Diplomatic Bluebook 2017
Japan's Foreign Policy that Takes a Panoramic Perspective of the World Map
2.China / Mongolia, etc.
A The Situation in China
The Chinese economy has been gradually slowing down, for example real GDP growth over the last few years has been slowing. In 2016, the real GDP growth rate showed an increase of 6.7% and total trade value fell 6.8% over the previous year (total export value in particular fell 7.7% over the previous year). On the other hand, in the short term the business trends vary greatly among regions and industries. By industry, for instance, while the secondary industry including manufacturing is slowing down, the tertiary industry such as finance and services is growing steadily.
Looking at financial trends, in the Shanghai stock market, stock prices fell rapidly again in January 2016 following the sharp decline in the summer of 2015 and the authorities aimed to stabilize the markets, for example by taking regulatory measures. Furthermore, in recent years the renminbi has been rising gradually against the U.S. dollar but it reversed direction due to a change in the central parity quotes of renminbi in August 2015 and against the backdrop of the rise of interest rate in the U.S. and other factors the dollar continued to appreciate against the renminbi.
Ensuring stable growth of the economy is a foundation of stable society and the source of Chinese people's support for the Communist Party of China, the ruling party. However it has become more complex and more difficult than ever before, with the background of reduced competitiveness, the negative legacy from the past rapid growth and the after effects of four-trillion-yuan-stimulus package. Under these circumstances, the Chinese Communist Party and the Government of China regard the current situation of the Chinese economy as the “new normal.” It aims to ensure a transformation in economic development model from the conventional high-speed growth led by investment and exports to mid- to high-speed growth led by consumption and domestic demand through structural reforms from a mid- to long-term perspective while securing sustainable and stable growth by economic stimulus measures from a short-term perspective.
In response to this situation, at the National People's Congress in March 2016, the 13th five-year plan (2016-2020) was adopted. This plan firmly stuck to the government targets of ensuring an average annual real GDP growth rate of 6.5% or more and doubling nominal GDP and per capita income in 2020 as compared with 2010, and set out goals such as structural reform on the supply side, through the reduction of excessive production capacity and real estate inventory, and the promotion of innovation. At the Central Economic Work Conference held in December of the same year, the Government of China showed a willingness to implement economic management which gives top priority to stability as the National Congress in the second half of 2017 approaches, and once again emphasized the importance of supply-side structural reform.
(B) Domestic affairs
President Xi Jinping is running his administration under the slogan of “the Four Comprehensives”. “The Four Comprehensives” refers to (1) Comprehensively build a moderately prosperous society (with some degree of comfort), (2) Comprehensively deepen reform, (3) Comprehensively implement the rule of law, and (4) Comprehensively strengthen Party discipline, and they were discussed and adopted from the Third Plenary Session in 2013 to the 6th Plenary Session in 2016 of the 18th Central Party of China (CPC) Central Committee, respectively. Furthermore, at the 6th Plenary Session, President Xi Jinping was positioned as the Party's “core” leader for the first time in a party document and he was seen to further strengthen his power base in the current system before the CPC National Congress which will be held in the second half of 2017.
On the other hand, China is facing a significant number of issues. The growth of the Chinese economy is slowing down and in this context pre-existing social issues such as the gap between rich and poor, environmental pollution, ethnic minority issues, etc. are becoming more pronounced. Furthermore, at a time when the Internet population is growing and the values of Chinese society are becoming increasingly diverse, the Government of China is continuing to strengthen its management of society through the establishment of the Law of the PRC on Administration of Activities of Overseas NGO in the Mainland of China and Cybersecurity Law, etc. Domestic and overseas critics have complained that these measures restrict civil activities and the rights of individuals. In October an incident occurred in which people seen to be military veterans asking for improved treatment surrounded the building which houses China's Ministry of National Defense. In the second half of 2017 in the lead up to the 19th CPC National Congress of the Communist Party of China, the present administration is under pressure to achieve difficult leadership objectives of responding to the dissatisfaction and unease in society while also having to strengthen its own power base.
