The 21 ^st century was once optimistically termed the Asian Century and in particular the Chinese Century, but a more cautious view has become prevalent of late. Even so, China unquestionably has the potential to greatly influence the course of world history in the 21 ^st century. China has already become the sixth-largest economy in the world, and in terms of economic scale alone could easily qualify as a member of the G7. The country is looking to grow at an annual pace of about 7%, expanding its economy by 2020 to four times the 2000 level. Endowed with the labor and capital resources needed for growth, China is urgently seeking to improve its productivity through technical innovation directed by leaders educated in science and engineering. The inflow of foreign capital and systemic reform that the country's accession to the World Trade Organization (WTO) will promote are expected to further invigorate China's economy. The strength of the political leadership, symbolized by a halving of central government officials, and above all the vitality and strong desire for improvement of companies and the general populace can be seen as having put the Chinese economy on track once again to stable growth. China perceives itself as a regional power in the process of developing into a global one and, as certainly the only regional candidate for superpower status, its presence in the region and around the world appears to be growing day by day.

　

Nevertheless, China cannot hope for the explosive double-digit growth it enjoyed in the mid-1990s. A developing country still in transition from a planned economy to a market one, China has stimulated its economy by introducing foreign capital and carrying out substantial deregulation in a number of sectors. While these steps did eliminate the perpetual shortages of goods that characterized China's "economy of shortage," the policy of restraint aimed at containing inflation proved all too effective, sending the economy to a state of deflation from the late 1990s. It was arranged then that public funds eventually would have to be used to cover the bad debts that accumulated. The increasing dependence on the issue of government bonds, the difficulty of structural adjustments, the aging of the society, and other problems facing the Chinese economy at the beginning of this new century resemble those plaguing the Japanese economy. Environmental problems stemming from economic growth and widening income disparities between regions and classes are also likely to pose increasingly serious challenges as we move deeper into the century. Rising pluralism and a diversification of views in Chinese society, which aggravate the mounting contradictions inherent in one-party rule, are putting pressure on the authorities to carry out political reforms, but it is certainly not clear if such reforms can make a "soft landing." China's remarkable economic growth has spurred a rise in nationalism, which the authorities have made a point of utilizing as a centripetal force for national unity. Skillfully controlling such a force without error, however, is by no means an easy matter.

　

The reality of China is complex and many-sided. Perceiving a growing rivalry between countries in overall national strength, China is pursuing a slow but steady modernization of its military capabilities, all the while seeking, as an important pillar of its foreign policy, to ensure a peaceful international environment that will allow it to quickly achieve economic development and catch up to the developed industrialized countries. Despite its continued professions of socialism and a political system firmly under the one-party rule of the Communist Party, the Chinese government has demonstrated an extremely practical and flexible attitude at times, promoting privatization for the sake of economic growth and granting party membership to capitalists in order to expand its power base. The country is in fact enjoying continued rapid growth and has developed remarkably as both a location for industry concentration and as a market, even as this same growth generates the various distortions seen in the previous section. In addition to being complex and multifaceted domestically, China is an ambivalent presence in East Asia. As economic competitors, the countries of ASEAN see the emergence of China as the "sole winner" as a threat, though at the same time they also have expectations of attracting Chinese capital and of exporting some of their goods to China. There are some in Japan, too, who perceive China as an economic threat. While addressing the "hollowing out" of industry is undeniably a matter of some urgency for Japan, Japanese companies have expanded their business as China has grown, and many of the Chinese-made goods imported by Japan are actually manufactured by Japanese companies operating in China. All of the countries of East Asia can benefit by utilizing the rise of China, and the worst-case scenario would in fact be a disruption in the Chinese economy leading to political instability. Vainly warning of China's imminent collapse or portraying China as a clear and present danger should be avoided; instead the realities of China need to be grasped.

　

China has in the past few years revised its traditional policies and suddenly taken an active part in organizing a framework for regional cooperation in East Asia, showing particular enthusiasm for concluding regional free trade agreements. This change can be partly attributed to a deeper understanding of economic security in the wake of the Asian financial crisis and recognition of the need for regional cooperation as a hedge against globalization, and may have been further inspired by the boost in China's confidence in conducting multilateral negotiations backed by its rapid growth in the 1990s and the stagnation of the Japanese economy. In addition, however, the country has come to realize the necessity of addressing the perception among its East Asian neighbors that China poses a threat. Despite its efforts to ensure a peaceful international environment for the sake of economic development and to maintain and develop cooperative relations with other countries, China faces the dilemma that achieving growth to the degree that it appears to be the "sole winner" will provoke concern among the nations of East Asia of "the Chinese threat." To allow everyone to benefit from the "asset" of Chinese growth, therefore, China has sought to avoid isolation by forming multilateral frameworks that will bring about a "win-win" situation. The adoption of a reconciliatory policy towards Japan over the past few years also derives from the view that Japan-China cooperation is essential in promoting regional cooperation in East Asia. With this turnaround in Chinese policy helping provide momentum, a regional consensus is being built in the general direction of forming an economic community in East Asia.

　

Although China is governed by a system of one-party rule, public opinion there is by no means monolithic and it tends to be forgotten that opinions vary widely on many issues. The country has doves as well as hawks. Bearing in mind this obvious fact, it is important that we endeavor to support those on the side of greater cooperation with the international community in policy disputes within China. Stable relations with the US are a crucial part of China's foreign policy. It is not the case, however, that China always maintains a consistent position in its relations with the US or with East Asia. To achieve a balance with the US, which at times assumes a very hard-line stance against what it sees as a "strategic rival," China sometimes pursues regional cooperation that is limited in scope to East Asia and that excludes the US. According to US and Japanese statistics, though, the volume of US-China trade in 2001 was 1.4 times that of Japan-China trade. For that reason, China also places emphasis on frameworks of regional cooperation inclusive of the US in light of the close interdependence between the countries of East Asia (including China) and the US. Consequently, China will likely continue in future to pursue simultaneously a balance of power and cooperation with the US, switching as needed between two approaches to regionalism: one excluding the US and one accepting it.

　

A key element in pursuing both global international cooperation and harmony within Asia at the same time will be incorporating China as a trustworthy member into the East Asian community. This will require joint efforts by all the countries of East Asia, including, of course, China itself. Nevertheless, it is a fact that South Korea and the countries of Southeast Asia expect Japan to take the initiative on this issue. Japan should seize the favorable opportunity presented by the emergent mood of multilateral cooperation in the region as a whole; it should dispel any introverted mindset as soon as possible and take action. Although overseas Chinese and Southeast Asian locals of Chinese ancestry may themselves have a considerable understanding of China, there is no country in East Asia that can surpass Japan in terms of the breadth and depth of its overall comprehension of China. One important role of Japan will be to develop an accurate picture of China and share this with the people of East Asia. Private exchange between Japan and China has become quite popular, with 988 Japanese NGOs involved in cooperation and exchange with China in 2001; the cooperation of 97 of these groups in tree-planting activities was particularly well-received by the Chinese side. Security, academic, and citizen-to-citizen dialogue supporting, and supported by, economic integration in East Asia is still lacking, though, and Japan should perhaps consider taking on the role of promoting dialogue between China and the rest of Asia at a variety of levels.