to deal with issues affecting regional peace and stability.

ASEAN is not only strengthening its internal cooperation mechanisms but has also been trying to promote East Asian cooperation through the ASEAN+3 (Japan, China and the ROK) Summit, held annually since 1997. At the ASEAN+3 Summit held in Manila in November following the ASEAN Informal Summit, leaders adopted the Joint Statement on East Asia Cooperation, pledging to strengthen regional cooperation in a wide range of areas, including politics, security, economy and culture, among Japan and other East Asian countries.

General elections were held in Indonesia in June and in October the People's Consultative Assembly (MPR), the country's highest organ of state power, chose Abdurrahman Wahid as President and Megawati Sukarnoputri as Vice-President. While embracing a number of problems, President Abdurrahman Wahid's new administration made a smooth start.

A direct ballot was held on 30 August in East Timor, and as a result, close to 80% of voters chose separation and independence from Indonesia. However, groups dissatisfied with the referendum result stepped up violence and pillaging, plunging East Timor into chaos. The subsequent deployment of a multinational force restored order, and the process of nation-building and independence has now been launched under the United Nations Transitional Administration in East Timor (UNTAET).

In Myanmar, the deadlock continued in the confrontation between the Government (the State Peace and Development Council) and the National League for Democracy led by Aung San Suu Kyi, with no real prospects for a dialogue between the two sides. At the same time, the Government did make some positive moves in 1999, such as re-opening some universities and allowing prison visits by the International Committee of the Red Cross. In tandem with such a political situation the economy is in a severe situation, and there is concern that basic social services are deteriorating. A Japan-Myanmar Summit Meeting, the first in 15 years, was held in Manila in November, where Japan urged for progress in democratization and also announced that it was prepared to cooperate in economic reforms undertaken by the Government of Myanmar.

d) Southwest Asia

The tension between India and Pakistan heightened by both countries' nuclear tests in May 1998 gradually ameliorated. In February 1999, the Indian Prime Minister made an official visit to Pakistan for the first time in 10 years, holding a Summit Meeting. The Summit produced the "Lahore Declaration," in which both leaders indicated, both at home and abroad, their intention to take a positive stance in resolving the outstanding issues such as Kashmir. However, tension escalated again when both countries conducted missile tests in April, followed by a May clash between the Indian army and militants which had crossed the Line of Control into the Indian side. The fighting began to subside in July as a result of Pakistani Prime Minister Nawaz Sharif's appeals to the militants to pull out, but subsequent incidents such as the shooting down of a Pakistani naval aircraft by the Indian air force and the announcement of a draft of Nuclear Doctrine by India's National Security Advisors Board again stirred up tension between the two nations. In October, Prime Minister Sharif announced the dismissal of General Pervez Musharraf while General Musharraf was abroad. This event, coming in the midst of a widening rupture between the military and the Prime Minister, who had been seeking to concentrate power in his own hands, triggered a military coup d'etat. India-Pakistan relations cooled still further as a result, and the situation grew increasingly opaque. The hijacking of an Indian Airline plane in December led to mutual condemnation over the backdrop of the hijacking, further reducing the likelihood of dialogue resumption.

In Sri Lanka, conflict between the Government forces and the Liberation Tigers of Tamil Eelam (the "Tamil Tigers") continued intermittently in the northern and eastern regions. President Chandrika Kumartunga was re-elected in the December presidential election, which was accompanied by a suicide bombing which appeared to be targeting the president, and frequent terrorist incidents have occurred in Colombo and elsewhere.

On the economic front, some progress was made in following up on the agreement reached at the 10th South Asian Association for Regional Cooperation (SAARC) Summit in 1998 to establish a South Asian Free Trade Area (SAFTA), with, for example, an experts' meeting held on the development of a SAFTA convention. However, the above-mentioned coup d'état in Pakistan led to the postponement of the November SAARC Summit, casting a shadow over regional economic exchange.

Japan has a long history of friendly ties with the Southwest Asian countries. Following the nuclear tests conducted by Pakistan and India, new grant aids and new yen loans were suspended to both countries, with the exception of emergency humanitarian assistance and Grant Assistance for grassroots projects. However, Japan continues to regard both countries as important partners in Asia, and has maintained high-level bilateral dialogue, including meetings with Indian and Pakistani Foreign Ministers during the United Nations General Assembly in September and with Indian Minister of External Affairs Jaswant Singh in November during his visit to Japan. Through such dialogue, Japan has appealed to both countries to resume their mutual dialogue, as well as to work toward nuclear non-proliferation, including signature of the Comprehensive Nuclear Test-Ban Treaty (CTBT). Japan has also been pushing for democratization in Pakistan, with State Secretary for Foreign Affairs Ichita Yamamoto's visit to Pakistan immediately following the coup d'état.

e) Oceania

Australia participated actively in the dispatch of multinational forces to East Timor after determination of the results of the direct ballot. However, the Government of Australia's hard line and the anti-Indonesian tone of Australian public opinion and the media ultimately created friction between Australia and Indonesia, and also alarmed neighboring Asian countries. While these developments were regarded in some quarters as indicating a move away from Australia's former pro-Asian stance, the Government of Australia has asserted that the Asia-Pacific region remains its top priority in terms of foreign and trade policy, and that the United States, Japan, China and Indonesia are still considered key countries in Australian foreign policy. A national referendum was held in November on whether Australia should become a republic, but this was defeated by majority vote. The majority of the population was thought to have been in favor of transition to a republican system, but the specific content of the republic establishment bill, which, for example, stipulated indirect presidential elections, met with stiff opposition.