In Hong Kong, the Legislative Council elections, which are held once every four years, were held in September and groups called “Localists” with a strong orientation toward independence for Hong Kong won seats for the first time. In November, however, two of the “Localist” members of parliament were disqualified as legislators based on an interpretation of the Hong Kong Basic Law adopted by the National People's Congress. Large-scale demonstrations opposing this move were reported.
(C) Foreign policy
Regarding the foreign policy of China in 2016, continuing on from last year, proactive economic diplomacy was deployed in light of the initiative entitled “the Belt and Road Initiatives (Silk Road Economic Belt/21st Century Maritime Silk Road),” with emphasis on infrastructure exports including high-speed railway. Related to that, the first Annual Meeting of the Asian Infrastructure Investment Bank (AIIB) was held and it began full operations in June. In addition, in September the G20 Hangzhou Summit, the first to be hosted by China, was held in Hangzhou and discussions on the world economy were held.
Regarding U.S.-China relations, vigorous exchanges have been held. For example, President Xi Jinping held a summit meeting with President Obama three times, etc. At the U.S.-China Summit Meeting on the occasion of the G20 Hangzhou Summit, the two countries announced they would conclude the Paris Agreement, and that they were expanding working-level cooperation through dialogue and consultations such as in the climate change area.
(D) Military affairs and security
China has continued to increase defense expenditures at a high level. However, the breakdowns of the budget, and the intention behind the increase has not been disclosed sufficiently. Under such circumstances, its nuclear and missile capabilities and military power centered on naval and air forces are assumed to have been enhanced extensively and rapidly in recent years. Furthermore, the Chinese People's Liberation Army (PLA) is working on organizational reforms and recently these reforms have taken shape at a rapid pace. In December 2015 ceremonies were held for the establishment of the Rocket Force, Strategic Support Force, etc. and then in January 2016 the general departments that were the headquarters for the entire PLA were replaced by 15 functional sections under the Central Military Commission. Moreover, in February the PLA's previous “seven military regions” were abolished and “five theaters of operations” were newly created. It is considered that these series of reforms are designed to build military forces that can fight and win wars but China has not set out a clear and specific future vision of its military strengthening.
At the same time, unilateral activities by the Chinese military in the sea and airspace around Japan are on the increase, such as the setting of the “Air Defense Identification Zone (ADIZ) in the East China Sea” in November 2013, the first entrance of a Chinese Navy combatant vessel into the contiguous zone around the Senkaku Islands in June 2016, etc.
Such broad and rapid expansion of military capability lacking transparency, and continued attempts to unilaterally change the status quo are common regional concerns. Japan intends to urge through dialogue for an improvement of China's transparency and encourage China to be positively involved in the international order based on the rule of law, in cooperation with the countries concerned.
B Japan-China Relationship
(A) Bilateral relations - General
The relationship with China, the neighboring country across the East China Sea, is one of Japan's most important bilateral relationships, and the two countries have close economic relations and people-to-people and cultural exchange20. At the same time, Japan and China have numerous political and social differences. Thus, it is inevitable to have friction and conflicts, precisely because the two countries are neighbors. Given this situation, Japan and China shared the view that they would build a “Mutually Beneficial Relationship Based on Common Strategic Interests” in 2006, based on the idea that it is important to develop the relations of the two countries by expanding their common interests in the context of contributing together to the international community. Since then, the leaders of the two countries have confirmed that they will promote a “Mutually Beneficial Relationship based on Common Strategic Interests.”
Following on from the previous year, generally speaking in 2016, Japan-China relationship was seen to tend toward improvement. In April Foreign Minister Kishida visited China in the context of bilateral relations, which was the first time for approximately four and a half years as the Foreign Minister of Japan where he made a courtesy call to Premier Li Keqiang and held a meeting with Foreign Minister Wang Yi. Foreign Minister Kishida explained his view on the bilateral relationship between Japan and China that is appropriate to a new era, that is, increasing the positive aspects of the relationship by expanding cooperation, as well as conducting candid exchanges and appropriately addressing difficult issues and concerns. This move toward an improvement in relations continued into the second half of the year and on the occasion of the Asia-Europe Meeting (ASEM) Summit (in Mongolia) in July, Prime Minister Abe held his second meeting with Premier Li Keqiang. In the same month the two countries took the opportunity of the ASEAN-related Foreign Ministers' Meetings to hold the Japan-China Foreign Ministers' Meeting. In August there were intrusions by a large number of Chinese Government-owned vessels into Japan's territorial waters surrounding the Senkaku Islands but late in the month Foreign Minister Wang Yi visited Japan for the first time in order to attend the Japan-China-ROK Trilateral Foreign Ministers' Meeting.
Then on the occasion of the G20 Hangzhou Summit in September, Prime Minister Abe visited China and held his third summit meeting with President Xi Jinping. This meeting was positive and productive, based on the shared recognition of the two leaders that they would cooperate in areas where cooperation between Japan and China is possible in order to expand the “positive” aspects of the bilateral relationship and manage matters of concern to reduce the “negative” aspects. Prime Minister Abe and President Xi Jinping also held a short meeting at the APEC Economic Leaders' Meeting in Peru in November, and reaffirmed that they would improve Japan-China relations toward the milestone years of the 45th anniversary of the normalization of diplomatic relations between Japan and China in 2017 and the 40th anniversary of the Treaty of Peace and Friendship between Japan and the People's Republic of China in 2018. In the context of high-level dialogues being held frequently in this way, a range of dialogues and exchanges gained momentum and in November continuing on from the previous year the Japan-China Security Dialogue was held in Beijing, where views were exchanged about the security policies, etc. of both Japan and China. In addition, in September and December, the Japan-China High-Level Consultation on Maritime Affairs was held, and views were exchanged about cooperation in the maritime affairs area, etc. Furthermore, in December the Japan-China Economic Partnership Consultation (Vice-Ministerial-Level) was held.
Japan and China share responsibility for the peace and stability of the region and the entire international community. Stable Japan–China relations are essential not only to the citizens of both countries, but also to the peace and stability of the Asia-Pacific region as a whole. Accordingly, based on the concept of the “Mutually Beneficial Relationship based on Common Strategic Interests,” the Government of Japan will promote the development of Japan–China relations from a broad perspective through continued dialogues and cooperation at various levels.
- 20 Since 1979, Japan has extended Official Development Assistance (ODA) of a cumulative total of more than three trillion yen to China. Approximately ten years ago, however, Japan terminated implementing new projects under Loan Aid and General Grant Aid, which had accounted for a large share of Japan's ODA to China, recognizing that ODA had already achieved a certain role in light of the economic development and improved technology level of China. Currently, ODA projects heve been implemented to a limited degree in areas in which strict necessity for cooperation is acknowledged. Such areas include cross-border pollution, infectious diseases, and food safety, which directly affect the lives of the Japanese people. Technical Cooperation is the main form of cooperation (disbursements of 806 million yen in FY2015), while Grant Assistance for Grass-Roots Human Security Projects have also been implemented (disbursements of 106 million yen in FY2015). Furthermore, recently Japan has been proceeding with a new form of cooperation, in which China bears part of the costs.
(B) Japan-China economic relations
Economic relations between Japan and China, including trade and investment, are close and interdependent. The total trade between Japan and China (excluding Hong Kong) amounted to about 270.3 billion US dollars in 2016, and China has been the largest trading partner for Japan for ten consecutive years. According to Chinese statistics, direct investment from Japan decreased to about 3.11 billion US dollars in 2016, due to increased labor costs: down 3.1% over the previous year (estimated based on officially published investment values). By country, Japan ranks fourth in terms of the amount of direct investment to China (Singapore ranks first and the ROK is second, followed by the U.S.).