In New Zealand, the ruling National Party led by Jenny Shipley was defeated in the November general elections by the Labor Party under the leadership of Helen Clark. The latter formed a coalition with the left-wing Alliance Party, establishing a center-left administration for the first time in nine years, albeit with a parliamentary minority, as a result of cooperation from the Green Party outside the Cabinet. Criticizing the economic policy of the previous National administration as leaning too far toward the market, the new administration has stressed the need for a government-led fostering of industry and environmental protection, and it will be interesting to observe how this affects the course of reform which New Zealand has followed since the 1980s.

The Commission for the Conservation of Southern Bluefin Tuna, comprising Japan, Australia and New Zealand, has been engaged in conservation and management of southern bluefish tuna, but catch quotas remain undecided due to differences between Japan on the one hand and Australia and New Zealand on the other regarding the state of resource recovery. Japan therefore conducted voluntary experimental fishing programs in 1998 and 1999, but Australia and New Zealand alleged this to be violating the United Nations Convention on the Law of the Sea and international laws, and initiated arbitration procedures based on the Convention.

Some Pacific island countries experienced changes in administration in 1999, although domestic political situations remained generally stable. Reforming vulnerable economic structures, promoting globalization including WTO-based trade liberalization, and responding to global warming and other environmental issues continue to constitute common challenges for these countries. The 1999 accession of Kiribati, Nauru and Tonga to the United Nations brings 11 of the region's 12 nations into the United Nations, while Tuvalu has instituted accession procedures, demonstrating the region's intention to engage more actively in the international community.

Japan actively pursued high-level dialogue with the countries of Oceania in 1999, including a July invitation extended to Australian Prime Minister John Howard as a State Guest, and a series of visits to Japan by leaders from Micronesia, New Zealand, Samoa and elsewhere. In October, Senior State Secretary for Foreign Affairs Shozo Azuma participated in post-forum dialogue between the South Pacific Forum (SPF) and Japan in Palau, the SPF Chair, while in December, following talks between Prime Minister Obuchi and President Kuniwo Nakamura of Palau, who had been invited to Japan, it was announced that leaders in Oceania countries would be invited to Miyazaki in April 2000 to attend the Japan-South Pacific Forum Summit Meeting (PALM 2000).

f) Asia-Europe Meeting

The Asia-Europe Meeting (ASEM), launched in 1996 to strengthen ties between Asia and Europe, is a large forum comprising 10 countries from Asia and 15 countries and one institution from Europe. Two Summit meetings have been held to date, with the third scheduled to be held in the ROK in 2000.

A series of ministerial meetings took place in 1999-the Finance Ministers' Meeting (January), the Foreign Ministers' Meeting (March) and the Economic Ministers' Meeting (October)-with activities further proceeding in the three key ASEM areas of politics, economy, and others including culture. A Science and Technology Ministers' Meeting was also held for the first time in October in Beijing, evidence of further expansion of ASEM areas of activity.

At the Second ASEM Foreign Ministers' Meeting in Berlin in March, a frank and vigorous exchange of views took place on the world economic situation and the regional and international situation, building upon the outcome of ASEM 2 in April 1998. In the political area, the discussion focused on the Korean Peninsula, and ministers expressed the desire that the parties involved would continue their dialogue with a view to solving the issues of concern, including the prevention of proliferation of the weapons of mass destruction. In terms of global issues, the Chairman's Statement referred to such areas of substantial interest to Japan as UN reforms and the destruction of anti-personnel mines. Turning to economics, Foreign Ministers shared the view that while the Asian economy was showing signs of recovery from the economic crisis, its social impact was still serious, and they also noted the importance of strengthening the WTO-based multilateral trading system. They stressed that pursuit of further cooperation among ASEM countries in a wide range of areas, including culture, education, science and technology, would be critical. A "Vision Group" of eminent persons submitted a report detailing a medium- to long-term vision for ASEM in the 21st century, with members agreeing to examine the content of this.

The second ASEM Economic Ministers' Meeting, held in October, witnessed a lively exchange of views on a broad range of areas, focusing on the WTO but also looking at the Asian economy and Economic and Monetary Union. Participants agreed to strengthen work on the further promotion of trade and investment between Asia and Europe, and, recognizing the importance of strengthening ties with industry, decided to further develop ASEM's links with the Asia-Europe Business Forum, a private-sector group.

ASEM 3 will be held in the ROK in October 2000, a key event at which leaders will discuss Asia-Europe cooperation in the 21st century. Japan, while acting as a bridge between Asia and Europe, is making efforts toward the success of the upcoming Summit as well as stronger Asia-Europe cooperation, making the best use of Japanese experience as one of the coordinators in the period leading up to ASEM 2 and working closely with related countries, the ROK in particular, the current coordinator and chair.

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