In 2016, the necessity for dialogue and cooperation between Japan and China in the economic area was reaffirmed at the summit and foreign minister levels. In the Japan-China Foreign Ministers' Meeting, in April etc., Foreign Minister Kishida proposed cooperation regarding “five areas of cooperation ((1) macro-economy, financial and monetary affairs, (2) energy-saving and the environment, (3) a low birthrate and an aging population, (4) tourism, and (5) disaster prevention)” in order to expand the positive aspects of Japan-China relations, and obtained a positive response from the Chinese side. Furthermore, in the Japan-China Summit Meeting on the occasion of the G20 Hangzhou Summit in September, Prime Minister Abe proposed to President Xi Jinping the promotion of cooperation in a variety of areas including the “five areas of cooperation,” etc. and the two leaders agreed to proceed with dialogue, cooperation, and a range of exchanges to expand the positive aspects of the relationship between the two countries.
In response to these developments, a range of dialogues and exchanges in the economic area were vigorously held. In April, Minister of Environmental Protection Chen Jining visited Japan to attend the Tripartite Environment Ministers Meeting, and in October, Minister of Commerce Gao Hucheng visited Japan to attend the Japan-China-ROK Economic and Trade Ministers' Meeting. In November, Chairman of the National Tourism Administration Li Jinzao visited Japan and held a meeting with Minister of Land, Infrastructure, Transport and Tourism Keiichi Ishii. In addition, the ministerial-level Japan-China Comprehensive Energy Conservation and Environment Forum was held in Beijing, and the relevant ministers from Japan visited China. With regard to the Japan-China Economic Partnership Consultation in which high-ranking officials of relevant ministries and agencies get together from the two countries, following on from the previous year a vice minister-level meeting was held in December, where they held wide-ranging exchanges of views on Japan-China bilateral issues and cooperation, including the “five areas of cooperation,” and on regional and multilateral issues and cooperation. Furthermore, regarding the import restrictions placed on food and agricultural products from Japan by the Government of China, Japan has taken every opportunity, particularly the Japan-China Summit Meeting in September 2016, to urge the Chinese side to carry out an evaluation based on scientific evidence, and has lobbied for the abolition and relaxation of the restrictions.
Economic exchanges at the private sector level were also actively carried out. In September, the Japan-China Economic Association, Keidanren (Japan Business Federation) and Japan Chamber of Commerce and Industry jointly dispatched a delegation to China, which had a meeting with top officials from the Government of China led by Vice Premier Zhang Gaoli. In November, a summit of CEOs, etc. from Japan and China was held in China, views were exchanged between the executives of major companies in Japan and China, and Premier Li Keqiang, etc. also participated.
On the working-level, various dialogues took place, including the 17th Japan-China Fisheries Joint Committee (November, Xiamen) and Japan-China governmental negotiations for Agreement on Social Security (June, Beijing and November, Tokyo).
(Ｃ) Promotion of mutual understanding between Japanese and Chinese people
(Current situation of people-to-people exchanges between Japan and China)
The total number of Chinese visitors to Japan strongly increased in 2016 as well, growing by more than 1.5 million people over the previous year and setting a record high of 6.37 million people. In the tourism area, the shift from group tourism to individual tourism is striking, and an increase in tourism for which shopping is not the only objective is being seen, and this reveals a high level of their interest in Japan.
〈Japan-China youth exchange, etc.〉
In 2016, Japan invited a total of about 2,700 Chinese high school and university students and others in the program “JENESYS (Japan- East Asia Network of Exchange for Students and Youths) 2.0.” Chinese young people that visited Japan experienced the various cultures and lifestyles, and felt the attractiveness of Japan through school exchanges and tours to businesses, while they deepened a mutual understanding with Japanese youth, and held vigorous exchanges of views about what the future Japan-China relationship should be. Furthermore, in 2016 under the Japan-China International Solidarity Project on Afforestation and Tree-Planting21 Japan invited youth, etc. from China and for the purpose of raising awareness of the environment and disaster prevention as well as further encouraging understanding of Japan, etc. implemented tree-planting activities, seminars about the environment and disaster prevention, tours of companies and related facilities, etc.
- 21 Size of budget: 9 billion yen (FY 2015 supplementary budget)
(Exchanges in various fields)
To further develop Japan-China relations, the Government of Japan invites people at various levels in all walks of life to Japan, such as leaders of central and local governments in China, people having certain influence in the political, economic, public and academic sectors, and next-generation leaders and opinion leaders in addition to young people who will carry the next generation, such as high school students and university students, thereby making efforts for a wide range of relationship building and strengthening. The Chinese participants are expected to exchange views with various circles and experts and go on inspection tours, hoping that a good relationship will be built between the invitees and Japanese parties concerned and Japan will be more accurately understood through these exchanges.
The Embassy of Japan in China referred to the period from October to November 2016 as the “Intensive Month for Japan-China Exchanges” and intensively implemented 41 cultural exchange projects in Beijing and Wuhan in collaboration with the private sector. A total of approximately 25,000 people participated in these projects and in addition, on the Internet SNSs were utilized to present live broadcasts and videos, etc. of the cultural exchange projects, which were viewed approximately 36 million times.
The Consulate-General of Japan in Hong Kong also held the “Japan Autumn Festival in Hong Kong-Rediscovering Nippon-” from October to November, and implemented 142 events and certified projects over a wide range of fields including sports, movies and art, seminars, etc.
Movies portray the universal aspects of human beings, including family love, romance, and friendship, and they affect the hearts of people across national borders. For that reason, exchanges through attractive films help to further foster friendly relations between Japan and other countries.
2016 was a very successful year for the film industry of Japan. There was a series of hit movies, most notably Your Name, as the number of admissions to movie theaters in Japan recovered to the level of over 180 million for the first time in 42 years and hit an all-time high box office sales of 235.5 billion yen were recorded.
On the other hand, the film market in China, seen in terms of box office revenue, accounts for 45.712 billion yuan (750.1 billion yen, 1 yuan=16.41 yen, 2016), which is approximately three times more than that of Japan. Furthermore, in terms of the number of screens, there are 41,179 screens in China (as of December 2016), approximately 12 times the number in Japan.
Successful Japanese movies have also been fascinating people in China. In 2015 only two Japanese movies were screened commercially in China, but in 2016, 11 movies were screened, including Your Name.
The government also supports these developments in the private sector. At the Japan-China Summit Meeting held between Prime Minister Shinzo Abe and President Xi Jinping in September 2016, the two leaders consented to “enhance interaction in a variety of areas ahead of the 45th anniversary of normalizing diplomatic relations in 2017, the 40th anniversary of the Japan-China Treaty of Friendship and Peace in 2018, and the Olympic events in the two countries in 2020 and 2022.” Based on these developments, in November 2016 the Study Meeting on the Overseas Development of the Film Industry set up in the Prime Minister's Office (Chair: Deputy Chief Cabinet Secretary Koichi Hagiuda) held discussions on the best approach to international exchanges through movies. Moreover, negotiations for a Film Co-production Agreement between the Government of Japan and the Government of the People's Republic of China began in order to boost film exchange between the two countries. Furthermore, six Chinese movies were screened at the Tokyo International Film Festival (in October and November) while 50 Japanese movies were screened at the Shanghai International Film Festival (June), and 22 at the Beijing International Film Festival (April). It is expected that in 2017 the two countries will witness further exchanges through film to commemorate the 45th anniversary of the normalization of diplomatic relations.
(D) Individual outstanding issues
〈Situation surrounding the East China Sea〉
Regarding the East China Sea, there continue to be intrusions by Chinese Government-owned vessels into the territorial waters around the Senkaku Islands and unilateral development of resources by China in the maritime area pending delimitation between Japan and China, and these actions are unacceptable to Japan.
In the territorial waters around the Senkaku Islands, China frequently dispatched government-owned vessels into the territorial waters around the Senkaku Islands throughout 2016, and repeated intrusions into the territorial waters 36 times (121 vessels in total). In particular in August a large number of Chinese Government-owned vessels intruded into the area around the Senkaku Islands together with Chinese fishing vessels, and repeatedly intruded into Japan's territorial waters.
To begin with, the Senkaku Islands are indisputably an inherent part of the territory of Japan in light of historical facts and based upon international law. Indeed, the Senkaku Islands are under the valid control of Japan. Consequently, there exists no issue of territorial sovereignty to be resolved concerning the Senkaku Islands. Since 1885, Japan had conducted repeated investigations and, having confirmed that there were no traces to suggest that the islands were under the control of the Qing dynasty, incorporated them into Japanese territory in January 1895. Subsequently, with the permission of the Government of Japan, numerous Japanese citizens settled on the Senkaku Islands, where they engaged in business activities such as the manufacture of dried bonito flakes. After World War II, the Senkaku Islands were placed under the administration of the U.S. by the San Francisco Peace Treaty. From 1895, when Japan obtained territorial title over the Senkaku Islands by lawful means under international law, until the 1970s, when the islands became the focus of attention after it was suggested that there might be oil reserves in the East China Sea, China did not raise any objections to Japan's sovereignty over the Senkaku Islands. Moreover, China has never explained why it had not expressed objections.
The Government of Japan will continue to cooperate closely with the countries concerned and the international community, and deal with the situation with resolute determination to defend Japan's territorial land, sea, and airspace. We have repeatedly used diplomatic channels to lodge strong protests and request the withdrawal of Chinese vessels.
Furthermore, in recent years, China has accelerated its development activities of natural resources in the East China Sea. The Government of Japan has newly confirmed 12 structures since June 2013, and a total of 16 structures including those confirmed before then, on the Chinese side of the geographical equidistance line.
The Exclusive Economic Zone and the continental shelf in the East China Sea have not yet been delimited. Japan takes a position that maritime delimitation should be conducted based on the geographical equidistance line between Japan and China. In this regard, under the circumstances pending maritime boundary delimitation, it is extremely regrettable that China is advancing unilateral resource development. Every time China's related moves are recognized, Japan has strongly requested China to cease its unilateral development and to resume negotiations as soon as possible on the implementation of the “June 2008 Agreement” in which Japan and China agreed to cooperate on the development of natural resources in the East China Sea.
In this context, Japan and China exchanged views regarding the “June 2008 Agreement” in the fora of the 5th Round Meeting and Working Group Meetings and Sixth Round Meeting and Working Group Meetings of Japan-China High-Level Consultation on Maritime Affairs in September and December. Japan will continue to strongly request China to resume negotiations immediately and implement the agreement as soon as possible.
With regard to the “Maritime and Air Communication mechanism between Japan-China defense authorities” to avoid unexpected situations, on the occasion of the Japan-China Summit Meeting held on 6 September 2016 the two parties shared the view that they would accelerate consultations toward early start of operation of the mechanism, then they held the 6th joint working group meetings in November, and in addition they held frank exchanges of views at the 5th and 6th Round Meeting of Japan- China High-Level Consultation on Maritime Affairs held in September and December. Both Japan and China share the view to continue to have consultations for early start of operation of the mechanism (See 1-1 (2), 2-1-6 and 3-1-3 (4)).
〈Abandoned chemical weapons issue〉
The Government of Japan, pursuant to the Chemical Weapons Convention (CWC), has been working on the disposal of abandoned chemical weapons in China. In 2016 disposal by mobile disposal facilities was carried out in Shijiazhuang City, Hebei; and test disposal took place in Haerbaling District in Dunhua, Jilin Province. The disposal of a cumulative total of about 45,000 abandoned chemical weapons has been completed (as of January 2017).
A Internal Affairs
In the presidential election in January, Chairperson of the Democratic Progressive Party, Tsai Ing-wen was elected and the Democratic Progressive Party also won its outright majority in the Legislative Yuan elections, in which the ruling party was replaced by the opposition party for the first time in eight years. President Tsai Ing-wen listed issues including pensions, education, energy and resources, demographic structure, environmental contamination, finance, judicial issues, food safety and the gap between rich and poor in her inaugural speech on May 20, and positioned the low income and difficult circumstances facing young people as the most important issue.
Regarding the economy, exports and consumption slightly recovered and the real GDP growth rate in 2016 increased by 1.40% (estimated figure) year on year.
B Cross-strait Relations and Foreign Affairs
Since the inauguration of the Tsai Ing-wen administration, exchanges and communications by the liaison institutions in both China and Taiwan (the Association for Relations Across the Taiwan Strait, and the Straits Exchange Foundation) have been discontinued, and the number of tourists from China to Taiwan has dramatically decreased. In this context, on the occasion of the APEC Economic Leaders' Meeting in Peru in November, Chairperson of the People First Party, James Soong Chu-yu, attended as the representative of Chinese Taipei, and held a short meeting with President Xi Jinping.
C Japan-Taiwan Relationship
The relationship between Japan and Taiwan is maintained on the basis of working relations at the non-governmental level, in accordance with the 1972 Joint Communiqué between Japan and China. For Japan, Taiwan is a crucial partner and an important friend, with which it shares basic values such as freedom, democracy, basic human rights, and the rule of law, and enjoys close economic relations and people-to-people exchanges. Amidst this, working relations are deepened day by day. In 2016 the cooperation documents of (1) product safety and (2) language education exchanges between the Interchange Association22 and the Association of East Asian Relations were signed.
Regarding the import restrictions imposed on Japanese food products by Taiwan after the Great East Japan Earthquake, the Japanese side has repeatedly requested the Taiwanese side through the Interchange Association for removal and relaxation of the restrictions that are not based on scientific evidence. Furthermore, in order to discuss the various maritime issues, in October the dialogue on maritime cooperation between Japan and Taiwan was held between the Interchange Association and the Association of East Asian Relations.
- 22 The Interchange Association changed its name to the Japanâ€“Taiwan Exchange Association on January 1, 2017.
A Domestic Affairs
The result of the State Great Khural (unicameral parliament, four-year term of office) general election held in June was that the opposition People's Party won an overwhelming victory, capturing 65 of the 76 parliamentary seats and securing an absolute stable majority of seats. On the other hand, the ruling Democratic Party suffered a huge defeat, losing 29 seats. Based on the results of this election, People's Party leader Miyegombyn Enkhbold became the new chairman on July 5, former Minister of Finance Jargaltulga Erdenebat became the new Prime Minister on July 8, and all of the ministers were appointed by July 30, and a new cabinet aiming to be a “professional cabinet” was inaugurated.
The situation of economic and fiscal slowdown and stagnation faced by the new Cabinet is extremely severe. The Mongolian economy recorded a GDP growth of 17.3% in 2011, but was subsequently affected by the economic slowdown in China, its largest trading partner, and the stagnation in resources prices, etc. and the mining industry, the country's major industry which accounts for 20% of GDP, fell into a slump. Moreover, as a result of the trade deficit due to an economic structure that depends on importing food products, daily necessities, and oil, etc., as well as a rapid decrease in foreign direct investment and a large decrease in foreign currency reserves due to restrictive investment policies and laws against the backdrop of its resource nationalism, the GDP growth rate fell to 2.3% in 2015. In 2016, the exchange rate for the Mongolian currency recorded an all-time low, and the fiscal deficit is also in an extremely severe situation.
B Japan-Mongolia Relations
Mongolia is an important regional partner, which shares fundamental values with Japan, so Japan will continue to further strengthen the friendly relationship of the two countries, which is positioned as a “Strategic Partnership,” so that the relationship to be truly mutually beneficial.
In 2016, high-level exchanges were actively carried out following the previous year. Mongolian Minister for Foreign Affairs Lundeg Purevsuren visited Japan (May), followed by Chairman Zandaakhuu Enkhbold of the State Great Khural (June), Minister for Foreign Affairs Munkh-Orgil (September) and Prime Minister Erdenebat (October). In July, Prime Minister Abe made his third visit to Mongolia and held his ninth summit meeting with President Elbegdorj. In June, the Japan-Mongolia Economic Partnership Agreement (EPA) entered into force, the first such agreement for Mongolia, and the first meeting of the joint committee established based on the EPA was held in Ulaanbaatar, attended by State Minister for Foreign Affairs Seiji Kihara and Minister for Foreign Affairs Lundeg Purevsuren.
In many of these meetings, they exchanged views on a broad range of fields keeping in mind the further strengthening of mutually-beneficial relations toward 2017, the 45th anniversary of the establishment of diplomatic relations between the two countries (in 1972).